I really don't get why so many people still seem to have a problem with this one. Providing if/as/when it becomes necessary additional decimal places can be added it matters not how much of the bitcoin in existence is 'hoarded' and not in circulation. It doesn't matter if the total bitcoin available for all world transactions is a small fraction of a single bitcoin. It will still be plenty. Its value is determined by demand which is determined by the the cumulative number and value of the transactions people want this tiny amount in circulation for. Obviously the value of those not in circulation is determined by the value of those that are. [...]
If you quoted what you're replying to, the "decimal places" bit sounds like a non sequitur. As far as the value of coins not in circulation being determined by the coins that are, that's not obvious & also false, currency trading != circulation. If i sold bob 5 bitcoins for 5 dollars, and he sold them to me for 5 dollars, there's no circulation, no matter how many times we rinse & repeat.
I was pre-empting the pedants who I could hear chiming in that bitcoin as it is only has 8 decimal points therefore if the whole of the circulating bitcoin economy was say .00001 bitcoin it could not be used. The fact that a quick non-controversial hard fork could when required make more decimal places available renders this argument moot.
My point is the save or spend thing is a false dichotomy. Of course nobody can both save and spend the same bitcoin but we have the option of acquiring to save then acquiring some more to spend where we are spending bitcoin instead of spending the equivalent in pounds.
I'm sorry, you seem to suggest that by splitting the pounds you convert to bitcoins in two separate parcels (one to buy bitcoin which shall be saved, one to buy bitcoins which shall be spent) you avoid the save/spend dilemma. I may be reading you wrong, but that's not a solution, it's a Rube Goldbergian obfuscation. If Bitcoin is a better store of value than fiat, the sound thing to do is convert all of your fiat into bitcoins *as soon as you can* & hold the coins. Each time you use bitcoins in a transaction, having to repurchase them later with fiat, you lose. Assuming that Bitcoin value continuously rises relative fiat (the very thing which would make it a better store of value than fiat), the bitcoins you "rebuy" will cost you more fiat than the ones you sold. Think of it in terms of selling a coin on Gox during a rally, and having to buy it back, oh, 5 minutes later
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In the bigger picture I was pointing out that it has zero effect on availability of bitcoins to use for spending because whatever's left can be divided into however many units and their value will reflect demand for those available.
In other words, to save the dollar, Americans should simply put most of their money under their mattresses, and what remains in circulation will become more valuable due to increased demand for the (temporarily) limited supply? Profit?
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...As far as the value of coins not in circulation being determined by the coins that are, that's not obvious & also false, currency trading != circulation. If i sold bob 5 bitcoins for 5 dollars, and he sold them to me for 5 dollars, there's no circulation, no matter how many times we rinse & repeat.
Apologies. Obviously not obvious to you. Not false, just incomplete. I was not referring to the currency market. I was talking about what one can buy with bitcoin. The currency market is a means (made possible by liquidity provided by speculators) of getting bitcoins from those who don't need them to those who do without having something to trade for them. And whilst the speculating might have a big impact on what can be bought and sold with them the bottom line is demand for the purposes of purchasing or sending money electronically.But if I've got 50,000 bitcoins and I'm not doing anything I have no say in what people choose to pay for those that are on the market. Of course the absence of my 50,000 will have an indirect influence. That was my argument against the point in the OP - that having the vast majority 'hoarded' and out of circulation is not a problem for Bitcoin because for however little is left, the active buyers and sellers (who are using it) along with the speculators (providing liquidity) mean demand can meet supply at a price that will enable it to be used for whatever purpose they wish it.
I disagree with you on the role of speculators. Speculation, stripped of all the negative associations, leaves us with this (slightly abbreviated) wikip definition: "Speculation is the practice of engaging in risky financial transactions in an attempt to profit from short or medium term fluctuations in the market value" If Bitcoin is indeed a currency, bringing liquidity to Bitcoin is less meaningful than bringing coals to Newcastle
Shouldn't it be the other way around (Bitcoin brings liquidity to ...)? I know, not yet. The value of Bitcoin, today, is purely a *speculative* value -- speculators are *guessing* how much a BTC will be worth in the future, and betting dollars (and pounds) on their predictions. (do British keyboards have a pound symbol?) They, and not the few merchants on SR & the other web-based businesses set BTC price today. That's why the price dances around so wildly rel.