Government is interested in defending its citizens, otherwise they won't be able to collect taxes Wow thats a mind fucking paradox right there. How can it defend you AND tax you? Isn't protecting you from people who would take your property away from you against your will part of defending you? You would have to pay something to somebody for defending you, even the most impenitent among anarchists admit it. Why would they want to defend you for free actually? If you have never thought about this, think about it now, it doesn't require much effort to understand such things... To hope for something out of nothing is the most popular form of hope |
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I have already replied to you see post above.
Again merchants cant use bitcoin as media of exchange because they would have to pay taxes on any gain in value of bitcoin itself which is much to cumbersome as it involves enormous paperwork. Thats why we have no competition in media of exchange. Again its one way the government makes sure only dollars are used, there are other ways as I have explained.
Could you please provide a link? Can't find your answer to my post... You may think as you please really, but I find your argument on taxing exchange rates differences very weak. It is simply beyond my understanding how Bitcoin may fail just because of some paperwork. It may actually fail in the end, but this apparently won't be for capital gains taxes. As to me, that would be equal to saying that an enterprise would go bankrupt just for gaining some surplus profit... How come? |
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At the level where it matters for the question discussed (i.e. subjective utility), there is not much difference between these two concepts. Actually, at this level security becomes what gives the currency some value (indeed this is not enough) because it all finally boils down to trust. As a counter-argument, I can just as well say that backing up by gold is simply preventing government from abusing their power. And security all of a sudden now begins to play in the same field...
Simple mental exercise, suppose you have to pick up between two currencies. One can be counterfeited more easily that the other, otherwise they are on a par. Which currency would you choose?
Their is a lot of difference, something can not be an effective store-of-value if it lacks EITHER. For a person to store value a person needs to do two things, they need to RETAIN an asset and the asset needs to RETAIN purchasing power. If I had an object with perfect ability to retain purchasing power but it could be stolen very easily it would be a poor store-of-value, alternatively something that's very hard to steal but which has unstable in purchasing power would likewise be bad. My total risk of loss is Retention Risk (losing the asset) + Valuation Risk (asset loses value). So any logical and subjective personal assessment of an assets store-of-value is going to need to take both risks into account. So, in short, you didn't actually say anything that would support your position. Retention of purchasing power (that is what matters here) ultimately depends on what the majority think about something as a store-of-value, whether it is worth being used as that (there is no god out there). And security of a currency does add to this subjective judgment in a positive way, whether you like it or not (see example in my previous post)... |
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No you have no clue how the world works. The monopoly of money is the most important power tool governments have. Wars have been fought to protect it. Again stop focusing on miners: Taxes on bitcoin are enough to kill its use as a medium of exchange.
Hey, you seem to have failed to address my point on taxation. If taxes on bitcoin you are talking about here boil down to the taxation of foreign exchange rate differences between Bitcoin and, say, dollar, this will surely not kill its use as a medium of exchange. I see no problem here and am waiting for your constructive answer.. |
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The difference is that the "medium of exchange" is taxed.
For example: If the merchant accepts dollars and holds onto them and eventually uses them to buy new supply (i.e. sells dollars), he doesnt have to pay capital gains taxes on a possible increase in the dollars value. If the dollar trades higher versus the euro, the government does not force you to pay taxes on these exchange rate "gains".
However if the merchant accepts bitcoin and holds on them and eventually uses them to buy new supply (i.e. sells bitcoins), he will have to pay capital gains taxes.
Now I see your point, but I don't think it would be serious obstacle really, if any. You will pay only if the exchange rate has increased, i.e. the exchange rate difference would only be taxed, right? If the exchange rate doesn't change, there is no additional taxation as I understand it... |
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You confuse BACKING with SECURITY, Backing a Currency means giving it value, government legal tender laws and the ability to pay your taxes in a currency BACK the currency, or in the past pegging the currency unit to quantity of precious metal. Security is preventing a currency from being stolen or counterfeited and governments also generally provide Security both by making paper bills hard to counterfeit and punishing thieves.
The BTC computer network provides SECURITY only, it keeps BTC from being counterfeited, and it kind-of prevents bogus transactions by cryptographic signatures, while turning a blind eye to scams, hacked wallets and black-markets. But all of these things are just guaranteeing your continued ownership of BTCs not that the coins will be WORTH anything. BTC is secured but not backed.
At the level where it matters for the question discussed (i.e. subjective utility), there is not much difference between these two concepts. Actually, at this level security becomes what gives the currency some value (indeed this is not enough) because it all finally boils down to trust. As a counter-argument, I can just as easy say that backing up by gold is simply preventing government from abusing their power. And security, all of a sudden, now begins to play in the same field... Simple mental exercise, suppose you have to pick up between two currencies. One can be counterfeited more easily than the other, otherwise they are on a par. Which currency would you choose? |
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Governments have already effectively made it impossible for people to use bitcoin as a medium of exchange, as they expect taxes to be paid on bitcoin gains. Thus it cant function as a medium of exchange (same goes for gold btw.). Unless Government loses its control on its money monopoly this law wont be altered.
I didn't get that point. If you buy something for dollars and then sell it for dollars, you still have to pay taxes. What am I missing here and what is the difference between dollars and bitcoins then? |
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Actually, it is backed by all the goods and services which are denominated in that fiat. The price suggested for an exchange is a confirmation of the trust the producer has in the currency. When you accept payment for your work, you do the same. If you think thoroughly about this, you will inevitably come to a conclusion that such a system doesn't differ very much from a money system where currency is backed up by some hard asset like gold...
Like many on this forum you seem not to understand how FRB actually works. If you think otherwise, please explain how a bank can have more liabilities than assets?
So all that's needed is for people to accept payment in bitcoin and it magically becomes "real"? Cool. In short, yes. But why do you think that most people would agree to receive payments in bitcoins in the first place? The real magic would be if you could persuade them to... |
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LOL, you ain't going to go all showmanship before you start a war with your equal, it's not like U.S striking Iraq, or even China's invasion of Vietnam, China knows what it's facing and if she really wants to attack Japan, she will do so quietly, do you really talk or brag about how will you punch someone before you really punch him? No way.
That is so true. IMHO, I think China will win if they were to actually have a war. Then the US will butt in.. Why?  Why do you and the others think China will win? Because they bought a aircraft carrier piece of junk that never sailed from the late '80? and remodeled into .. something? I don't think that China will win. If anything, she will be nuked into the Stone Age. But if we look deeper into the history, the conventional wars (China aside) are ultimately won by those countries which just happen to have more resources... |
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To be short and simple, economic "value" is the price of goods and services. BTC is not backed by any good or service. Exemplifying, as some can say miners are providing services, BTC would be backed by a service if 1 BTC could be redeemed by 1 doctor visit. On the other hand, the service by miners is not value, it is operational cost.
Please understand I'm not against virtual currencies, I think they can be very useful in the future.
Fiat is not backed by anything at all. Not only that, banks lend out more than ten times the amount they nominally have. I'm close to just writing you off as a troll at this point. Actually, it is backed by all the goods and services which are denominated in that fiat. The price suggested for an exchange is a confirmation of the trust the producer has in the currency. When you accept payment for your work, you do the same. If you think thoroughly about this, you will inevitably come to a conclusion that such a system doesn't differ very much from a money system where currency is backed up by some hard asset like gold... Like many on this forum you seem not to understand how FRB actually works. If you think otherwise, please explain how a bank can have more liabilities than assets? |
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Добрый вечер! Меня смущает положение по конфиденциальности сервиса. Правильно ли я понимаю, что любая транзакция происходит в открытую? То есть все переводы и движения биткойнов окрыты? Видны куда потрачены средства с определенного кошелька?
Конечно видны, иначе невозможно было бы организовать распределённую сеть. Причём вся база транзакций уместится на одной более-менее приличной флешке. Вся жизнь биткоина - от рассвета и до заката будет в ваших руках... Что ещё нужно для грамотного следователя или налогового инспектора? |
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If you saved your paper dollars under the mattress, this wouldn't be much different from saving some files on the storage media in your computer. Whether material or immaterial, the form in which value is saved or stored plays no role. What really does is the subjective value people attribute to the things and which you cannot redeem in order to store safely in your home. If security as well as safety are among them, then anything that provides security and safety will have that subjective value (which you just can't squirrel in the backyard because it is purely a mental construct in people's heads)...
So you're actually confusing issues here (I hope unintentionally)
Well, I understand the form in which value is stored is not important: besides paper dollars and metal coins under my mattress, I use credit cards and checks, and I understand my bank keeps dollars in files in their computers. But that's all dollars, legal tender. So maybe I'm just a confused old guy, perhaps my 50 yo old brain can't catch up with you guys  The notion of legal tender is useful only when you pay your debts to banks or taxes to the state (which are debts too). In many jurisdictions, you can be lawfully refused to do business with and may not insist on striking a deal. This would render legal tender (lol) effective only as an offered payment for debts... |
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even the guy holding 10% of all the coins? you cant be serious. there are 5 people holding at least 20-30% of all coins. they could do it any time.
You can't destroy bitcoin with the price , end , point , end. Even if they control 10% each time they pull a stunt like that they lose a few of their coins , things can't go like that forever. You implicitly assume here that they can only sell their stash. Why would they? It would be logical for them as the earliest adoptors to protect their advantage and competitive edge and at the same time make use of an opportunity to raise some money whenever possible... |
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Ok, in that case (BTC is "backed by the strength and security of the network as well as the safety"), where is the download link where I can redeem my BTCs for that in order to store some safety in my own home, or use it in my laptop once in a while? See? It's not backed by anything of value. You cannot trade subjective stuff as strenght, security or safety. My 2 bit cents If you saved your paper dollars under the mattress, this wouldn't be much different from saving some files on the storage media in your computer. Whether material or immaterial, the form in which value is saved or stored plays no role. What really does is the subjective value people attribute to the things and which you cannot redeem in order to store safely in your home. If security as well as safety are among them, then anything that provides security and safety will have that subjective value (which you just can't squirrel in the backyard because it is purely a mental construct in people's heads)... So you're actually confusing issues here (I hope unintentionally) |
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The facts are that the government is the police's customers, not us. The government are the ones that pay the bills and give the orders. That means it's in the best interests of the police to serve the government. And this is exactly what you see. The police are far more concerned with protecting government officials than protecting citizens. They are more concerned with handing out fines than solving crimes.
Such logic is primitive (don't take it personal or as an offense) Even if government is police only customer, this doesn't change anything really. Government is interested in defending its citizens, otherwise they won't be able to collect taxes just because citizens will not have the money to pay them with. Police is just a tool among many others that government has at its disposal. We can debate endlessly whether they are good at their work or not, but this doesn't change the lay of the land... |
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One day you enter too early and without cutting your losses just in time, you are doomed to lose a great deal of money. It is just a matter of time...
Clarify? I am long term bullish on BTC but I think the above trading strategy capitalizes on the volatility and allows acquisition of more BTC without using more fiat (which I am running short on). If we are talking about day-trading (the strategy that capitalizes on the volatility) as we do here, then stop-loss orders are a must-have. They are designed to limit an investor's loss on a position when the price change is unfavorable beyond allowed limits. The OP says nothing about them in his post. Simple example, in 2008 the oil price got somewhere above 140 dollars, then within a year (maybe even less than that) it fell to somewhat above 30 dollars and never bounced back to previous highs (despite all the monetary expansion and QEs). So, if you would have bought oil at, say, 130 dollars per barrel (as the OP suggests in regard to Bitcoin) you would still be losing out... I hope I have clarified my stance (it is not mine actually, it is the ABCs of trading) |
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You said "If the economy is expanding at a faster pace then the money supply, the currency could actually appreciate meaning that prices and axchange rates go down..." Yes this is true but the exchange value of money is lower than it could have been if monetary expansion never happened, you see what i'm getting at?
It is easy to show that the monetary expansion has very little to do with price volatility if at all. If Bitcoin supply is fixed as it is, why then do we see that Bitcoin is volatile as hell in the first place? |
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Sure oil prices have fell recently, but look at the 50 years graphs and tell me which currency is more volatile, I'm not sure about the dynamics of oil pricing so I cannot comment on recent changes but over the past 50 years oil priced in gold has remained steady wheareas priced in dollars it has increased substantially since 1998 (when the money printing really got going). How can oil prices fall 30 dollars despite rapid expansion in money supply?
You seem to not understand what volatility actually means or just intentionally try to confuse matters. It is a measure of price variation of a currency over time (or any other good for that matter), not its overall appreciation or depreciation. Volatility doesn't measure the direction of price changes nor the absolute increase/decrease in prices, it shows the dispersion of prices around some mean value (e.g. standard deviation in relative terms) for a given time period... The volatility of prices measured over 50 years just doesn't make sense (you would be tracking long term trends instead of volatility) |
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Their numbers are minuscule at best. And the "merchants" you're talking about come primarily from gambling industry and bitcoin mining equipment production. I'm not taking into account somebody selling a Tesla car here or buying a house there for bitcoins. These cases are sporadic and far in between...
Why are you putting merchants in brackets? There's more than you think and more are popping up every day. There's quite a few big developments happening here in the UK already. I reckon the rate of businesses accepting bitcoins next year will be increasing quite dramatically. It's early days for Bitcoin/crypotcurrencies, but it's obviously making waves. I've heard that more than half of bitcoin transactions come from some gambling site, don't quite remember its name (maybe SatoshiDice?). It is not the number of transactions that actually counts but rather volume transacted, but still it is no more than idle talk really unless we have accurate figures at our disposal... |
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And so what? This (and what you wrote after the emboldened text) doesn't change a thing about the fact - it's Bitcoin's volatility, not of the fiat currency you exchange it for. I have already written in my post that volatility (and stability for that matter) of a currency is predetermined by the size of the economy, i.e. the overall volume of goods and services that you can buy or have rendered to you. The money supply being constantly expanding doesn't affect the volatility of the currency (just in case that was your point)...
Of course expansion of the money supply affects the volatility of a currency, look at the exchange value of USD for oil or food it's constantly changing (or getting worse), money is just a means of exchange so increasing the amount in circulation reduces the exchange value for other goods and currencies. If you look at the price of oil in gold you can see it's barely changed, what can we infer from this? Expansion of the money supply increases the volatility of a currency. At first you say that money supply is constantly expanding, then you tell me to look at the exchange value of USD for oil... Did you look at the dynamics of oil prices yourself before writing this nonsense? It cost somewhere above 140 dollars in 2008 (or was it in 2007?), now it is at 110 dollars for barrel and fell to 30 dollars somewhere in between. How can this ever be possible? To say that just increasing the amount of money in circulation reduces the exchange value for other goods and currencies is meaningless unless you account for other factors, which could make your assumption flat-out wrong in most cases. If the economy is expanding at a faster pace then the money supply, the currency could actually appreciate meaning that prices and axchange rates go down... |
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