Quote from: npl on December 06, 2013, 05:04:30 PM

Quote from: Shneebly on December 06, 2013, 08:55:51 AM

Quote from: npl on November 30, 2013, 02:08:45 PM

Is Bitcoin primarily a medium of exchange or a store of value? No financial instrument can be both things equally well. Despite what some Bitcoin proponents believe, specialization in one direction is inevitable (many people who seem to think it can somehow be both are the same ones advocating 'buy and hold forever'...).

I disagree with your premise. Bitcoin makes a fantastic medium of exchange (best in human history), and due to the predictability and certainty of mining new Bitcoins (at predetermined rates), and the lack of monetary inflation, it will also make a great store of value.

Please explain why one cannot both save and spend in Bitcoin?

For a modern capitalist economy to function properly the following must hold true, in the long run:

A. currency in actual circulation (i.e. circulating paper money) must be expected to decline in terms of purchasing power in the long run. Otherwise there is no incentive to turn to stores of values (which, as explained below leads to decreased spending and no new investments = economy grinding to a halt).

assuming A is fulfilled, and people turn to stores of value, then:

B. commodity stores of value (gold) must expected, in the long run, to not outperform investment vehicles that provide a return on value (i.e. growth from anticipated real price increase plus dividends). When people no longer believe that to be the case (e.g. because of strong economic or political turmoil) they increasingly turn to gold, thus putting further pressure on the economy (because not enough money being directed to investment).

bottom line: BTC can be both store of value and medium of exchange - but only in the context of a sustained strong economic downturn (or even collapse) of a capitalist economic system. If this is desirable or not - I leave to you to decide for yourself.

Why does it have to decline in the long run? Your point B makes it look like too many people turning to stores of value is a bad thing for the economy (ie the currency being used for active exchange). So if it doesn't decline in the long run and people have no need to turn to a store of value (because it stays so stable if it has full investment) then we don't worry about people sitting on it - they have no incentive to do that.