Cryptocurrency - where's the actual value?

[Behemoth]

Benjaminpalma said:

It seems like everyone who's really 'into' Bitcoin can only ever talk about the ingenuity and never about the insubstantiality.

What insubstantiality? I'm happy to talk about that if you explain what you mean.

[NickCQ]

TooMany2cvs said:

The Spruce goose said:

BTC is legal tender in Japan

Well, it's a legally recognised payment mechanism. That's not quite the same thing.

Quite. The interesting question is whether you can pay Japanese taxes in BTC at a fixed exchange rate. That's for me the only difference between 'money' and 'commodities' (gold, BTC, silver, yams, cigarettes and so on). The only 'fundamental' value of the US dollar is that people will always need dollars because the US government will always be able to impose tax liabilities denominated in dollars.

[Behemoth]

NickCQ said:

Quite. The interesting question is whether you can pay Japanese taxes in BTC at a fixed exchange rate.

Can you pay Japanese taxes in Euros, Sterling or Dollars at a fixed exchange rate? I don't see the problem you're outlining.

[Maxf]

Maxf said:

Why havent you sold your coins?

My error - sorry. Mixed you up with another poster who was calling people 'loons' yet held btc

[NickCQ]

Behemoth said:

NickCQ said:

Quite. The interesting question is whether you can pay Japanese taxes in BTC at a fixed exchange rate.

Can you pay Japanese taxes in Euros, Sterling or Dollars at a fixed exchange rate? I don't see the problem you're outlining.

You are right, it's not relevant whether it's Japanese taxes or the taxes of some other large country. The point I'm making is that the difference between a currency and a commodity is whether there is any government with a stable currency that has the power to levy taxes in that denomination.

So as to the point of BTC being 'legal tender' in Japan (can't remember who said that now), that phrase has no meaning unless you can pay your taxes in BTC.

[Yipper]

Currencies are going online.

Everyone under 18 lives online. They know nothing else.

Bitcoin is the future.

[NickCQ]

Yipper said:

Currencies are going online.

Everyone under 18 lives online. They know nothing else.

Bitcoin is the future.

Bitcoin's not the only way to do currency online. I think it has several flaws, firstly the ridiculous amount of energy expended in mining farms to generate new coins and secondly the hard cap on the number of coins meaning that an economy based on BTC will suffer from persistent deflation, which can be pretty toxic.

[Behemoth]

NickCQ said:

Bitcoin's not the only way to do currency online. I think it has several flaws, firstly the ridiculous amount of energy expended in mining farms to generate new coins and secondly the hard cap on the number of coins meaning that an economy based on BTC will suffer from persistent deflation, which can be pretty toxic.

The energy resources are very favourably comparable to the resources that support the traditional banking industry infrastructure.

I don't see BTC as a replacement for a nation's economy. It is, and it will sit alongside. Disruptive, yes. But in a good way. It's time to call unscrupulous governments to account. Anyone in a banana republic is going to benefit and some might argue that'd spread further. Think of the Cypriot 10% haircut inflicted by the ECB a few years back.

[anonymous-user]

BTC was set up after the crash of 2008. Some argue the world debt and finance industry is no better off than then. People may/are starting to see more security in crypto currencies over fiat. I know Korea has fueled a lot of crypto rises due to the uncertainty there.

[Behemoth]

NickCQ said:

The point I'm making is that the difference between a currency and a commodity is whether there is any government with a stable currency that has the power to levy taxes in that denomination.

I'd say Bitcoin disrupts that definition. It's important to point out it is not about evading tax. It's more conceptually fundamental than that. It's not above the law, meanwhile. CGT is of course payable once any gain is crystallised.

[egomeister]

Behemoth said:

NickCQ said:

The point I'm making is that the difference between a currency and a commodity is whether there is any government with a stable currency that has the power to levy taxes in that denomination.

I'd say Bitcoin disrupts that definition. It's important to point out it is not about evading tax. It's more conceptually fundamental than that. It's not above the law, meanwhile. CGT is of course payable once any gain is crystallised.

I'd view not fitting that criteria as a positive...

[anonymous-user]

The Spruce goose said:

People may/are starting to see more security in crypto currencies over fiat.

Quoted for posterity.

Now then, I've got these tulip bulbs and values are rising sharply. Anyone want to buy some?

Sorry, I only accept hard cash....

[anonymous-user]

rockin said:

Quoted for posterity.

Now then, I've got these tulip bulbs and values are rising sharply. Anyone want to buy some?

Sorry, I only accept hard cash....

hard cash, so safe the banks only guarantee 85k in savings accounts?

[egomeister]

The Spruce goose said:

hard cash, so safe the government only guarantee 85k in savings accounts?

Ok, it's funded by the finance sector, but the ultimate backstop is the government.

[anonymous-user]

egomeister said:

Ok, it's funded by the finance sector, but the ultimate backstop is the government.

Not sure what your point is but The FSCS is funded by levies on firms authorised by the Prudential Regulation Authority, which is part of the BOE, in its self owned by the Government Legal Department.

The limit is actually enforced from EU legislation.

And when we talk about cold hard cash, it was interesting that to look at these debt numbers, where the money value is derived from.

http://www.bbc.co.uk/news/business-15748696

''The UK has very large amounts of overseas debt, of which the biggest component is the banking industry. The high debt to GDP ratio is explained by the UK's active financial sector, where there is a great deal of capital movement. This level of overall external debt is generally not seen as a problem because the UK also holds high-value assets. Having said this, the UK economy remains in the doldrums and the country is highly exposed to Irish as well as Italian and Portuguese debt. The UK in turn owes hundreds of billions to Germany and Spain.''

Edited by The Spruce goose on Wednesday 6th September 21:06

[egomeister]

The point was it's not really the banks guaranteeing the deposit

[BJG1]

Benjaminpalma said:

So if coins are given out for mining - that is solving mathematical problems and in so doing helping to ensure the security of the system - where's the actual value in cryptocurrencies, other than as speculated-upon e-tulips?

I have scoured the web looking for the answer to this point, but articles only describe how clever it is (and, yes, blockchain tech is).

Same place the value in fiat currency is - faith.

[x5x3]

The Spruce goose said:

Not sure what your point is but The FSCS is funded by levies on firms authorised by the Prudential Regulation Authority, which is part of the BOE, in its self owned by the Government Legal Department.

where does Brexit leave this one then?

[TooMany2cvs]

x5x3 said:

The Spruce goose said:

Not sure what your point is but The FSCS is funded by levies on firms authorised by the Prudential Regulation Authority, which is part of the BOE, in its self owned by the Government Legal Department.

where does Brexit leave this one then?

Christ alone knows. You don't think they've worked that sort of fine detail out yet, do you?

[NickCQ]

egomeister said:

The Spruce goose said:

hard cash, so safe the government only guarantee 85k in savings accounts?

Ok, it's funded by the finance sector, but the ultimate backstop is the government.

Sure you get £85k back but there's no guarantee of what physical goods / services you can buy with £85k