The Bitcoin Saga

[Perky_Goth]

@Mark_Weston

Dollars don’t have any intrinsic value either.

Try paying your taxes with anything else, then.

[Wallapuctus]

@Perky_Goth

Try paying your taxes with anything else, then.

The only reason Bitcoin is worth anything is because you can trade it for Dollars. The only reason Dollars are worth anything is because you can trade them for things you need, like food and shelter.

There’s merit to the argument that Bitcoin has value. Anything someone is willing to trade for has value. But it’s not money. I’m not selling my onions for Bitcoin and then buying milk with Bitcoin. We do that with Dollars, because people trust Dollars. We trust dollars because the government backs them.

The whole argument for crypto is decentralized currency, not subject to central banks. Well… that’s why no one trusts it. It’s the same flaw all libertarian philosophies have in practice.

[Timex]

@Wallapuctus

The only reason Dollars are worth anything is because you can trade them for things you need, like food and shelter.

Perky-Goth highlighted a really key difference.

You have a legal obligation to pay taxes in the US, and you can ONLY pay those taxes in USD. If you don’t have USD, you can’t pay taxes. If you don’t pay taxes, you go to jail.

Bitcoin and other cryptos have no established foothold in society that requires their existence.

[Mark_Weston]

@Timex

Dollars are backed by the US government though. And even now, off the gold standard, the USD has an established place at the center of international trade.

If you bring up intrinsic value (your phrase), I see no difference between BTC and $. Backing by the US government is just an unenforceable promise. It’s not real or tangible nor intrinsic to the currency. It’s a mixture of historical record and hope.

Your “off the gold standard” throwaway was a bit funny too, as gold itself obviously has no intrinsic value beyond scarcity. Exactly like Bitcoin in fact.

@Timex

Crypto currency is purely a speculative commodity at this point. While all currencies are speculative commodities to some degree, they all have a LOT more inertia than any crypto does now.

This is just a matter of market sentiment. It’s true until the collective psychology changes, and then suddenly it’s not.

I’m not a Bitcoin advocate, and I’ve never owned any. But if we’re all going to agree that Bitcoin is terrible and stupid, then we should at least have some decent arguments to back that up.

[Timex]

@Mark_Weston

Backing by the US government is just an unenforceable promise. It’s not real or tangible nor intrinsic to the currency. It’s a mixture of historical record and hope.

Well, a long historical record does in fact create a lot of inertia… but Perky highlighted a more important aspect, which is that you are literally required to use USD to pay your taxes, or else you go to jail. That creates some fundamental floor of demand for it.

[Lantz]

@Mark_Weston

If you bring up intrinsic value (your phrase), I see no difference between BTC and $. Backing by the US government is just an unenforceable promise. It’s not real or tangible nor intrinsic to the currency. It’s a mixture of historical record and hope.

Do you see the difference between US Federal Criminal laws and the rules to ice hockey? They are just rules for conduct enforceable by getting put in a box but could not be enforced.

[Aceris]

@inactive_user

Come for the greatest Twitter handle of all time, stay for the fire .

I think he means “Bitcoin has basically been a speedrun of libertarians stuboornly failing to learn how we got all our banking regulations”.

@Mark_Weston

This is just a matter of market sentiment. It’s true until the collective psychology changes, and then suddenly it’s not.

But we know that the bar for that collective psychology to phase change for state backed currencies, in terms of the failure of the backer, is very high indeed. There’s a lot of gradual weakening that happens instead.

[Soapyfrog]

@Mark_Weston

gold itself obviously has no intrinsic value

Well that’s not true. Gold is genuinely useful. I’ll agree that a lot of the value we place on gold is extrinsic, but gold is itself intrinsically valuable.

[CraigM]

The ability to pay taxes in a currency is, in many ways, fundamental to the development of paper money. Several examples from the 17th and 18th centuries highlight this principle. I am familiar with Britain and France where this was true, and given that my knowledge of historical currency is limited, but that all the examples I know of feature this aspect, I’d wager this is not a historically unique concept.

[Andy_Bates]

@Mark_Weston

If you bring up intrinsic value (your phrase), I see no difference between BTC and $. Backing by the US government is just an unenforceable promise. It’s not real or tangible nor intrinsic to the currency. It’s a mixture of historical record and hope.

If we get to the point where the USD is no longer being backed by the U.S. Government, I think that the choice of preferred currency will be the least of our problems. Anyway, the new currency will probably be bullets and gasoline.

[Timex]

BoTtleCaps.

[Enidigm]

Someone with a bunker full of beanie babies while watching the bombs fall, and surely petting one weirdly, looks to the sky with a smirk. “Finally, my babies, our time has come.”

[wisefool]

If you circulate beanie babies they won’t be mint anymore, are you insane? Wait is that what the art NFT stuff is for? sell an NFT of your beanie.

[AK_Icebear]

You can offset tax obligations with donations made using BTC. It’s a way that cryptocurrency holders avoid capital gains taxes.

[AK_Icebear]

Also, this fixation on a currency needing to be accepted by tax officials seems to at least conclude that Bitcoin is an asset - given it is legally treated as such by the IRS and SEC.

[Timex]

@AK_Icebear

You can offset tax obligations with donations made using BTC. It’s a way that cryptocurrency holders avoid capital gains taxes.

You need to actually PAY your taxes in USD though. Your employer, withholding stuff from your paycheck? If he sends bitcoins to the IRS on your behalf, you are gonna have a problem.

[AK_Icebear]

Incorrect. Cryptocurrency can be donated directly to an eligible charity, without first selling into USD (which would trigger a capital gains taxable event). The USD value of the amount donated at that time can offset other income tax obligations.

[antlers]

@Enidigm

Bitcoin ect aren’t currencies, they’re commemorative civil war plates from Bradford Exchange that call themselves currency. The only really interesting things about them are their Blockchains.

The real risk of Bitcoin is spoofing or counterfeiting the Blockchain - and it will happen one day, and suddenly crypto collapses. Considering the value of crypto now it seems the smartest criminal minds should be cooking that problem rather than just buying a bunch more GPUs.

I believe the bitcoin blockchain is de facto controlled by a few huge mining outfits, mostly based in China based on corrupt sweetheart deals with local officials for cheap power. I wouldn’t be surprised if their exit strategy involved filching the contents of a few large wallets before they shut everything down.

[Timex]

@AK_Icebear

Incorrect. Cryptocurrency can be donated directly to an eligible charity, without first selling into USD (which would trigger a capital gains taxable event). The USD value of the amount donated at that time can offset other income tax obligations.

You cannot make donations to charity and avoid paying all your taxes, man.

[AK_Icebear]

I think the follow example would allow it.

You invest in 1000 in crypto. Your investment turns into 10,000. You have 9,000 in potential capital gains. You donate 4,500 worth to a charity, creating a tax credit in that amount. You liquidate the remaining holdings, with a capital gain worth 4,500, that are fully offset. At least this is what exchanges like Gemini are advertising based on IRS notices.