Why Bitcoin is ultimately doomed to fail (not today or tomorrow)

[deisik]

Really? Misusing the term?

I can understand how there might be other uses for the term, but Euros are clearly legal tender.

Euros are legal tender only in the territory of the European Union. It means that with euros you can pay only EU taxes (not US ones). In short, if a foreign currency were a legal tender, it would no longer be foreign...

I don't know what any of this has to do with anything, but okay.

This has everything to do with Bitcoin which is not legal tender neither in the USA, nor in any other country that I know about. If you can't pay local taxes with some currency, it means that this currency is not legal tender in this jurisdiction. Wikipedia gives a pretty good explanation what legal tender is, for a start...

[AnonyMint]

Precisely the point has been in this thread that we don't exchange legal tender for foreign currencies before we spend it, and when we do (e.g. paying for something with our credit card priced in a foreign currency) we spend the foreign currencies immediately so there is no capital gain on legal tender.

Secondly, while you might do certain things, other people do other things. There certainly are people who exchange their functional currency for a foreign currency well in advance of spending it.

Not if they have to pay significant capital gains taxes with Bitcoin.

They can with dollars because when you convert dollars to Euros, there is no capital gains tax due on the gain in the value of the dollar relative to the Euro.

I hope we don't need to continue this nonsense further.

The point is we don't exchange the currency of our country for other currencies, we exchange it for goods & services. That is why it is a currency. When we exchange our legal tender for those goods & service, the legal tender never has a capital gain. This is not the case for Bitcoin.

So US dollars have the benefit over bitcoin in that they never ever go up in value?

Umm, okay.

We don't pay capital gains taxes on the rise of value of our own legal tender when we spend it or convert to another currency.

PERIOD.

[deisik]

This has everything to do with Bitcoin which is not legal tender neither in the USA, nor in any other country that I know about. If you can't pay local taxes with some currency, it means that this currency is not legal tender in this jurisdiction. Wikipedia gives a pretty good explanation what legal tender is, for a start...

OK. It has everything to do with Bitcoin. What does it have to do with why Bitcoin is ultimately doomed to fail? Or, indeed, with anything in this thread?

I am the author of this thread and I officially declare that any posts pertaining to both Bitcoin in particular and economics in general are welcomed in the thread. Will this be enough for you?

[deisik]

And yeah, Wikipedia. Great stuff. "This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (November 2011)"

November 2011. LOL.

I think this will suffice

United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts

You can also look at the end of that Wikipedia article (in the Notes section) if you want to see some official info on legal tender and related issues for a number of countries (other than the USA)...

[AnonyMint]

This has everything to do with Bitcoin which is not legal tender neither in the USA, nor in any other country that I know about. If you can't pay local taxes with some currency, it means that this currency is not legal tender in this jurisdiction. Wikipedia gives a pretty good explanation what legal tender is, for a start...

OK. It has everything to do with Bitcoin. What does it have to do with why Bitcoin is ultimately doomed to fail? Or, indeed, with anything in this thread?

I am the author of this thread and I officially declare that any posts pertaining to both Bitcoin in particular and economics in general are welcomed in the thread. Will this be enough for you?

So, nothing? You just felt like spouting out some random facts you learned from Wikipedia?

You know in addition to not being legal tender, bitcoins are not coins? Citation: https://en.wikipedia.org/wiki/Coin

Euros, on the other hand, are legal tender. Citation: https://en.wikipedia.org/wiki/Legal_tender

Actually he was making the implied point that your injection of the legal tender property of Euros was irrelevant to the debate you were having with me.

[Lala]

Didn't economics class teach you about supply and demand on day one?

[deisik]

You know in addition to not being legal tender, bitcoins are not coins? Citation: https://en.wikipedia.org/wiki/Coin

Euros, on the other hand, are legal tender. Citation: https://en.wikipedia.org/wiki/Legal_tender

Euros are legal tender only in the territory of the European Union, as I have already written before here. Euros are not legal tender in the USA. Is it that hard to understand and how many times should I write this?

[AnonyMint]

Actually he was making the implied point that your injection of the legal tender property of Euros was irrelevant to the debate you were having with me.

I thought you agreed you were going to end this nonsense.

deisik why are you letting him clutter this self-moderated thread with his 85 IQ? If you delete the post I quoted, please feel free to delete this one too.

[deisik]

I thought you agreed you were going to end this nonsense.

deisik why are you letting him clutter this self-moderated thread with his 85 IQ? If you delete the post I quoted, please feel free to delete this one too.

I don't think this would do any good. First of all, if someone wants to delete his posts, he can do it himself, I don't mind deleting one's own posts. Secondly, it will do more harm since it would be considered as personal offense (more personal and serious that just harsh words or flaming). And thirdly, someone else might have misconceptions about what legal tender is, but these posts clarify the issue a little as I think... Just don't reply to useless posts and he gets it backfired

In my opinion, overquoting contributes much more to cluttering

[deisik]

In which case we just send them to the grand old Wikipedia, which says:

Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation.

So, things like US dollars and Euros are legal tender, and things like bitcoins are not.

Yes, since there are many legal systems and jurisdictions in the world, there are many legal tenders as well. But this in no case implies that a currency considered as legal tender in one jurisdiction will be considered as such in another, meaning that you can't pay US taxes with the EU legal tender, i.e. euros. And you were arguing with AnonyMint just about that...

I'm curious if you didn't actually see this or just were trying to confuse matters?

[deisik]

Yes, since there are many legal systems and jurisdictions in the world, there are many legal tenders as well. But this in no case implies that a currency considered as legal tender in one jurisdiction will be considered as such in another (meaning that you can't pay US taxes with the EU legal tender, i.e. euros)...

I'm curious if you didn't actually see this or just were trying to confuse matters?

I wasn't trying to confuse matters. You protested that I was misusing the term "legal tender".

It seems that you're now willing to accept that I wasn't in fact misusing it at all.

If so, great.

I think you were (misusing the term "legal tender"), since you claimed that on legal tender income taxes are due. So you have to admit that either you were wrong on the premise that there are capital gains on legal tender (which you consider as a type of income taxes) or you were misusing the term "legal tender" in this context...

Your pick?

[deisik]

I think you were (misusing the term "legal tender"), since you claimed that on legal tender income taxes are due.

OK. What about my corrected phrasing? Is this still misusing the term "legal tender"?

"For capital gains on a legal tender, ordinary income taxes are due (unless a certain valid election has been made beforehand)."

Personally, I wouldn't use such phrasing since it is confusing (and this is exactly what you are trying to do right now). In this context "a legal tender" would still implicitly refer to a legal tender under specific jurisdiction where you pay those taxes, say, dollars for taxes paid on income in the USA. The correct phrasing would be along the lines "for capital gains on a foreign currency, ordinary income taxes are due"...

[deisik]

So I guess I misused the term "legal tender".

I should have said "a legal tender".

Can I go back out and play now?

The usage of the indefinite article wouldn't help you much here. It would render the whole message more abstract but wouldn't break the link with specific jurisdiction with which the term is semantically tied. So I think it is not correct to use the term as a substitute for foreign currency ("foreign legal tender" looks like an oxymoron to me) ...

[AnonyMint]

capital gains taxes are due on Bitcoin but not on legal tender

For capital gains on a legal tender, ordinary income taxes are due (unless a certain valid election has been made beforehand). Capital gains tax rates are generally lower than ordinary income tax rates. In fact, for most people the long term capital gains tax rate is 0%.

Obviously this normally doesn't apply to one's functional currency ( http://www.law.cornell.edu/uscode/text/26/985 ). A US hundred-dollar bill is generally always worth a hundred dollars in USD, so you wouldn't have capital gains on it, unless it was for numismatic value or something.

He continues this complete nonsense.

When I spend dollars (or any other legal tender) for goods or services, I don't pay any income tax nor any kind of tax on the change (gain) in the value of dollars since I acquired those dollars. Whereas with Bitcoin, you will have to pay either a capital gains tax and/or a VAT tax on the APPRECIATION (gain) IN VALUE of the Bitcoins since you acquired them.

I don't know why anth0ny continues to think we pay income taxes on the change in value of dollars.

We pay income taxes on income we receive, whether the (passive or active) income or capital gains are paid to us in dollars, barter, or even loans or forgiveness of loans. That is completely unrelated to the point that we don't pay taxes on the change in value of dollars we are holding.

Now let's see if he still doesn't get it and replies with another 16 posts of noise.

The entire point since 48 posts upthread is that Bitcoin will be taxed simply for holding it. Dollars are not taxed for holding them. Thus Bitcoin can not be a currency. The only possible solution for cryptocurrencies is anonymity so we don't pay taxes. Otherwise, the government will control the digital currencies. There is no other possibility. Choose one.

[AnonyMint]

When I spend dollars (or any other legal tender) for goods or services, I don't pay any income tax nor any kind of tax on the change (gain) in the value of dollars since I acquired those dollars.

If those dollars (or other legal tender) are not your functional currency, and the gains are not de minimis, you should.

"not your functional currency"

So why were you arguing the point. The point was Bitcoin can't be a currency, because it not the functional currency (legal tender) any where on earth.

Governments won't willingly give up their power to tax. Nor their power over the creation of money and debt.

We will have to take that power from them with anonymity. Otherwise put Vaseline on our anal hole and bend over for the 71% tax fucking coming.

[AnonyMint]

When I spend dollars (or any other legal tender) for goods or services, I don't pay any income tax nor any kind of tax on the change (gain) in the value of dollars since I acquired those dollars.

If those dollars (or other legal tender) are not your functional currency, and the gains are not de minimis, you should.

"not your functional currency"

So why were you arguing the point. The point was Bitcoin can't be a currency, because it not the functional currency (legal tender) any where on earth.

I was arguing with you because that's not what you said before. You made some incorrect and stupid comment about how Bitcoin is taxed because it's not a currency.

I am still saying that. It can't be a currency if it is taxed as an asset.

[deisik]

I was arguing with you because that's not what you said before. You made some incorrect and stupid comment about how Bitcoin is taxed because it's not a currency.

I am still saying that. It can't be a currency if it is taxed as an asset.

I'm not sure what you mean by "taxed as an asset", but the Euro is a currency, Euros are an asset, and capital gain on the disposition of a Euro is taxed as income.

Because Euro is not legal tender in the US jurisdiction (neither would Bitcoin), and it is not treated as such by the IRS. I thought we got some understanding on this point already. If Bitcoin is treated everywhere as an asset (i.e. not legal tender in any country), it is not a currency...

[AnonyMint]

And still Bitcoin is never legal tender any where, so never a currency any where (unless possibly we have anonymity and don't pay the taxes).

If we repeat it 16 more times, you will still continue your nonsense posts.  

[Impaler]

Just get it over with and kick anth0ny from the thread, the guy is seriously staring to rival johnyj for skull thickness.

[tacotime]

Just get it over with and kick anth0ny from the thread, the guy is seriously staring to rival johnyj for skull thickness.

Wow, two full pages of the thread just disappeared.