7 thoughts on Bitcoin

[Jobe7]

Hi,

I'm a bit of a newbie on bitcoins, bit here's some of my thoughts, feel free to comment to prove they're wrong, to spark some discussion and chat. I'm gonna clump it all in this post I guess.

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1. Counter Balance: The fiat system adopted and now exists within a counter balance system. If you buy yen for gbp, yen value goes up, gbp goes down. Same the whole world around, these currencies exist side by side, they counter balance each other. Yet bitcoin exists above them all. Bitcoins counter balance is the fiat system itself. When bitcoin value goes up that is because the fiat system has invested itself in it.

2. Tipping Point: At some point so much will be invested in bitcoin that it's value will be 51% of the known global economy and it will take over (probably sooner if you think about all the other bonuses in bitcoin).

3. Global Prohibition: The illegal drug market is the 3rd largest industry in the world, if major players in this realise the power of bitcoin before the end of prohibition the bitcoin value will take a MAJOR jump, and the world will notice. Which will happen first?

4. Bitcoin Welfare: When the world economy is primarily bitcoin, would a few miners running at home make enough to substitute the basic costs of living? Would this state be a brilliant new self funding type of welfare system? Your thoughts? (I nickname this the - Bitcoin Welfare System, you heard it hear first!

5. Don't Support Government Wars (DSGW): When employers the world over realise how this systems blows away all current existing employment payment system. Right now, you could pay anyone you employ in bitcoins, they could then use those bitcoins to pay for food, stuff, etc (via loads of bitcoin sites now), just change a little to cover bills. Keep as much as you can in the bitcoin world, then you only need to declare whatever you have changed into fiat cash, maybe so little that you don't have to pay any tax at all. And you could tell/convince your boss to pay you in bitcoin by saying something like "hey, if you want to save money, pay me xx less, but pay me in bitcoin" because you'll be saving xxx from not paying tax for your government to kill people with. You can stop paying tax and have your government throw you jail.

5a. If you're paying tax, you'd need to convince your boss to pay you in bitcoin, the bitcoin doesn't need to be registered anywhere. He can still declare he's paying you, etc, for his fiat tax purposes, he's just paying you less now.

6. Economic Growth: Because the people won't be paying tax for the government to start wars and give to their bank buddies, people will have more money to spend, which will give growth to small and big businesses alike (whichever become part of bitcoin sooner will benefit most, especially from the increase in bitcoin value), which will give rise to more jobs, etc, etc, encouraging other businesses to take on bitcoin as they see their bitcoin neighbors booming with growth.

7. End of Inflation: When only bitcoin exists in the market inflation will end.

[tango@bitango]

good thoughts, thanks

[montana]

Here are some more:

How high can BTC without dragging LTC with it?  LTC has already risen substantially in the last month, and this almost certainly is due to BTC's rise.  If BTC goes to 100 USD, LTC will probably be worth a half a buck or so.  Will the same thing happen with other coins..?  Probably not. 

Now, those two will succeed because of their brand, I guess you could say.  HOW long can it be before someone puts together a "Jesus Coin" for Christians.  They will jump on it presuming that it means that when they do business at all, it will likely be with other Christians.  Or "Freedom Coin" for libertarians.  Or "Commie Coin" for China.  You get the idea.  That would inevitably lead to...

"MetaCoin" suites... where you could trade in coins that were like mutual fund packages of select coins that the user prefers.

...and that SHOULD lead to a global mesh of economies that, after a while, would probably be incredibly stable.

[bitlybit]

Bitcoin rules!

[Jobe7]

urm.

1. A limit of coins is exactly one of the main reasons that the world SHOULD use bitcoin, and why it will help immensely. A limitless supply is just.. another fiat system, who would control the flow?

2. It's supposed to decrease. If it increased we would've had all the coins out a while back, which would have meant the system wouldn't work at all. Just a few people walking around with millions of nearly worthless bitcoins. And there would be no appeal to mine, as transactions would be none existent and there would be no more coins to mine.

As it is - You NEED a limited supply in a true system. Steady mining of which the equilibrium balances vs the value of bitcoin, until the year 2033 will ensure miners until the time when bitcoin has become the sole currency. Which by that point increased transactions (and costs) will be at the level where it will offset the end of 'mining for coins', and mining will turn into a purely 'ledger book' business.

So... ye.. bitcoin does the opposite of fail because of those 2 reasons.

[mwag]

Some thoughts on tax.

I don't know where you are from, but in most cases simply using a different form of payment, even barter, does not remove your tax burden.

If you are working for bitcoins or trading with bitcoins, you are still obligated (according to most governments) to pay taxes. If you do not, and you are caught, you will face whatever punishment your government prescribes for tax evasion.

I'm telling you this, not because I agree with the various governments or involuntary taxation, but for your own safety.

[downying]

when bitcoin is heard by 80% of earth population. Only 1% of that have already jumped in, the majority who miss the bus being early adaopter start getting upset, they want bitcoin death by agreeing to fork a new coin so that everyone has a fair chance. Bitcoin dies, miserably. How's that.

[mwag]

Bitcoin 1 fails for these reasons:
1. Limit of coins
2. BTC creation speed reduces over time instead of increasing at a stable 2% rate

You just gave the same reason twice.

I wonder how many people use Bitcoin because they are sick of perpetually inflating fiat?

My guess: Most.

[mwag]

when bitcoin is heard by 80% of earth population. Only 1% of that have already jumped in, the majority who miss the bus being early adaopter start getting upset, they want bitcoin death by agreeing to fork a new coin so that everyone has a fair chance. Bitcoin dies, miserably. How's that.

Fair? There is no such thing. How's that?

[iwilcox]

If you buy yen for gbp, yen value goes up, gbp goes down.

If you tip a glass of water into the ocean, the level in the ocean goes up, the level in your glass goes down.  Bitcoin is no different to, say, gold in the respect of being outside the fiat currencies.

The illegal drug market is the 3rd largest industry in the world, if major players in this realise...

I'd imagine that if "the major players" know anything at all about Bitcoin right now, it's that it has properties that make it useful for black market dealings.  That's pretty much the first thing people seem to hear, unfortunately.

Keep as much as you can in the bitcoin world, then you only need to declare whatever you have changed into fiat cash, maybe so little that you don't have to pay any tax at all.

That throws out the baby with the bathwater, doesn't it?  Admittedly a large proportion of your tax goes on defence and military spending, but you're also paying to have your rubbish collected, have your community centres maintained, have the courts run...

[mwag]

Keep as much as you can in the bitcoin world, then you only need to declare whatever you have changed into fiat cash, maybe so little that you don't have to pay any tax at all.

That throws out the baby with the bathwater, doesn't it?  Admittedly a large proportion of your tax goes on defence and military spending, but you're also paying to have your rubbish collected, have your community centres maintained, have the courts run...

No, the baby is dead and rotten. It doesn't cost 16 trillion dollars (although I assume you are British, so it's some other figure) to take out the trash, clean up the parks, and pay judges. As if those things couldn't be done more efficiently by the private sector anyway.

[Jobe7]

"when bitcoin is heard by 80% of earth population. Only 1% of that have already jumped in, the majority who miss the bus being early adaopter start getting upset, they want bitcoin death by agreeing to fork a new coin so that everyone has a fair chance. Bitcoin dies, miserably. How's that."

This is a good comment.

People are flocking to bitcoin because of the inherent bonuses in using a decentrilised system such as bitcoin. The same way that people moved to the fiat system away from gold/silver, because of its use in comparison (transportability = profit/less costs). Atm (as far as I know), there is nothing (similar) that compares to bitcoins infrastructure and market (and trust, which is hellova important).

IF as you say (which is possibility), late comers get peeved at the success of bitcoin, they then invent a better version, then excellent, if there's a better version I'm sure people would then understand the need for change and improvement better and will move onto it. And the geniuses that invented this improved money system would benefit.

As long as it's great for the world, then we should all support something new, as Satoshi would from what I understand.

Bitcoin would not have died miserably, it would have given birth to something even better and would graciously move into it.

The fiat system dies because it is corrupt, inflatable beyond reason. Gold was as the horse, fiat was as the automobile, bitcoin is like the plane.

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Concerning tax -

how will you state it? as bitcoins? you're changing enough to cover bills, and keeping the rest in bitcoins. Taxman phones you and asks where your money is, DON'T lie, be honest, you say "urm, I have spent all my (converted) cash, you can see my bank accounts, but I have bitcoins." They'll be like "eh, what?", they'll report it back, but there's nothing they can do unless they bring bitcoin into their system of tax (which would be amazingly awesome for bitcoin taking over the fiat, it would kind of be a tipping point, in the far future probably).

At this point they can request your employer provide an initial bitcoin deposit address, then tax that amount (probably on the point of receiving). After that initial wallet it'll be lost to them as you spread it around a little and spend it.

So, bitcoin itself is taxable (introduce a 'forced' tax address that employers have to pay you through) IF they introduce it into their systems, at this point it pretty much at tipping point for taking over. Which still massively in the benefits for all if such a system became dominant.

And the major point is that those NOT paying tax until that time would have more spending power, atm, your taxes/spending power is going to wars and mass imprisonment. If you choose NOT to pay tax (as many would today) knowing that you'll be starving your corrupt government of its 'bankers bonuses' and war money, and at the same time putting your own money into new and old business, that YOU want to put your money into.

There's plenty of huge corporations in bed with governments that DONT pay tax atm, I'm sure you've heard of a few. Yet the people are trapped in the tax system. Bitcoin frees us, but it does allow us to CHOOSE where we put our tax free money, which in turn is an investment back into the economy.

But as you say, taxes cover public services - governments will (should) be forced into more national spending, instead of wars and corruption/bankers, if they don't, with the lack of money, it's much more likely they'll be voted out of office, and people who give a damn about their people, the people, will get voted in.

And - if governments continue to use their tax money for bankers and wars (as is more likely tbh, because thats what they have been doing), public sector jobs will decline, the economy will continue to crumble, taxes will be continued to be misused and this whole continued mess will push more people to bitcoin (as it did me).

Also, many public services have gone private, or are going private and more will appear. You don't need to pay tax to cover your costs. If governments don't catch up, then there's a possibility that they will disappear in the future... If their funding is cut off, and all the privatised companies in a persons area takes/taxes bitcoin. Then your area has excellent self funding, yet your government has suddenly been starved from your area.

End of the Government era?

Rise of the Libertarian States?

[Jobe7]

Thinking on it a little more ..

It would truly give power to the people, if the government was doing something you supported, then donate/tax, if not, then don't support it. Not the enforced tax or go to prison that we have now..

[bitlybit]

Bitcoin is the best!

[mwag]

Concerning tax -

how will you state it? as bitcoins? you're changing enough to cover bills, and keeping the rest in bitcoins. Taxman phones you and asks where your money is, DON'T lie, be honest, you say "urm, I have spent all my (converted) cash, you can see my bank accounts, but I have bitcoins." They'll be like "eh, what?", they'll report it back, but there's nothing they can do unless they bring bitcoin into their system of tax (which would be amazingly awesome for bitcoin taking over the fiat, it would kind of be a tipping point, in the far future probably).

You don't understand. Let me explain.

You work all year long. Your employer pays you only in gold coins (nuggets, bars, dust, whatever). You never convert that gold to fiat in order to purchase a single thing.

You still owe taxes on your earnings, and you owe it in legal tender (fiat flavor of the land). If you don't file and pay, you are evading taxes and subject to punishment.

Replace gold with bitcoin and the story remains the same.

Don't think for a second that the tax man is stupid enough to let a loophole like "being paid in something other than fiat" exist. They want your share, and they will get it.

Again, I'm telling you this not because I agree with it, but for your own well being. Evading taxes is going up against the guys who have a monopoly on aggression, be safe.

[mwag]

Bitcoin is just the first p2p cryptocurrency

Don't expect it to be flawlessly designed the first time, that seems highly unlikely

It doesn't need to be flawless today. Bitcoin can evolve when required.

It's actually far easier to hard fork than to get everyone to switch to a different coin entirely. With a hard fork, everyone's coins still exist on the forked chain. With a new chain, they have to liquidate their bitcoins and obtain newcoins.

[nobbynobbynoob]

Bitcoin is just the first p2p cryptocurrency

Don't expect it to be flawlessly designed the first time, that seems highly unlikely

But now, Bitcoin already has the network effect in its favour, and the principle of path dependency (network effect) means that it will probably take a far superior (not merely slightly superior) competitor to dislodge Bitcoin. Either way, all users will ultimately benefit.

[Jobe7]

"Don't think for a second that the tax man is stupid enough to let a loophole like "being paid in something other than fiat" exist. They want your share, and they will get it."

If you got paid a job in coconuts, I highly doubt a taxman will come and demand a % in tax of your coconuts.

The loop hole exists until a state adopts the currency. E.g. Starts to tax in bitcoins (which is possible, law derived to force employers to pay a % of their employees bitcoin wages as tax, before it goes to their wallet).

But again, like I said, this IS a desired outcome. Adoption of a new currency for the purpose of tax is a definite milestone.

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"You still owe taxes on your earnings, and you owe it in legal tender (fiat flavor of the land). If you don't file and pay, you are evading taxes and subject to punishment."

Exactly .. listen to what you're saying yourself .. you owe taxes on earnings .. IF your earnings is in bitcoin (i.e. you get paid in bitcoin at the 1st point), then you can't/don't declare any earnings. I dare you to (and I hope people do) phone up the tax office and say "Hi, I need to declare my earnings for the year, xxxx bitcoins."

What the system regards you as otherwise is a volunteer, working for nothing. Until a state recognizes bitcoins and decides to tax it.

And ye, this would ONLY work if your employer agreed to pay you in bitcoin.

People are already getting paid in bitcoins, and more will as the bitcoin businesses flourish, the early ones won't get taxed, spending as much bitcoin as they can AS bitcoin. Eventually a state will catch on, and will realise they have to include a new clause, "if you're paid in bitcoin you will get taxed bitcoin".

You can not enforce a law of "it is illegal to pay people in bitcoin" .. because how could you? you'd have to make it illegal to volunteer for anything, or do anything for anyone else, you'd never know if they were getting paid in bitcoin. The only way for a state would be, as you said, to tax it.

[mwag]

If you got paid a job in coconuts, I highly doubt a taxman will come and demand a % in tax of your coconuts.

The loop hole exists until a state adopts the currency. E.g. Starts to tax in bitcoins (which is possible, law derived to force employers to pay a % of their employees bitcoin wages as tax, before it goes to their wallet).

But again, like I said, this IS a desired outcome. Adoption of a new currency for the purpose of tax is a definite milestone.

---

Exactly .. listen to what you're saying yourself .. you owe taxes on earnings .. IF your earnings is in bitcoin (i.e. you get paid in bitcoin at the 1st point), then you can't/don't declare any earnings. I dare you to (and I hope people do) phone up the tax office and say "Hi, I need to declare my earnings for the year, xxxx bitcoins."

What the system regards you as otherwise is a volunteer, working for nothing. Until a state recognizes bitcoins and decides to tax it.

And ye, this would ONLY work if your employer agreed to pay you in bitcoin.

People are already getting paid in bitcoins, and more will as the bitcoin businesses flourish, the early ones won't get taxed, spending as much bitcoin as they can AS bitcoin. Eventually a state will catch on, and will realise they have to include a new clause, "if you're paid in bitcoin you will get taxed bitcoin".

You can not enforce a law of "it is illegal to pay people in bitcoin" .. because how could you? you'd have to make it illegal to volunteer for anything, or do anything for anyone else, you'd never know if they were getting paid in bitcoin. The only way for a state would be, as you said, to tax it.

Last try.

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Tax-Responsibilities-of-Bartering-Participants

[koinnabber]

I read "most" of the posts above, and here is my take on crypto-currency (any type)

People give them value, people keep the power.

---- Thoughts on using Crypto-Currency as a replacement to current currency

• Until you purchase something point-to-point with bitcoin (100% transaction) you can be tracked down, even still then you can be tracked down to some extent.
• Eventually you will purchase something for x.xx bitcoins / litecoins ... not the $$ value of the coins (this defeats the whole crypto-currency theme).
• If you base the value of the crypto-currency on the paper money value, you are doing it WRONG...

The value of the currency needs to come from the currency itself, once you can trade the currency for the good directly without converting its physical value, it has not done its job.[/li]
[/list]

---- Thoughts on using Crypto-Currency in conjunction with paper currency

• Paper currency fluctuates in value as does crypto-currency, this un-stable system can make people money and it can also lose people's money (both crypto and paper) solely on speculation or emotions/fear. This makes the money "soft" and weak in times of turmoil and despair.
• Crypto-currency can be controlled similar to that of bittorrent traffic. Governments can analyze the traffic that your sending on the internet and tell what IP addresses are using crypto-currency, or are a node at least. Using new acts that the government (US) has enacted due to "Terrorism" (I have my feelings about terrorism, I will not discuss it here [not a terrorist, fyi]) the government could get search warrants and search your home. Place you on a list that you don't want to be on. Potentially be held for conspiring to commit Terrorism... SAD!
• There are some positives to having multiple currencies, both paper and Crypto, The main being that if you maintain your lifestyle bby using paper currency and only use crypto for your extra purchases like vacations, etc. you can create a slightly better life for yourself. You deserve it!!!! Most people that don't agree with what it is we are trying to do either rely on the government to give them money or rely on people that rely on the government to work in their companies for a low wage to only line their pockets more.

anyhow, there is more positives and negatives... just something to give a different angle on someone's views.

Peace!