Cryptocurrency - where's the actual value?
Discussion
Benjaminpalma said:
Dr Jekyll said:
Sometimes provided another currency, sometimes provided goods, sometimes a service.
No - at the outset, when the first recipient of each Bitcoin is mined?I suggest you read the white paper, o/p. Then ask questions. It's not particularly technical & should be a simple enough read. https://bitcoin.org/en/bitcoin-paper
Behemoth said:
I suggest you read the white paper, o/p. Then ask questions. It's not particularly technical & should be a simple enough read. https://bitcoin.org/en/bitcoin-paper
Okay, thank youBenjaminpalma said:
Right - so they don't contribute anything to society just help support the product. At the core of Bitcoin, there's nothing of any value other than to support the Bitcoin system.
By your argument, any infrastructure work that supports a currency or its transactions does not deliver value. That is clearly nonsense.James_B said:
Oh, that one's easy, the £10 note can be used to pay your taxes, and so stop you going to jail.
For some reason cryptocurrency advocates don't ever seem able to ge pt their heads around just how important being able to settle your debts with the state is. It's not a small point, it's a whacking great big important one.
It's straightforward, though. To give you an easy example, I have property in France and pay French property tax in €. I earn nothing in €, all in £. I convert the £ to € to pay the tax (and live with the volatility year to year). Like other currencies, Bitcoin is convertible. That's all you need to settle your tax debt.For some reason cryptocurrency advocates don't ever seem able to ge pt their heads around just how important being able to settle your debts with the state is. It's not a small point, it's a whacking great big important one.
James_B said:
That's not really got anything to do with the point I made, though. The value of the Euro is that it can be used to settle your French taxes, the state has no choice but to take it.
Bitcoin is convertible today. The fact that it can't be used to directly pay taxes means that it is fundamentally different to currency that can, and that you know far less about what it will be worth tomorrow, as demonstrated, of course, by the exchange rate fluctuations.
Actually, the claim that it is easily convertible today is hardly true. Have you personally managed to convert tens of thousands of pounds from bitcoin into cash? A friend at the bank where I work struggles massively to do so, for months. Can I suggest you give it a try? Put £50k into bitcoins, and then a month later walk out of a bank with that £50k in £50 notes. You may be surprised.
Those things just describe the state of the crypto market today, it is nothing to do with the fundemental technology. It is easy enough to envision that at some point a state may decide to accept a cryptocurrency as legal tender, or better methods of exchange may be created. Bitcoin is convertible today. The fact that it can't be used to directly pay taxes means that it is fundamentally different to currency that can, and that you know far less about what it will be worth tomorrow, as demonstrated, of course, by the exchange rate fluctuations.
Actually, the claim that it is easily convertible today is hardly true. Have you personally managed to convert tens of thousands of pounds from bitcoin into cash? A friend at the bank where I work struggles massively to do so, for months. Can I suggest you give it a try? Put £50k into bitcoins, and then a month later walk out of a bank with that £50k in £50 notes. You may be surprised.
Fiat money has no utility by itself, it doesn't DO anything, it is inert lumps of metal, pieces of paper and arbitrary numbers in databases. It can be magicked up, deleted and whatever you like. Everything it does is a result of people treating it a certain way or it being defined a certain way in law, and all that seems to be rather... flexible. At least cryptocurrencies have some algorithmic functions/behaviour baked in and therefore are far less arbitrary.
Edited by MiggyA on Sunday 10th September 08:50
Edited by MiggyA on Sunday 10th September 08:51
James_B said:
That's not really got anything to do with the point I made, though. The value of the Euro is that it can be used to settle your French taxes, the state has no choice but to take it.
Bitcoin is convertible today. The fact that it can't be used to directly pay taxes means that it is fundamentally different to currency that can, and that you know far less about what it will be worth tomorrow, as demonstrated, of course, by the exchange rate fluctuations.
Actually, the claim that it is easily convertible today is hardly true. Have you personally managed to convert tens of thousands of pounds from bitcoin into cash? A friend at the bank where I work struggles massively to do so, for months. Can I suggest you give it a try? Put £50k into bitcoins, and then a month later walk out of a bank with that £50k in £50 notes. You may be surprised.
Any large movement of cash is subject to AML/KYC review triggers, regardless of the currency origin. It's in a bank's duty to investigate abnormal movement like that.Bitcoin is convertible today. The fact that it can't be used to directly pay taxes means that it is fundamentally different to currency that can, and that you know far less about what it will be worth tomorrow, as demonstrated, of course, by the exchange rate fluctuations.
Actually, the claim that it is easily convertible today is hardly true. Have you personally managed to convert tens of thousands of pounds from bitcoin into cash? A friend at the bank where I work struggles massively to do so, for months. Can I suggest you give it a try? Put £50k into bitcoins, and then a month later walk out of a bank with that £50k in £50 notes. You may be surprised.
Yes, Bitcoin is fundamentally different. Who knew?
Of course it can't be used to pay tax directly. Of course that's a difference. You are stating the blindingly obvious and to assert that crypto advocates don't understand this is a little patronising.Benjaminpalma said:
Dr Jekyll said:
Sometimes provided another currency, sometimes provided goods, sometimes a service.
No - at the outset, when the first recipient of each Bitcoin is mined?Nothing has been done to create the extra worth other than someone else will pay more for it because they think someone else will pay even more in a few weeks or months.
James_B said:
That's not really got anything to do with the point I made, though. The value of the Euro is that it can be used to settle your French taxes, the state has no choice but to take it.
Bitcoin is convertible today. The fact that it can't be used to directly pay taxes means that it is fundamentally different to currency that can, and that you know far less about what it will be worth tomorrow, as demonstrated, of course, by the exchange rate fluctuations.
Actually, the claim that it is easily convertible today is hardly true. Have you personally managed to convert tens of thousands of pounds from bitcoin into cash? A friend at the bank where I work struggles massively to do so, for months. Can I suggest you give it a try? Put £50k into bitcoins, and then a month later walk out of a bank with that £50k in £50 notes. You may be surprised.
I don't think the validity of currency is defined by which tax jurisdiction you happen to be resident in.Bitcoin is convertible today. The fact that it can't be used to directly pay taxes means that it is fundamentally different to currency that can, and that you know far less about what it will be worth tomorrow, as demonstrated, of course, by the exchange rate fluctuations.
Actually, the claim that it is easily convertible today is hardly true. Have you personally managed to convert tens of thousands of pounds from bitcoin into cash? A friend at the bank where I work struggles massively to do so, for months. Can I suggest you give it a try? Put £50k into bitcoins, and then a month later walk out of a bank with that £50k in £50 notes. You may be surprised.
Your point about convertibility has much more weight, but limitations on that at present aren't down to anything fundamental within the technology but market factors.
98elise said:
Nothing has been done to create the extra worth other than someone else will pay more for it because they think someone else will pay even more in a few weeks or months.
There's definitely a huge amount of speculation. Nobody would doubt that. But there is also price discovery which ultimately has its foundation in utility. The latter will come to the fore eventually. Whether Bitcoin's ultimate value to the word's economy and transaction infrastructure is peanuts or diamonds is currently a strategic guess. That's what the market play is.Where is the limit, $10000, $100000, $1000000? Why not 1 billion per coin?
When there are no more buyers is when the price will drop/level/crash.
There is no doubt the blockchain technology is revolutionary.
Here is an interesting paper from the LSE
Custody chains and asset values: why
crypto-securities are worth contemplating.
http://eprints.lse.ac.uk/62609/1/Micheler_Custody%...
Note it is about crypto-securities not actual cryptocurrency.
When there are no more buyers is when the price will drop/level/crash.
There is no doubt the blockchain technology is revolutionary.
Here is an interesting paper from the LSE
Custody chains and asset values: why
crypto-securities are worth contemplating.
http://eprints.lse.ac.uk/62609/1/Micheler_Custody%...
Note it is about crypto-securities not actual cryptocurrency.
Behemoth said:
It's straightforward, though. To give you an easy example, I have property in France and pay French property tax in €. I earn nothing in €, all in £. I convert the £ to € to pay the tax (and live with the volatility year to year). Like other currencies, Bitcoin is convertible. That's all you need to settle your tax debt.
You could convert the £ you earn to $ or ¥ then to € to pay your French taxes. It's called currency speculation.You could even convert your the £ you earn to widgets or classic cars or wine then to € to pay your French taxes. That doesn't make widgets or classic cars or wine a "currency".
TooMany2cvs said:
You could even convert your the £ you earn to widgets or classic cars or wine then to € to pay your French taxes. That doesn't make widgets or classic cars or wine a "currency".
Yes, you are right. But the problem in your argument is that widgets, classic cars and wine don't display the core competencies of a currency. These are durability, portability, divisibility, uniformity, limited supply, and acceptability. Bitcoin has these, and in a number of aspects outperforms traditional fiat currency by quite some margin. Of course, it's early in the adoption curve, so by definition its acceptability is currently limited.Behemoth said:
TooMany2cvs said:
You could even convert your the £ you earn to widgets or classic cars or wine then to € to pay your French taxes. That doesn't make widgets or classic cars or wine a "currency".
Yes, you are right. But the problem in your argument is that widgets, classic cars and wine don't display the core competencies of a currency. These are durability, portability, divisibility, uniformity, limited supply, and acceptability. Bitcoin has these, and in a number of aspects outperforms traditional fiat currency by quite some margin. Of course, it's early in the adoption curve, so by definition its acceptability is currently limited.Behemoth said:
TooMany2cvs said:
You could even convert your the £ you earn to widgets or classic cars or wine then to € to pay your French taxes. That doesn't make widgets or classic cars or wine a "currency".
Yes, you are right. But the problem in your argument is that widgets, classic cars and wine don't display the core competencies of a currency. These are durability, portability, divisibility, uniformity, limited supply, and acceptability. Bitcoin has these, and in a number of aspects outperforms traditional fiat currency by quite some margin. Of course, it's early in the adoption curve, so by definition its acceptability is currently limited.The original question was does cryptocurrency have value - the demand, and pricing in other forms of value would suggest it does (at present). From my perspective, given it's relative lack of transactional utilisation I am somewhat sceptical of its current valuation (which dovetails into the points made about taxes - the only merit I see with that argument is that it provides a baseline of transactional usage, there is nothing special about taxes that legitimises our current currencies)
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