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

[pand70]

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.  

If people keep using it as a currency then it will become a legal tender everywhere. If noone uses bitcoins to buy staff then no authority will declare bitcoins as real money...

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[deisik]

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. 

If people keep using it as a currency then it will become a legal tender everywhere. If noone uses bitcoins to buy staff then no authority will declare bitcoins as real money...

Why would authorities want to drop their fiat currencies in favor of bitcoin? I don't say it is not possible at all, since there are countries like Ecuador (where the US dollar became legal tender in 2000) which don't have an independent money system, and they might actually opt for bitcoin. I'm just curious about the possible reasons behind such a move...

[pand70]

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. 

If people keep using it as a currency then it will become a legal tender everywhere. If noone uses bitcoins to buy staff then no authority will declare bitcoins as real money...

Why would authorities want to drop their fiat currencies in favor of bitcoin?

Why would you ask something like that? Who said anything about dropping fiat currencies 

[deisik]

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. 

If people keep using it as a currency then it will become a legal tender everywhere. If noone uses bitcoins to buy staff then no authority will declare bitcoins as real money...

Why would authorities want to drop their fiat currencies in favor of bitcoin?

Why would you ask something like that? Who said anything about dropping fiat currencies 

I don't know about countries (maybe there are some indeed) where more than one currency was declared as legal tender nowadays. If we proceed from your assumption that some state would establish bitcoin as legal tender, we might as well expect establishing bitcoin instead of its today's legal tender (fiat currency), right? If you assume that some government would set bitcoin as second legal tender on par with fiat currency, then Gresham's law would inevitably kick in, so why would they?

Or, are you misusing the term legal tender too?

[Sergios]

The last bitcoin will be mined in 2140 or so, we won't live to see it happen and the world will be so different then I doubt we will even have a monetary system at all. At least not something that resembles anything we have now. Bitcoin will be long gone before that time, a currency's timespan is no longer than 40-50 years if you look at history. No reason to think it will be any different this time.

It may well be so as you picture it, but actually that was not my point... Some people here (and there) draw bright prospects for Bitcoin when and if it becomes a legal tender or a means of exchange. So I was trying to give some cogent reasons why this is not going to happen at all (as opposed to "just not any time soon")...

True. and the fact that the banks and every other "expert" in financial publications is trying to convince people that Bitcoin is "bad" risk  and "you will never see your money again". Or that bitcoin is only used by criminals ( like an article in the financial times that hinted on that which I find poor taste.). The same arguments can be implemented when discussing the use of physical monetary systems. up to 90% of the US bills have cocaine and/or other drugs on them.
It can also be argued that because the banks and their efficiant lobby system is creating such a fuss about crypto currencies is that they are feeling threatened by it. Why? because they can't control or skim of some of the daily earnings. SO there is no money in it for the banks(or they just need to buy bitcoins and start trading like everybody else ). Now IF a bank came up with the idea of crypto currency and worked it out it would be heralded in the media as the "new holy grail" of doing business etc.
So if the governments accept bitcoin as a "legal currency" there will be a huge set of restrictions and the whole tshebeng will under the supervision and control of the banks or bank related institutions. That way they can take their part of the daily trade in bitcoin and other crypto currencies.
If the governments don't accept it  well it can go different ways. If a government, say the US, finds or fabricates "evidence" that some terrorist douchbags are using bitcoins or other currencies they could confiscate every single bitcoin from its citizens. It can and it will see the amendments to the constitution and even that isn't necessary. Just blame it on the NSA or CIA or FBI and  when public opinion is running against the ruling elite just fire the top dog of those institutions, use the media to smear it out and focus on the "new CIA, NSA, FBI or whatever organisation
It may be far fetched for some but Ive been around a while and seen a lot of this backstabbing, double standards, back alley trading, and manipulative behavior that it wouldn't surprise me when it happens.

[cczarek123]

It is the epic idiocy of a "scarce" currency. It incentivizes the SOS with FRB. Besides that and much sooner, there will always be alt-coins inflating the supply regardless.

[pand70]

I don't know about countries (maybe there are some indeed) where more than one currency was declared as legal tender nowadays. If we proceed from your assumption that some state would establish bitcoin as legal tender, we might as well expect establishing bitcoin instead of its today's legal tender (fiat currency), right? If you assume that some government would set bitcoin as second legal tender on par with fiat currency, then Gresham's law would inevitably kick in, so why would they?

Or, are you misusing the term legal tender too?

How about gold coins etc. Aren't those a legal tender in many countries alongside with the nation currency?

[deisik]

I don't know about countries (maybe there are some indeed) where more than one currency was declared as legal tender nowadays. If we proceed from your assumption that some state would establish bitcoin as legal tender, we might as well expect establishing bitcoin instead of its today's legal tender (fiat currency), right? If you assume that some government would set bitcoin as second legal tender on par with fiat currency, then Gresham's law would inevitably kick in, so why would they?

Or, are you misusing the term legal tender too?

How about gold coins etc. Aren't those a legal tender in many countries alongside with the nation currency?

If these gold coins are minted by that country's mint than yes, they are legal tender in that country at their face-value. But this is still a foreign currency in other jurisdictions, so I doubt it strongly that you could officially pay taxes directly with them anywhere in the world except a country of origin...

[AnonyMint]

I don't know about countries (maybe there are some indeed) where more than one currency was declared as legal tender nowadays. If we proceed from your assumption that some state would establish bitcoin as legal tender, we might as well expect establishing bitcoin instead of its today's legal tender (fiat currency), right? If you assume that some government would set bitcoin as second legal tender on par with fiat currency, then Gresham's law would inevitably kick in, so why would they?

Or, are you misusing the term legal tender too?

How about gold coins etc. Aren't those a legal tender in many countries alongside with the nation currency?

If these gold coins are minted by that country's mint than yes, they are legal tender in that country at their face-value. But this is still a foreign currency in other jurisdictions, so I doubt it strongly that you could officially pay taxes directly with them anywhere in the world except a country of origin...

Only for the face value portion of the exchange. The commodity value is taxable separately.


Also please understand that unless most users are anonymous, then anonymity is useless for any user.

It isn't FUD.  

It's real, alipay and the other payment providers and financial institutions are not allowed to deal with the bitcoin exchanges anymore.

I told you guys the legal document was open for interpretation.

https://bitcointalk.org/index.php?topic=358368.0;all

Financial institutions deal with currency, and the Chinese government wants to keep it that way.

Bitcoin Exchanges and related companies deal with Bitcoin, and the Chinese government wants to proceed this way.


It's only clarification of separation between THESE businesses, not Bitcoin in general.

Agreed. A big part of the motivation is probably to stem potential capital flight out of China via bitcoin. Not there was likely much of that going on, but the gov probably wants to get out ahead of matters. Which means eliminating layers of financial intermediaries that could obscure identity (hence why "payment processors" might not be allowed to interact with bitcoin exchanges, but banks are ok).

All in all, it will probably indeed dampen the mania to some degree, but it's by no means as hostile as many are making it out to be.

Bingo!

Good to see you all are starting to understand finally.

For the record, we can fully expect governments everywhere to demand the equivalent of AML/KYC, which is more or less what this China action likely amounts to (though more rigidly). That AML/KYC status-quo permeates the global financial system; not just the US.

Yes and they will collect capital gains and/or VAT taxes on Bitcoin appreciation as an investment even if you are trying to use it as a currency (medium-of-exchange), thus it can not be a currency.

But developers of altcoins will rise to the opportunity and create truly anonymous coins. Anoncoin isn't it. Bitcoin isn't it. I will soon publish a whitepaper to explain why.

In short, you need to understand that Chaum mix-nets (e.g. Tor) are vulnerable to timing attacks, and even honeypotting given only 3 hops. They NSA and spy agencies in each country are likely still able to track your identity much of the time. And VPNs are likely all controlled/backdoored/hacked/rooted by the NSA. And exchanging through mixers and altcoins does not obscure your IP address no matter how many times you do it. Also even across these proxies, your identity is tracked in other ways such as browser plugins trojans, cookies, patterns of internet uses such as favored search terms, facbook et al tracking the way you type, etc..

Even if you are one of the lucky few who manages to keep your anonymity assured by careful mix of the above methods, the point is the majority will not. And thus it is very simple for the government to make your anonymous coins practically unspendable and useless. The government simply sends a tax bill and put criminal liability for all activity on a coin since mining until present, until those non-anonymous coins holders (or former holders) can provide the identity of whom they bought from and sold to.

Thus all users will become afraid and only accept coins and sell coins from those who provide their complete identity. Thus only a coin with widespread assured anonymity would be able to become a currency and remain immune to government control.

So clearly you can see that you never will have anonymity with Bitcoin nor any current altcoins. Thus Bitcoin and the current altcoins can never be currencies (unless the governments take them over somehow and make them legal tender), and the government will essentially control them.

Note one means anonymity I proposed thus far are a new way to do physical crypto-coins.

[deisik]

I don't know about countries (maybe there are some indeed) where more than one currency was declared as legal tender nowadays. If we proceed from your assumption that some state would establish bitcoin as legal tender, we might as well expect establishing bitcoin instead of its today's legal tender (fiat currency), right? If you assume that some government would set bitcoin as second legal tender on par with fiat currency, then Gresham's law would inevitably kick in, so why would they?

Or, are you misusing the term legal tender too?

How about gold coins etc. Aren't those a legal tender in many countries alongside with the nation currency?

If these gold coins are minted by that country's mint than yes, they are legal tender in that country at their face-value. But this is still a foreign currency in other jurisdictions, so I doubt it strongly that you could officially pay taxes directly with them anywhere in the world except a country of origin...

Only for the face value portion of the exchange. The commodity value is taxable separately.

That was exactly my point. Is it really possible to pay taxes directly (i.e. bypassing banks and that kind of things) with gold and silver coins in the USA at their market price?

[AnonyMint]

I don't know about countries (maybe there are some indeed) where more than one currency was declared as legal tender nowadays. If we proceed from your assumption that some state would establish bitcoin as legal tender, we might as well expect establishing bitcoin instead of its today's legal tender (fiat currency), right? If you assume that some government would set bitcoin as second legal tender on par with fiat currency, then Gresham's law would inevitably kick in, so why would they?

Or, are you misusing the term legal tender too?

How about gold coins etc. Aren't those a legal tender in many countries alongside with the nation currency?

If these gold coins are minted by that country's mint than yes, they are legal tender in that country at their face-value. But this is still a foreign currency in other jurisdictions, so I doubt it strongly that you could officially pay taxes directly with them anywhere in the world except a country of origin...

Only for the face value portion of the exchange. The commodity value is taxable separately.

That was exactly my point. Is it really possible to pay taxes directly (i.e. bypassing banks and that kind of things) with gold and silver coins in the USA at their market price?

No. If you don't pay the commodity portion of the tax due, you will go to prison and/or pay hefty fines. There are cases already.

[deisik]

If these gold coins are minted by that country's mint than yes, they are legal tender in that country at their face-value. But this is still a foreign currency in other jurisdictions, so I doubt it strongly that you could officially pay taxes directly with them anywhere in the world except a country of origin...

Only for the face value portion of the exchange. The commodity value is taxable separately.

That was exactly my point. Is it really possible to pay taxes directly (i.e. bypassing banks and that kind of things) with gold and silver coins in the USA at their market price?

No. If you don't pay the commodity portion of the tax due, you will go to prison and/or pay hefty fines. There are cases already.

Do you mean to say that if you pay a tax with gold coins at their face-value just like you would do with paper dollars (this is my point, and I specifically mentioned that), I will have to pay additional taxes for the income which I might but didn't actually receive?

[AnonyMint]

If these gold coins are minted by that country's mint than yes, they are legal tender in that country at their face-value. But this is still a foreign currency in other jurisdictions, so I doubt it strongly that you could officially pay taxes directly with them anywhere in the world except a country of origin...

Only for the face value portion of the exchange. The commodity value is taxable separately.

That was exactly my point. Is it really possible to pay taxes directly (i.e. bypassing banks and that kind of things) with gold and silver coins in the USA at their market price?

No. If you don't pay the commodity portion of the tax due, you will go to prison and/or pay hefty fines. There are cases already.

Do you mean to say that if you pay a tax with gold coins at their face-value just like you would do with paper dollars (this is my point, and I specifically mentioned that), I will have to pay additional taxes for the income which I might but didn't actually receive?

Yes.

You spent or received the coin which has a commodity value above and beyond its very low face value, e.g. gold 1oz US Eagles have a $50 face value yet are worth $1300.

http://www.reviewjournal.com/news/employers-gold-silver-payroll-standard-may-bring-hard-time
http://www.rapidtrends.com/robert-kahre-vs-the-irs-and-doj/
http://www.dailypaul.com/210328/can-i-accept-payments-in-gold-report-face-value-as-income

[anth0ny]

[deisik]

If these gold coins are minted by that country's mint than yes, they are legal tender in that country at their face-value. But this is still a foreign currency in other jurisdictions, so I doubt it strongly that you could officially pay taxes directly with them anywhere in the world except a country of origin...

Only for the face value portion of the exchange. The commodity value is taxable separately.

That was exactly my point. Is it really possible to pay taxes directly (i.e. bypassing banks and that kind of things) with gold and silver coins in the USA at their market price?

No. If you don't pay the commodity portion of the tax due, you will go to prison and/or pay hefty fines. There are cases already.

Do you mean to say that if you pay a tax with gold coins at their face-value just like you would do with paper dollars (this is my point, and I specifically mentioned that), I will have to pay additional taxes for the income which I might but didn't actually receive?

Yes.

You spent or received the coin which has a commodity value above and beyond its very low face value, e.g. gold 1oz US Eagles have a $50 face value yet are worth $1300.

http://www.reviewjournal.com/news/employers-gold-silver-payroll-standard-may-bring-hard-time
http://www.rapidtrends.com/robert-kahre-vs-the-irs-and-doj/
http://www.dailypaul.com/210328/can-i-accept-payments-in-gold-report-face-value-as-income

It seems that you don't understand what I mean. Your examples only look relevant to my point, though in fact they are quite the opposite of what I mean. If you pay taxes with gold coins at their face value instead of paper dollars (i.e. taxes total being equal coins face value total), you effectively end up paying more than you would pay if you previously sold your coins at their market price and paid the original tax plus the tax due to the commodity value of your coins. How can you possibly be charged for tax evasion if you end up paying more than needed?

I'm not talking here about accepting payments in gold coins, then reporting face value as income

[AnonyMint]

If you pay taxes with gold coins at their face value instead of paper dollars (i.e. taxes total being equal coins face value total), you effectively end up paying more than you would pay if you previously sold your coins at their market price and paid the original tax plus the tax due to the commodity value of your coins.

And who would be stupid enough to do that?

People are stupid, but that not that stupid. Most of them can count.

[deisik]

If you pay taxes with gold coins at their face value instead of paper dollars (i.e. taxes total being equal coins face value total), you effectively end up paying more than you would pay if you previously sold your coins at their market price and paid the original tax plus the tax due to the commodity value of your coins.

And who would be stupid enough to do that?

People are stupid, but that not that stupid. Most of them can count.

This doesn't render payment of taxes with gold coins at their face value either impossible or eligible for taxing the commodity value of them (which was your point). You can't pay an income tax on an income that you didn't get (that was my point)...

[AnonyMint]

If you pay taxes with gold coins at their face value instead of paper dollars (i.e. taxes total being equal coins face value total), you effectively end up paying more than you would pay if you previously sold your coins at their market price and paid the original tax plus the tax due to the commodity value of your coins.

And who would be stupid enough to do that?

People are stupid, but that not that stupid. Most of them can count.

This doesn't render payment of taxes with gold coins at their face value either impossible or eligible for taxing the commodity value of them (which was your point). You can't pay an income tax on an income that you didn't get (that was my point)...

Actually your entire thesis is incorrect and you missed the point of the links I provided in a prior post.

If someone pays you face value for your gold coins, you and they will both be taxed as if you gave them incremental commodity value as a gift. So they will pay income taxes on that portion.

My links showed someone tried to pay payroll using face value of coins and it was ruled he under-reported payroll.

There is no escape for this. You must include the commodity value in the tax calculation when it is transferred.

[deisik]

If you pay taxes with gold coins at their face value instead of paper dollars (i.e. taxes total being equal coins face value total), you effectively end up paying more than you would pay if you previously sold your coins at their market price and paid the original tax plus the tax due to the commodity value of your coins.

And who would be stupid enough to do that?

People are stupid, but that not that stupid. Most of them can count.

This doesn't render payment of taxes with gold coins at their face value either impossible or eligible for taxing the commodity value of them (which was your point). You can't pay an income tax on an income that you didn't get (that was my point)...

Actually your entire thesis is incorrect and you missed the point of the links I provided in a prior post.

If someone pays you face value for your gold coins, you and they will both be taxed as if you gave them incremental commodity value as a gift. So they will pay income taxes on that portion.

My links showed someone tried to pay payroll using face value of coins and it was ruled he under-reported payroll.

I didn't miss the point of the links you provided. They are just not relevant to the issue of paying taxes with gold coins

I wasn't talking about someone paying somebody gold coins as wages or whatever (which I mentioned specifically), I was talking about paying taxes (not wages) with gold coins at their face value (total taxes = total face value of coins) and nothing beyond that. I hope I made it clear at least now. Why you raised the point which is not relevant to the issue what I had been talking about (i.e. paying taxes with gold coins, not wages) is beyond my understanding...

[AnonyMint]

Why would you pay taxes with the face value of a gold coin instead of selling the gold coin for commodity value which is 2000% higher, subsequently paying taxes with the fiat?

Doesn't make any sense. What is the point you are trying to make with the absurdity?