Quote from: Fooality on June 13, 2015, 05:36:52 PM

Quote from: sgk on June 10, 2015, 09:38:04 AM

An interesting quote from the article about the HODLers:

Quote

......The catch-22 is people buy Bitcoins because they think the price will go to infinity and beyond once everybody uses them, but they don't spend their own Bitcoins because they think the price will go to infinity and beyond once everybody else uses them. And so nobody uses them.
But if nobody uses them, then the price will stay stuck at something a lot less than infinity let alone beyond. So the Bitcoin faithful have tried to not only convert people, but also convince them to martyr themselves, financially-speaking, for the crypto cause.....

This article actually led me to this forum. I know there are a whole lot of new changes coming, and Bitcoin will be even better as an exchange system, but that catch-22 is the hazard of it all. Its good for exchange when its price is stable, but the volume of exchange will drive up the price. They need some kind of a smoothing instrument, so the price can rise slowly, but never so much as to mess up exchanges in it. I am going to be very curious to see what kinds of things are innovated next, I think many things depend on it.

This "catch 22" is really just Gresham's law. The same is true of USD in Zimbabwe, Gold in Yugoslavia, etc. The canonical example to understand why it isn't a problem is Moore's law. Why would we buy computer memory today when it will be cheaper tomorrow? Well, because we actually want it today. This explains a good portion of the 120k TX / day. People actually want stuff, and all they have left is good money.. so, they have to use it. Yes, any sane person would rather spend their their USD if possible, but.. watch the cold storage being brought out over the next few years.