Quote from: JoelKatz on August 02, 2011, 08:17:36 AM

Quote from: Astrohacker on August 02, 2011, 02:35:26 AM

Quote from: JoelKatz on August 02, 2011, 02:14:05 AM

Will you give me 100 bitcoins today if I promise to give you 100 bitcoins next year? Of course not -- even if you 100% trust me, you're still giving up the opportunity value of being able to spend those bitcoins within the next year should you choose to do so. There's no reason you should give that up in exchange for nothing. If you hold your bitcoins, that's exactly what you're doing.

I don't understand what you're saying. Your argument seems to imply the exact opposite of your conclusion. You seem to be saying that if you want to be able to use your money at any time, you should let someone else take care of it.

No, I am saying that if you simply hold onto your money, the opportunity value is lost. Whereas, if you deposit the money in a bank, you can extract the opportunity value.

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But actually, when you do that, you are risking losing access to your money, because they may run off with it, or do something else irresponsible with it and lose it.

True. That is the downside of a bank. However, the upside is that you don't waste the opportunity value of the money.

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And you also seem to argue that this is why you shouldn't hold on to your money... because then you can't use it when you want.

No, that's not what I'm saying. If you hold onto the money, you cannot use it unless you find some way to extract the opportunity value. If you cannot do that, and in general you cannot, that value is wasted. A banker is an expert at extracting the opportunity value of money.

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But exactly the opposite of this is true. It is only when you have it that you can use it when you want.

I would say that if you have it, you can only use it when you want. But if you don't want to use it, the opportunity value is wasted. This is value to which you are entitled that you are simply giving up for nothing if you hold the money.

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The opportunity value is decreased, not increased, by storing money in a bank.

No, it is increased. That's how the bank pays you interest.

Look, say you have 100 bitcoins and you don't need them until next week. Say someone else needs 100 bitcoins right now, badly enough that he's willing to pay back 110 bitcoins next week. If you hold your 100 bitcoins, you lose the 10 bitcoins of opportunity value you could have made by loaning those bitcoins out. Even if you say "well, then you risk losing the whole 100", you can easily imagine a situation where you could also obtain insurance against loss of your principle for, say, 2 bitcoins. So you still waste 8 bitcoins of opportunity value by holding your bitcoins, and the guy who could have done something with the bitcoins today doesn't get to do that either. Lose/lose. (But then the fewer bitcoins in circulation do benefit some people, so they win.)

Actually, more likely someone else will lend the guy the 100 bitcoins. So he'll have 110 bitcoins less 2 for insurance and you'll have 100. You're playing the sucker.

But Joel, you're thinking is clouded by the system we have in place today which pays interest.

First of all, the banks pay way less interest than they should given the enormous risks they take with our money. in fact the FDIC has made way more guarantees than it can possibly handle and only maintain the facade thru the taxpayers guarantee.

and none of what you say applies with a deflationary currency which may increase in value with time more than compensating for the small amt of interest paid by a bank along with the risk.