You have already given an example of bad money (Zimbabwean dollars) vs good money (US dollars). We know in advance that Zimbabwean dollars depreciate faster than US dollars, so people would prefer paying with bad money and stashing good money, provided all other things being equal. There is no contradiction with Gresham's law actually. It is the same law but stretched in time to make up for floating rates...
A related point is that we don't know whether US dollars are going to go up or down in value relative to BTC. If we did, then the $/BTC ratio would adjust accordingly. Because the $/BTC exchange rate floats, any known future changes in value are already factored in. It is enough for an individual to make assumption, i.e. discriminating judgment about what money is bad and what money is not so bad over his planning horizon. This is the crucial point of the extension of Gresham's Law for floating exchange rates that I put forward... |
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But the point is that all things aren't equal when we have floating exchange rates.
If you read carefully, you would have noticed that I didn't say about all things being equal. In fact, I said all other things being equal, i.e. anything beyond currency appreciation/depreciation that would make up a floating exchange rate. This was intended to exclude possible considerations not pertaining to the actual question. If I hadn't written this, you wouldn't even pay attention... |
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I'm not sure what "Zimbabwean dollars depreciate faster than US dollars" means, really.
I hope somebody would explain you what currency appreciation/depreciation means, or you can always ask Google yourself. Presently, I'd rather stick to explaining your other points which seem to me of greater importance... |
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"But this doesn't mean that we can't extend it a bit by substituting that requirement with an individual's discriminating judgment about the moneys, leaving bad money and good money where they are." Is that what you mean? If so, it's not clear to me what that means, let alone why it would be true.
You also say that we can call this Deisik's Law. Let's do that, so as not to make it sound like something that Gresham would have supported. It seems to be the opposite of Gresham's law.
You have already given an example of bad money (Zimbabwean dollars) vs good money (US dollars). We know in advance that Zimbabwean dollars are bad and they depreciate faster than US dollars, so people that have bad money (e.g. they are paid for their work with it) would prefer spending it and stashing away good money, provided all other things being equal. There is no contradiction with Gresham's law actually. It is the same law but stretched in time to make up for floating rates... |
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Under Gresham's Law, if my choice is to pay with a silver quarter worth $3.50, or a 2013 quarter worth $0.04, or 10 2013 nickels worth $0.60, I'm going to pay with the 2013 quarter. The fixed exchange rate is the reason that good money drives out bad.
I didn't quite understand your example, but you can consider the actual floating exchange rates as fixed at any given moment. My extension of Gresham's Law implies that bad money depreciates faster than good money (by definition). Thus the floating exchange rate is effectively taken out of the equation... |
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If 1 mBTC is worth $10.00, and I can buy something for $15 or for 1 mBTC, then I'm going to pay with the 1 mBTC. If I can pay $5 or 1 mBTC, I'll pay with $5. If the choice is $10 or 1 mBTC, then I'll be indifferent between the two.
How come? If 1 mBTC is worth $10.00 it means that you can buy something for $10 or for 1 mBTC. Otherwise, it is not worth $10.00... |
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So what's the problem? Holding depreciating dollars would mean losing purchasing power which you could preserve if you held bitcoins instead. In your case that would be time between Friday and Monday. The extension still standing firm...
There is no problem, and I'm not sure what extension you're talking about. What is your "extended" version of Gresham's Law? And more importantly, what is your evidence of its truth? My explanation was written in reply to your request about explaining what was my take on Gresham's Law. It seems that you missed it. It is not my evidence, but it is also it this thread. The evidence is in the post with which the current discussion about Gresham's Law started... |
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If you are paid in dollars, you would then try to get rid of them as soon as possible, either through exchange for things or for bitcoins. So with that knowledge in your head you are first of all spending all your dollars...
But if I get paid every two weeks on Friday but I spend money every day. On Friday I'm going to convert all my dollars for bitcoins. The next Monday I'm going to spend my bitcoins directly, if I'm able to. Or maybe I can convince my employer to pay me in bitcoins directly. Then I can avoid ever touching those icky dollars. So what's the problem? Holding bad money (depreciating dollars) would likely mean losing purchasing power, which you could preserve if you held good money (bitcoins) instead. In your case that would be the time period between this Friday and the next Monday. The extension still standing firm... |
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If bad money drove out good money even when exchange rates floated, then we'd all be hoarding US dollars and paying everything in Zimbabwean dollars or something.
I see no reason why it would be otherwise (according to my extension of Gresham's Law) but for the factors which don't allow us both to easily get Zimbabwean dollars and to spend them as easily (also taking into account possible depreciation of the currency in between). So, I think this new Gresham's Law will persist... |
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Its inflating until the last coin is minted.
Actually, it's deflating once the number of lost coins exceeds the number of mined coins. Once the rewards get small enough, this can happen. How could you really assess the number of coins lost? Is there any way to even approximately estimate the rate of "normal wastage" of bitcoins? And could lost coins be retrieved somehow (say, in twenty years)? |
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Failing to report your income from your bitcoin business is no different from failing to report your income from a cash business. You might be able to get away with it if you never spend the money. But what's the point of that?
Would it be correct to treat the increase in bitcoins as income? What is considered as income by IRS? I think income can be calculated only when you actually sell something which is not money, right? Otherwise, it doesn't make much sense because prices change constantly, and then, in case of Bitcoin, what price should be taken for a tax assessment? |
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Yeah, I remember Al Capone, then the public enemy number one, was indicted for income tax evasion and sentenced to 11 years of imprisonment. He didn't get away with it!
Yeah, I mean most criminal enterprises nowadays are running businesses where they're overreporting their income. Make millions in drug money, then launder the drug money through your network of bars and strip clubs which report the millions as income. This way when the IRS comes knocking and asks how you can afford that mansion and porche, you say you made it with your strip club business and show where you reported it on your taxes. The lesson seems to be learned the hard way but nevertheless pretty well... What else can we say? |
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That's what Gresham's Law is about. You run away from a bad money (dollars) into a good money (bitcoins).
I'd like to hear what exactly you think Gresham's Law says. It only applies when bad money and good money are required by law to be treated as equal. It doesn't apply to dollars vs. bitcoins, because the exchange rate between dollars and bitcoins floats. Strictly speaking, you're right. Yes, it does actually say that the law requires bad money and good money should be treated as equal. But this doesn't mean that we can't extend it a bit by substituting that requirement with an individual's discriminating judgment about the moneys, leaving bad money and good money where they are. So let's call it Gresham's Law Extended to keep things simple and clear... Or you can call it in my honor, I wouldn't mind! |
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I'm not very familiar with the US tax system, lol... It is pretty clear with buying and selling bitcoins, but what about bitcoins that you mined yourself and then sold them through an exchange? Should you calculate the profit or can get away with taxes by claiming a net loss? Will they ever come after you?
Oversimplifying things (there are 3.4 million words in the tax code alone): You report your revenues and you report your expenses. You pay taxes on the net. If you claim a net loss year after year, there's a good chance you'll get audited. If you get audited, then you have to prove that you reported everything accurately. If you fudge the numbers by a little bit, and report $2,400,000 instead of $2,500,000, then maybe you'll get away with it. Maybe not. Yeah, I remember Al Capone, then the public enemy number one, was indicted for income tax evasion and sentenced to 11 years of imprisonment. He didn't get away with it! |
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Obviously you don't know much about how IRS audits work. If you mine bitcoins and sell bitcoins for dollars and then use those dollars to pay your rent, the IRS doesn't have to know that you mined bitcoins and/or sold bitcoins for dollars. They audit you, ask you how you've been paying the rent without earning any income, and then they ask you to prove it.
If you're making $30,000 a year mining bitcoin, or if you're living like someone who makes $30,000 a year, then maybe you'll get away with it. If you're making $30,000,000 a year mining bitcoin, and living the lifestyle of someone who makes $30,000,000 a year, but you're not reporting any income on your taxes, you will get caught.
What would happen if you tried to tell them the truth, that you mined the coins yourself and then sold them paying taxes only for the real profit you made? Would they take you to court if they don't believe you? Any real life evidence or things have yet to happen somewhere in the future (given the number of new millionaires)? |
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If you had a time machine which would allow you to travel to the future (say, two-three years ahead of now) and saw the Bitcoins were universally accepted and dollar banned (Bitcoin addicts' pipe dream), would you spend your coins instead of dollars in the present?
Yes. Definitely. As soon as I got paid I'd immediately convert all my dollars into bitcoins. And when I had to buy something, I'd try to pay in bitcoins, rather than converting my bitcoins into dollars and then paying in dollars. The less time I have to hold dollars, the better. If I convert my bitcoins into dollars and then my dollars into food, I have to worry about the value of the dollar going down for the period of time I hold dollars. If I convert my bitcoins directly into food, then I eliminate this risk. That's what Gresham's Law is about. You run away from a bad money (dollars) into a good money (bitcoins). If you are paid in dollars, you would then try to get rid of them as soon as possible, either through exchange for things or for bitcoins. So with that knowledge in your head you are first of all spending all your dollars... |
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I don't get either what can be difficult to understand here. If you get an income, you should pay an income tax. If you sale something, you pay taxes from the profits you make. As far as I know, currently no government collects taxes from an income or profit obtained in bitcoins (but can be wrong here).
You are wrong. Gross income is all income from any source derived. 26 USC 61. If you have income obtained in bitcoins, it is taxable just the same as income obtained in any manner whatsoever. Unless there is an exception, income is taxable. There is no exception for income obtained in bitcoins I'm not very familiar with the US tax system, lol... It is pretty clear with buying and selling bitcoins, but what about bitcoins that you mined yourself and then sold them through an exchange? Should you calculate the profit or can get away with taxes by claiming a net loss? Will they ever come after you? |
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Опять проблемы с резервами? BL615259 сутки жду, раньше в 12 часов укладывались. Хотелось бы получить деньги до обеда завтрашнего дня  .... Прикрутите онлайн консультанта к сайту, чтоб таки вопросы можно было на месте выяснять. Скорее всего информация разошлась в народе и перестали справляться с платежами. И я вот тоже уже вторые сутки банковский перевод жду, а денег всё нет и нет, хотя закинул-то практически по минимуму. Ещё сутки платёж повисит и буду требовать скидку. Похоже, перехвалил я этот обменник на свою шею... |
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Those who will not conform in a given society would likely move, as they would find it impossible to interact with those around them. Those who aggress, on the other hand, would likely find themselves on the wrong end of a gun sooner or later. NOT just for "chewing gum" to use the previous example, but rather such things as robbery, rape, attempted murder, etcetera. Actual crimes.
So you are actually in favor of concentration camps and barbed wire. Why in the first place would those who disagree move anywhere if they are in their own right? Moving on "their own accord" when the majority makes the life of the minority unbearable is not much different from forced evictions. That is what is actually meant by "finding it impossible to interact with those around them". The law and the state behind it seem to be by far fairer here. At least they don't tell between whether you like it or not... |
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Once the IRS starts attacking, no one will accept or sell coins without knowing the identity of the counter-party.
The government is sitting back letting the wildwest go on so as to let electronic money become popular. Then they will crack their whip and it will done. There will be no difference between Bitcoin and 666. Everything is on the public ledger. Much worse than cash.
Despite what you say, they weren't able to do anything to Edward Snowden, so I think it is not too late yet. Though I agree that anonymity of Bitcoin is a myth. Was trying to explain this to one of the converts here, but to no avail... |
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