Where will Bitcoin be on 9/4/2018?

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9 members have voted

September 5th, 2017 at 10:01:52 AM permalink
DRich
Member since: Oct 24, 2012
Threads: 22
Posts: 1004
Quote: AZDuffman

For example, if I get enough and it goes up enough, when I go to put on a deck and hot tub I will ask, "can I pay you in Bitcoin?" If they say, "yes" then I get the gain tax free. Can that last?


It is not "tax free". It is still unreported income (or capital gains) that you are supposed to pay taxes on.
September 5th, 2017 at 10:44:24 AM permalink
AZDuffman
Member since: Oct 24, 2012
Threads: 110
Posts: 8633
Quote: DRich
It is not "tax free". It is still unreported income (or capital gains) that you are supposed to pay taxes on.


But it is just a trade with no cash.

Say I buy a BC today for as I write this, $4,306. It triples this year to $12,000. I put on said deck and tub for one BC. No cash has traded hands. And I still had just the one BC, same one BC. It never became cash thus will never be reported. No theft by the feds possible at this point.
The man who damns money has obtained it dishonorably; the man who respects it has earned it
September 5th, 2017 at 12:57:53 PM permalink
DRich
Member since: Oct 24, 2012
Threads: 22
Posts: 1004
It is still taxable as you must convert the value of the gain to U.S. dollars. So the fair market value of the hot tub and deck is reported as income or a capital gain.

If only cash was taxable I would take most of my salary in goods and services to avoid the taxes.

This IRS document from 2014 outlines some basics of how to treat virtual currencies. There are probably newer ones too but I haven't looked in a while.

https://www.irs.gov/pub/irs-drop/n-14-21.pdf
September 5th, 2017 at 1:38:43 PM permalink
Nareed
Member since: Oct 24, 2012
Threads: 345
Posts: 12535
Quote: Wizard
I think they have some value but most of the current value is tulip-driven.


Conventional wisdom is that bubbles are often, though not always, the result fo people without adequate knowledge of a market putting massive amounts of money into that market. If this be so, I think it gets worse when these people who have no idea what they're doing, nonetheless convince themselves they know perfectly well how to make the market pay. And it gets really bad when they borrow money to "invest" in the bubble (few investments will yield a higher return than what banks charge for personal loans to individuals). We did see the last with stocks bought on margin in the late 1920s, and the plethora of bad mortgages recently.

So where's the bitcoin/cryptocurrency bubble at?
Donald Trump is a fucking liar
September 5th, 2017 at 2:16:41 PM permalink
Pacomartin
Member since: Oct 24, 2012
Threads: 850
Posts: 10146
Quote: Wizard
When some country like Sweden backs a crypto-currency, I think it will put all the ones like Bitcoin, based on nothing, practically out of business. I should think Sweden would welcome a high demand for their currency. It would be good for their economy if they only place you could actually spend them is in Sweden.


That's an interesting statement because a central bank would not want their crypto currency to fluctuate in value more than the present day money. We all know that national currencies are periodically besieged by speculators, the best know of whom is George Soros.

So is bitcoin desirable because of it's ability to make anonymous transfers electronically, or is it desirable because it's value is unstable? By unstable I mean that people will hope that it keeps growing exponentially, but in the back of their mind thinking that it could go to worthless.

Sweden has not decided the nature of it's crypto currency or even if it should exist at all. One proposal is to essentially create accounts to store e-krona in. In that case, the difference between central bank accounts and commercial bank accounts may be minimal. The commercial banks may start a publicity campaign to kill the program.

If Sweden does not set up accounts, and possibly if they peg the exchange rate (current 10 SEK =1.05 EUR) then people all over the world will want to use the e-krona to make untraceable electronic transactions. That is an extreme position which is not likely to happen.

There doesn't seem to be a hard limit to how much cash a country should issue. All cash can theoretically be used for illegal transactions possibly involved two parties neither of which are associated with the country.

But for practical purposes most illegal international transactions are going to be in dollars, euros or possibly Swiss francs. I don't know the extend to which Austrian or Singapore dollars are used in other countries.

Cash (banknotes and coins) in other countries is a considerably higher percentage of GDP than the 1% in Sweden. So even if the e-krona balloons to 5% of GDP, there is no direct international rules being violated.
GDP% 2015 Currency
19.44% Japan
15.51% Hong Kong SAR
12.25% India
11.76% Switzerland
10.63% Euro area
10.56% Russia
9.55% Singapore
8.20% Saudi Arabia
7.90% United States
6.84% Mexico
5.56% Korea
5.37% Turkey
4.65% Australia
4.08% Canada
3.82% Brazil
3.72% United Kingdom
September 5th, 2017 at 3:55:42 PM permalink
Wizard
Administrator
Member since: Oct 23, 2012
Threads: 204
Posts: 4824
Quote: Pacomartin
That's an interesting statement because a central bank would not want their crypto currency to fluctuate in value more than the present day money. We all know that national currencies are periodically besieged by speculators, the best know of whom is George Soros.


Good point.

I think crypto currencies are desirable for their secrecy. If Sweden jumped into the game, I assume it would come with regulation, which would deter most interest. I do applaud efforts to move to a cashless economy but it can probably be done by conventional electronic means, which are already similar to a crypto-currency.

Another thing that might kill BitCoin is major countries banning their use. In fact, I don't know why they are so slow to. I've only heard of Bitcoin being used to hide transactions that are for something illegal.
Knowledge is Good -- Emil Faber
September 5th, 2017 at 5:34:36 PM permalink
Pacomartin
Member since: Oct 24, 2012
Threads: 850
Posts: 10146
Quote: Wizard
Another thing that might kill BitCoin is major countries banning their use. In fact, I don't know why they are so slow to. I've only heard of Bitcoin being used to hide transactions that are for something illegal.

But those are the stories make the news. Ethereum is more suited to transactions than Bitcoin, so this issue might resurface.

Confirmation time with Bitcoin is actually very slow, which makes it suitable for investment, buying large legal items, or illegal transactions. But bitcoin is not very suitable for purchasing pizzas. One place around here will sell pizzas for bitcoin, but you have to pay when you order so that by the time you pick it up the transaction has cleared.
https://blockchain.info/charts/avg-confirmation-time?timespan=all

Ethereum is trying to make transactions closer to the time it takes a card reader to process the security chip.



Transactions will be easier and cheaper but jobs will be lost

LONDON Four of the world's biggest banks have teamed up to develop a new form of digital currency that they believe will become an industry standard to clear and settle financial trades using blockchain technology.

UBS, Deutsche Bank, Santander and Bank of New York Mellon are teaming up to develop the new digital currency, which industry experts say would raise profits for the banks but with an additional cost: job losses for thousands of people.

"Today, trading between banks and institutions is difficult, time-consuming and costly, which is why we all have big back offices," Mr Julio Faura, head of R&D and innovation at Santander, told FT.com. "This is about streamlining it and making it more efficient."


Electronic transactions still require thousands of people in offices from Texas to Bangalore to check whether they are valid, and to process them.

The cost of settling trades in the finance industry runs as high as US$80 billion (S$108 billion) a year, but customers who use Internet banking and ATMs reduce manpower costs and add to the bank's profit margin on every transaction.

Blockchain technology - a set of complex algorithms that allow cryptocurrencies to be traded and verified electronically without a central ledger - will require fewer people in the verification process, potentially from dozens to only a couple per transaction.

It will also considerably reduce time taken for transactions from days to minutes.

Regulatory approval for the digital cash system would not be a problem for the banks since blockchain transactions are easier to trace and hence make enforcement more efficient, wrote Bloomberg columnist Christopher Langer.

This could cause a lot of jobs to eventually disappear, like bank tellers whose importance has been reduced since the ATM machine was introduced, he said.

Banks may end up saving more than US$20 billion in the United States alone.

"Of course, not all those jobs will be lost and some new ones may be created, but the maths is clearly in favour of adopting blockchain for financial-transaction processing," Mr Langer wrote, adding that "that explains why banks are suddenly so keen to develop systems that will enable it".

Several rival digital cash systems are also being developed. Citigroup is working on its own "Citicoin" solution, while Goldman Sachs has filed a patent for a "SETLcoin" to allow trades to be settled near-instantaneously. JPMorgan is also working on a similar project.

SETL, a London-based group founded by hedge fund investors and trading executives last year, also aims to settle financial market payments with digital cash linked directly to central banks.

Now that companies in finance and other industries are looking to adopt blockchain, more standards-setting organisation is needed to speed up development and resolve any issues, such as how to deal with hacking attacks.

Some of blockchain's biggest backers, including people with ties to IBM and JPMorgan, gathered for a three-day meeting yesterday to work on the issue of absence of grown-up governance.
http://www.straitstimes.com/business/big-banks-plan-to-coin-new-digital-currency
September 6th, 2017 at 5:26:12 AM permalink
Wizard
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Member since: Oct 23, 2012
Threads: 204
Posts: 4824
Why would anyone even need a crypto currency to buy a pizza? That is what cash is for. If you don't like cash there are debit cards. I've also seen people at Starbucks just show a pattern of dots on their cell phone, which the clerk scans. Takes three seconds. I don't know what it is called but I could see that being the way of buying things in the future.
Knowledge is Good -- Emil Faber
September 6th, 2017 at 5:49:12 AM permalink
AZDuffman
Member since: Oct 24, 2012
Threads: 110
Posts: 8633
Quote: Wizard
Why would anyone even need a crypto currency to buy a pizza? That is what cash is for. If you don't like cash there are debit cards. I've also seen people at Starbucks just show a pattern of dots on their cell phone, which the clerk scans. Takes three seconds. I don't know what it is called but I could see that being the way of buying things in the future.


One reason is protection against the government. People have had cash confiscated just because they are carrying too much cash. Throw in that if the feds want to lock you out of the system they can do so. With a crypto, you cannot be locked out, it is too hard to lock every door, and too easy to just make a new one.

Another great thing is protection against inflation. While the cryptos are currently a very volatile market, one day they should stabilize, rising just a bit to take into account inflation loss of the USD. Countries will set their own currency to devalue just 1-3% against the USD to keep things even in real terms, think that way.

One more is taxes. See my deck-and-hot-tub example. I speculate on IBM and it hits, I have to pay big taxes. I speculate on a crypto and hit big, I can just buy items with it. Sure, I am supposed to pay tax, and a project like that may attract attention. But one pizza at a time? Who will bother to collect the capital gain there?
The man who damns money has obtained it dishonorably; the man who respects it has earned it
September 6th, 2017 at 6:13:53 AM permalink
Pacomartin
Member since: Oct 24, 2012
Threads: 850
Posts: 10146
Quote: Wizard
Why would anyone even need a crypto currency to buy a pizza? That is what cash is for.


Olaf Carlson-Wee has been involved in crypto currencies his entire adult life (about 10 years) and he tries to live without the dollar.


CNBC journalist Seema Moody recently published a report detailing the trials and tribulations of her attempt to live for a week solely using bitcoin as currency.

She discovered that it makes life a lot more expensive. For example, the ice cream sandwich at Melt sold for $5, but with bitcoin she ended up spending the equivalent of more than $9.


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