Bitcoin Forum

Hi guys,

I was thinking about bitcoin lately.

For me it is not a currency and we should not buy common goods with it.

For the free market to stay free, it should not be considered as a currency, because government will be able to tax you for it.

For me the real purpose of bitcoin, and were it has actual intrinsic (maybe intrinsic is not the right word, but you get me) value, is that bitcoin is to money, what money is to common goods.

It let you abstract the value of money, like money abstract the value of goods, to be able to do a lot of cool stuff!

The concept of bitcoin is what Keynes wanted to create after the war, but he was kinda putted apart from the negotiations in Breton Wood (and other meetings), by the Americans, because they wanted their currency to have the supremacy. They still gave him some important position in the monetary regulation, but still, the etalon-$ was imposed.

Today the hacker world have created what Keynes was not able to create.

I think that Keynes ideas are good because, what he suggested, and predicted after WW1, was correct, and governments should have listened to him and to the Jewish german bankers of that time. It would had let germany more freedom, and it would have gave a greater chance to not choose what they choose to do... They were both (Keynes and Jewish german bankers) very strongly against the occidental oppression of germany.

So in conclusion bitcoin is good to transfer money easily and freely. The value of bitcoin is not very important, if you want to transfer 100,000$, you don't care if you need to transfer 100BTC or 10BTC, because it's the same to transfer 10 or 100. Knowing this, the value has to go up, because miners won't put new bitcoins on the market, if it is under the price they have paid to mine it. And you won't care buying 1 bitcoin 10,000$ because it still does what you need to do at the same cost.

Maybe a derivative currency based on bitcoin can be good to buy common goods, because it would avoid us to pay VAT, that is 20% in France. Or income tax for business, since in the books, it's possible to have something coherent without money income (I still need to study that a little deeper). And it would give independence to bitcoin in regard to $.

Please use the search function and dont create new posts for topics which have substantial discussions already.

Hopefully a mod can merge your post.

Ooh, a post by a Keynesian telling us all why Bitcoin isn't money. I'll make sure to pay lots of attention to this one.

Who are you to decide what is and isn't money? You sound like a government. I think the people and users will decide whether it's a currency or not, and I vote it is.

Regardless of whether Bitcoin is not a currency or should not be considered a currency it is in fact being used as a currency.  It is also being used as an asset and a security and an store of value... etc. 

No stopping it regardless of what the armchair economic theorists say.

Exactly. Would you be worried about government involvement if people started using potatoes as currency?

If enough people started trading potatoes and the value of the potato money supple reached a certain level you can bet the government would get involved. 

Especially if there at a black market website for illicit good that only accepted potatoes. 

But then McDonald's, at the world's largest buyer of potatoes would hire a lobbying group for millions of dollars to prevent potatoes from being used as money and stating they can only be used for french fries, home fries and mashed potatoes. 

I'm sure they would. Bitcoin is going to be regulated whether people like it or not. Governments are not going to just sit back and let people launder money freely.

I just give my opinion, you're free to do so also

I don't think it's that regulation we have to worry about (though that has already created a significant hurdles).  Taxation will be the real threat to bitcoin.

Actually I'm saying that Keynes's idea to bring a better monetary system was to create a concept that bitcoins is representing today. He didn't named his currency bitcoin, either he didn't have any idea of internet and stuff, but the concept are the same.

http://en.wikipedia.org/wiki/Bancor

I think the same about taxation.

The less Bitcoin is usable, more of a bubble it is. If we don't get to a point where goods are massively sold for BTC directly, we just let the BTC exchanges take commissions instead of banks.

Are you seeing BitCoin as an alternate version of SWIFT?

I used to think it wasn't money but I've been swayed. Actually with a fixed supply it resembles more a commodity but money is anything people give value really.  What would be interesting is if someone, a large bank for example, created a crypto currency backed by gold or silver with a fixed supply... it might help keep the price stable and being able to exchange your currency for metal for a small fee would be an interesting idea.

Eventually.  Could be years and with probably won't be bitcoin but a later iteration.

The volatility comes from a very shallow liquidity pool.  You have to understand that even with over 12 million bitcoin mined only about 5 million are actually in circulation (and that may be and over estimate).  Past block chain analysis has shown that over 7 million bitcoin are being horded.  Transaction analysis shows those coins having been received or mined and never having been transferred again. 

So when a country like China jumps on and off the band wagon off course there are going to be wild fluctuation.

I do see taxation as a threat.  If governments can't tax at least -some- part of Bitcoin, they will do everything in their power to block it.  If you trade bitcoin, make a profit, you are legally required to pay a tax on the gain, whether a short term gain or long term gain.

Here are a couple of taxation scenarios.

If you are a miner the GOV could tax your block reward and fee on receipt as income.

Then at the time you convert those coins to fiat you could also be taxed with a capital gains if the price increased.

In Countries where there is a Value Added Tax (VAT) they could put a premium on bitcoin transactions and make its use more expensive then credit cards and other forms of payment.

For the regular user/trader  I would expect that bitcoin earnings or loss would be taxed as a capital gain or loss at the very least.

Lot of theories and speculation out there.

I'd expect a US IRS ruling before April 15, 2014.

I will never declare to any gov that I own bitcoin that's for sure!

And when I cashout, if I'm asked, I will just say that I sold, cryptographic private keys, that were valuable to some random people, for research or any kind of stuff, to unlock stuff with it.

If they still want to tax it, I would direct myself to banks in Swiss or something like that. In a legal way of course, by becoming a swiss taxpayer.


Exactly I see bitcoin like SWIFT in a certain way, but not exactly.

This is a fork in the road where you have to choose the lesser of two evils.  You ether play ball or you play against.  One hand washes the other principle.  If BitCoin really takes off a whole new industry will emerge on a grand scale.  It is understandable some form of tax needs to be in place.  You want the support.  Everyone wins.  

It may sound a bit against the grain of the wood, but I believe there should also be transaction costs to ensure everyone that secures that transaction gets a piece of the pie.  Everyone is the infrastructure and BitCoin keeps the family feed.  This would be spreading the wealth on a major grand scale.

This topic makes no sense to me. How you define currency?

currency definition (Webster):
a :  circulation as a medium of exchange
b :  general use, acceptance, or prevalence <a story gaining currency>
c :  something (as coins, treasury notes, and banknotes) that is in circulation as a medium of exchange
d :  paper money in circulation
e :  a common article for bartering
f :  a medium of verbal or intellectual expression

Anything with value essentially is a currency. So you're saying bitcoin should have no value?

Transaction cost will happen.

Since the difficulty to validate a transaction increase so much, the mining cost will eventually increase.


For example if you buy 1THash today you still make profit. But if you buy it in April2014 at 5000$, if BTC stays at around 1000$ with no transaction cost, you will never break even. I guess miners won't ever sell new bitcoins under a break even price, and if the market doesn't go in the up direction, transaction cost will have to be setup.

I'm not sure about the hardware price, but I think you can get 1Thash for 5000$, if it's a different price, juste put the right price in the sentence, I used to have calculated it.

In regard to the currency, I emphasize, it should not be considered as a currency for common goods and services. But a currency for $, euros etc.

According to aristotle, a currency has 3 fonctions, unity of count, value reserve, medium of exchange. In this view yes it's a currency.

Ilanoh,  I understand the sentiment but that is a very naive attitude.  

1.  You've just stated that you intend to commit a crime (in any jurisdiction with taxation laws) on a public forum.

2.  Your explanation does not hold water.  If you are located in the US the Financial Crimes Enforcement Network has already issued guidance that virtual currencies are legally considered "other value that substitutes for currency" which makes it use and transmission subject to a host of financial service laws and regulations including civil and criminal prosecution.

3.  Even if you are not in the US, DreadPirateRoberts and his administrates and users and sellers thought their bitcoins were safe from from the long arm of the law and that proved to be an incorrect assumption.

4. While I'm not aware of many taxation rulings outside the US when these rulings are put in place again you would become subject to civil and criminal fines and penalties buy trying to evade them.

I'm not saying that is right or wrong.  I'm just stating the facts.  

(ok begin the personal attacks!)

pbody

The word "currency" implies  it is currently in use as a medium of exchange.  And a medium of exchange is what ever two people agree has value to them.  Whether it is eggs, oil or bitcoin.

A lot of people value bitcoin.  A lot of people use them to trade and/or buy things.  There for bitcoin is a currency.

Now whether or not it is a good or bad currency, only time will tell, regardless of what all the talking heads say.

Right before the big asteroid  his the earth.  All the dinosaurs where sitting around saying "This is fucking great!  We rule the world"  They never knew what hit them.

Its a delusional kind of thread, much Dystopia can been seen by a section of posters on this forum, not sure whether they are thinking seriously or have a motive, hard logic says they must be motivated by something. Not every post one makes has to be in a positive light though also facts should be considered before making statements. We all know that Crypto's could have security issues and wat not but that dosn't make them not a currency   :D

I'm an european, my country signed the Rome Treaty. I'm free to move, me as a person and my capital, wherever it is the best for me, if my country isn't giving me a great environment compared to another. 

People forget that's how the United States basically got started.  The Federal Gov had very little control.  Each state ran its own finances and people were free to move from one state to the next.  91 years ago the Federal Gov decided they had the authority to tax income and passed the 16th amendment.  Little by little over the years since 1912-1913, states rights have been taking away by the Federal Gov.  The constitution gave the states more of the rights.

I'm not familiar with Rome Treaty.

If Bitcoin is not a currency then what is it?

* It has a current set value against other currencies/cryptocoins
* It has value
* You can buy goods with it/sell it for other currencies
* It is obtained by working (mining)
* Any other currency type quality to be added here...

Regarding the tax situation - at some point this will be implemented by governments if they can work out how to track the transactions and identify back to the owner.

I could see bitcoin as a currency but more like a compliment to the dollar. If it was easier to convert dollars to BTC this would be more likely. I could also see it as a a store of value like gold. I don't think there's any way to make the market decide is there?

I agree completely.  The free markets will decide what Bitcoin is, not me, not you, not this forum.  In due time if and when Bitcoin becomes more mainstream, I think it'll be used as a store of value/medium like gold.  But I also see if being used as currency.  It won't ever replace the dollar, Euro, Yen, etc.  I think people are overly optimistic if they think this.  But if all goes will it'll be another form of value and currency and will compliment it.

Bitcoin is a currency. It is listed in many investment magazine and classed it under currency.

Taxing bitcoin should not be possible.

Why do government do taxes.

Because they have to pay for stuff they deliver for free to you.

For ex in France we are heavily taxed because we do not have to pay for health services.

States, guarantee the value of your money, so it's like money is a state property, so state has right to tax you.

But considering bitcoin, state does not have any rights on it, states doesn't guarantee any bitcoins.

So states doesn't have a right on it, so states cannot tax you for it.

I see bitcoin as digital gold. Gold is, as you say, a store of value more than a curency.

I agree. I think bitcoin is better defined as a commodity, not a currency. But still has the same properties as other currencies. Currency is a pretty broad term, so it could technically be classified as both I guess. So who knows lol

I suppose semantics aren't as important here unless you really want them to.


Agreed, only time will tell for sure. I mean, people are buying and selling things with btc, so there is that and there's no denying that. I suppose wither you view btc as a currency or a commodity is highly irrelevant in most peoples case. 

We in the United States share that same privilege I hope you realize. I would expect most humans on earth share that same privilege too

I LOLed.  Well, I'm an Austrian and I actually agree that bitcoin isn't money...yet. Bitcoin is a virtual commodity with the potential to become money. It has to be more than a store of value and a medium of exchange. It has to be the MOST liquid commodity, the one thing people accept in trade more than any other. it needs to become more valuable and less volatile to actually become money.  I think this has a reasonable chance of happening because of speculators.

Good speculators buy low, sell high, decrease volatility of the market, make profits and continue speculating. Poor speculators buy high, sell low, increase volatility, loose money and quit the game. Over time, the incentives cause the market to become less volatile and that has actually occurred so far. This last "bubble" was proportionally about half the size of the one before it in April 2013, which was in turn less than half the size of the 2011 bubble. Bitcoin will replace gold before it will replace fiat.

In about 4 days difficulty will increase by 25% can we expect an adjusted to cost/difficulty increase in the bitcoin price? Because we can see that graphs have quite the same form (difficulty and btc price).

I begin to work on a platform for Venezuela and bolivars, if someone want to think about it with me, I have all kind of connection around the world that can be useful.

Liquidity is the key I agree with you billy, I have some ideas on how to create liquidity also.

One way for a financial market to be crises-free is to cancel the huge factor: fear of future liquidity shock.

That is we need to guarantee liquidity in every situation possible.