First of all I want to state out that I am not a Spectaculator who tries to make his profit by posting bad things about Bitcoins. Actually I am a big Bitcoin supporter right after I came in contact with them but still I have a few doubts about Bitcoins that I would like to discuss with people who got a clue.
The general problem of Fiat Money that causes most the economic problems is the hoarding of money. The conflict comes with the contradiction that money is personal property and general property at the same time. All people who participates in one market depend on the money circulation, if money is hold back by one participant this cuts down the income of all other members in the same market.
Let me illustrate this point:
One Market has 5 members. Every Member has a total capital of 100 BTC. Every Member runs a different business, one blacksmith, one grocery store... etc. Everybody spends all of his money for goods in one week (we assume that all participators get the same amount of the spend). So all participators got at the end of the week, all goods they need + 100BTC for their needs in the next week => working market.
So if the Blacksmith decides to build up a fortune and decides to spend 10 BTC less now every week, what will happen? All other market members will end up with 2,5 BTC less that they had last week what forces them to cut down their spendings for the next week. Now every week 10 BTC income are missing as long the Blacksmith holds on his 10 BTC ( 10 BTC in one week, 40 BTC in a month.. etc).
The market has now 2 options:
- Reaction with deflation, making all money more valuable => The Blacksmith succeeded to absorption the purchasing power of the other participators.
- Paying the blacksmith interest so that he spends his BTC => The Blacksmith succeeded and got now his 100 BTC + Interest leaving all other participators with less purchasing power.
There are no other options forcing the Blacksmith to spend his BTC because its his private property and since Money cannot rot like every other good does, so he can hold on, on his money as long as he wants to.
The solution:
All money is issued for a limited period by constant value and looses value over time after that period. Forcing you to spend it because now the money rots away if you dont spend it quick enough.
This was already worked out by Silvio Gesell an German merchant and theoretical economist and founder of Freigeld(Free Money) and Freiwirtschaft(Free Trade).
So how is that associated with the Bitcoin reality might you ask?
Pretty simple. Bitcoins got an even huger problem since they are based on deflation, so everbody who holds on, on his Bitcoins is guaranteed that they rise value, making you think twice spending them, which hurts the market really bad since all participators depend on the money circulation in order to achieve income. I already saw hundreds of posts of people saying that they "hold on" on their coins. Meaning that they dont want to spend them and ultimately seeing BTC as an investment like stocks and not as a currency.
So everybody who truly believes in the succeed of BTC would be an Idiot if he spend them now, cause they are guaranteed in growing value over time, the only rational reason that keeps people spending their BTC is fear. Fear that they dont worth a penny tomorrow, so they spend them today. But the trust will be build up in short time and we will end up with an not working market because a big portion of the BTC coin volume wont be spend.
A solution for this problem might be looking like this:
1 BTC has to cross X Wallets in Y Time or Z % of that BTC will vanish.
This would force people to spend their BTC and handling them like a currency and not like an investment.
Discuss.
greetings MaDDDog