Topic: Why Bitcoin will collapse in price. - page 15. (Read 24631 times)

Bitcoin is a disruptive technology.  The social, political, tax, and welfare systems in place will be forced to adapt.  You are trying to pigeon-hole bitcoin into the current system, and I think this is what is preventing you from imagining the future: bitcoin is a game changer. 


 >> You just describe a method that moves the costs of paperwork from the business to the customer.

Are implying that all citizens would be required to track their entry and exit points into bitcoin in dollar terms and pay capital gains on the difference?  This is a worthwhile debate and I look forward to seeing guidance issued by various tax authorities on issues like these.  Here's my take:

Bitcoin makes VAT easier to collect but capital gains tax much harder to collect.  If you attempt to collect tax on bitcoin gains, then you must also allow taxpayers to write-off bitcoin capital losses.   This system would be very easy to cheat in favour of the tax payer and very hard to police by the tax authority.  People hoping to minimize their capital gains on bitcoin could easily obfuscate their trail (in fact it would be hard not to): how is anyone going to know what exactly Sam bought with her bitcoins, or the exact price she bought them off of Joe?  Furthermore, such a system would be ripe for abuse: less scrupulous people could easily "create" paper trails to appear as though they took an enormous capital loss in bitcoin trading.  They could then use this to write off other capital gains in an unfair way. 

On the other hand, people would pay VAT seamlessly with bitcoin, and would have very little incentive or ability to avoid it.  Merchants would love it, because the real-time tax systems I described would eliminate headaches.  Tax-authorities could shrink because the blockchain could be audited in real time and payment would be automatic (no collection issues).   


 >> You are going down the deep end. Government wants you to use and hold onto their currency so that they can inflate and steal purchasing power. Collecting taxes is not going to solve that problem.

Do you imagine "them" as this cohesive group of people plotting to make your life miserable?  The government (aka "they") are just a bunch of unique individuals trying to make a nice life for themselves and those close to them.  I agree that the system in place steals purchasing power through inflation--most people do.  But to imply that everyone in government drools over the thought of stealing your purchasing power is juvenile.  Everyone knows there is corruption in places, but still most people in government are just like you or I.  They dislike crazy banking fees and they worry about reckless government spending affect their purchasing power in retirement. 

The inflation problem is *systemic*.  With the current Federal Reserve system, it is politically easiest to "print money and worry about it tomorrow."  This is not a conspiracy.  This is just people kicking the can down the road. 

Bitcoin forces governments to be accountable.  This is better for everyone. 

Finally someone with common sense.

Any Altcoin is as good as Bitcoin as a medium of exchange.

Interesting is that only few people are using them as a medium of exchange. On one side no one wants to spend theirs, as they could be worth more tomorrow. On the other side, apart of some enthusiasts, no vendor wants to accept them as they are too volatile.

I believe that the high volatility is damaging Bitcoin. Bitcoiners love it, as they made a lot of money. I would have prefered a more slower and constant rise, 2%-5% p.a., or even flat. This would have made adoption more easy.

Any person with some sensibility for risk will not touch Bitcoins until they are stable for at least a year. The big price increase over the last a few weeks and now the upcoming crash are damaging the future of Bitcoin.

Currently it is only seen as a "get rich quick" scheme, and I don´t believe that this was its purpose.

Even if these services can reduce the cost by using economy of scale, the cost is still present. Add that to the cost of exchanging fiat for bitcoins and you have high transaction costs.

Also my main argument is again that value as a medium of exchange wont be it, as governments can prohibit its use, close down exchanges, raid miner networks.

So whats left might be the store of value argument. Again I have addressed this already. I dont believe its a viable alternative to something like gold or silver.

hint: electronic gold.

reason why nobody uses eletcronic gold: government enforces its monopoly (see gold money, liberty dollar)

bitcoin is not going to be an exception. you have not made the case.

ways government could undermine medium of exchange value:

1) prohibit merchants using it 2) costly tax laws 3) raiding miners 4) prohibiting exchanges

List is endless.

Store of value like gold?

I dont think so, see OP.

There are entire businesses apparently that specialise in removing this hassle. Again these costs plus conversion from fiat to bitcoin back to fiat (spread) costs are quite enormous.

Again that was just one way government make transacting in bitcoins costly.

The other way to kill bitcoin as a medium of exchange is straight out prohibiting businesses to accept bitcoin. Again they like their money monopoly.

So you imagine the merchant having to manually write down on a piece of paper about each bitcoin (or even fraction of) he/she receives or sells ... ok... if that's your argument, I am done.

Best regards,
ilpirata79

1) You just describe a method that moves the costs of paperwork from the business to the customer.

2) You are going down the deep end. Government wants you to use and hold onto their currency so that they can inflate and steal purchasing power. Collecting taxes is not going to solve that problem.

I dont see how converting fiat to bitcoin and then bitcoins back to fiat (spread) PLUS the paperwork will be viable (less costly than credit cards).

This is the post I was waiting for. That argument for bitcoin to fail because of some paperwork looked fishy right from the start. I just could not take it serious. If anything, such things usually could be fixed pretty fast...

I have read the thread and you talk about "Governments have already effectively made it impossible for people to use bitcoin as a medium of exchange, as they expect taxes to be paid on bitcoin gains. Thus it cant function as a medium of exchange".
You say that not being able to tax bitcoin will kill it.
In my country we pay taxes on gold and even bitcoin so it is possible and in my country bitcoin IS a medium of exchange. In neighboring contries this is also true. America isn't the whole world you know.
We have systems in place for verifying that taxes are paid. If you buy a house or car beyond your means and can't explain where the money came from and haven't paid taxes you have a problem.

Bitcoin is an open system and not anonymous. If you use your bitcoins your identity can be associated.

LOL you do know that inflation makes money worth less? Inflation happens because dumbasses print money so they have more. This is not tax this is devaluation of money to make your debts less and income greater. Tax is money taken from the population, inflation is printing money or money losing value.

I explain how it can be hacked and when it can be hacked. Did I say it cannot be hacked? I explained that banks are more vulnerable once the technology does appear.

Why do people put their money on bank accounts? Ow because they can smell and touch it right? What's the difference between money on a bank or in a bitcoin wallet?
1) What if the Euro outcompetes the Dollar? Ow that's happening right now ....
2) You can't touch money in your bank account. Money is paper with a promise on it also no intrinsic value.
3) You mean the 21 million coin limit? Other coins forked from the bitcoin have hit the limit and it works. Well the dollar has no limit since it's being printed by the thousands and this isn't something average joe has a problem with.
4) You can't count cos you missed 4
5) Yeah choose the stability of the dollar.

Did I say bitcoin is the best? No bitcoin is a good medium in it's first years of development. It will take time for stability.
Bitcoin has it's problems but atleast it's an open system so you can see every transaction.
You talk about safer alternatives, yes there are safer alternatives but what's stopping a bank from protecting your bitcoins for you?
Bitcoin has the possibility for being safe it will take time. Your comparing the first few years of bitcoin with hundreds of years running fiat money. You can't expect it to get to a mature level without going through a rough patch.

Service like BitPay help businesses transition from dollars to BTC, while removing the paperwork/record-keeping barriers you described above.  

A coffee shop I frequent here in Vancouver simply enters the dollar amount for my coffee, and BitPay generates a QR-code-based invoice that I scan with my phone and pay.  BitPay then converts these bitcoins to dollars and gives the coffee shop the *exact* amount they requested, minus a 1% fee (less than credit cards).  BitPay absorbs all exchange risk and eliminates any "currency-exchance / capital-gains" accounting.  It is *easier* for a vendor than getting set up with Visa.  


In the future, and as the bitcoin economy grows, it will become advantageous to *never* convert to fiat.  I have described "real-time" tax-collection systems for merchants such as coffee shops, in other posts.  Such systems could remit the VAT instantly as it is collected on each purchases.  Furthermore, the tax-authority could instantly credit the merchant with bitcoin payments to offset input tax credits against tax-deductible supplies like coffee beans or electricity bills.  In a world where all customers pay in bitcoin and all vendors accept bitcoin, it would be possible to pay your VAT taxes but never have to fill out another form again!

My point is that bitcoin will help to streamline government, making it more efficient, and restoring peoples faith in these institutions after the scandals from the recent financial crises.  

define: "governments" .Today all governments are just individuals prone to lobbies instead than political partys. If bitcoin will succed is because governments ar not nearly powerful as lobbies and markets. Governments have no way to make mining or btc exchange illicit without incurring in constitutional issues, of course that's not the case of china, the ceo of baidu created the last pump, for the next there is a single player who can without any doubt push the btc to 30.000 (having loaded bunches before) and his name is bezos.  

Because it is heavy, cumbersome, liable to tear and wear as well as counterfeiting and defacing. Actually, it is you who have to study history here. Silver coins were primarily used as a means of exchange, at least in Europe (don't know much about other countries), gold was stashed away as a store of value above anything else except jewelry...

Who wants to carry gold with him? And how do you pay a keg of beer and some snacks? Ah yeah. Those !@#$%^&* tax laws!

Learn history. Gold has been used as money for thousands of years.

Your interpretation of the Great Depression is incorrect but lets not go into this.

I am asking you why nobody is using gold (not gold standard!) as a media of exchange. (The answer is tax laws!, like bitcoin).

For merchants its complicated as they have to track the prices of bitcoin for each bitcoin they hold and sell. Why would a merchant want this? Again you keep assuming bitcoin will be adopted despite it being more complicated than government currency.

Why isnt gold used as money? Why is everybody using government money. Think about it. You are in love with bitcoin.

There can be no "guesses" about it. Currency backed up by gold (or any other asset limited in supply, for that matter) had been a cause of much headache in the past due to its deflationary nature. The problems with gold backed money finally culminated in the Great Depression of 1929. After that the gold standard to which you appeal here had been quickly abandoned by all states...

Thats the first part. (The new part is that government has already killed bitcoin as a media of exchange due to tax laws. You dont want to understand this which is fine. )

The second part is about its acceptance as a store of value.

Also I believe transaction costs are high if its not accepted as media of exchange.

If you cant refute these points the value is effectively 0.

What paper work are you talking about?
As of now, you just have to declare your capital gains at the end of the fiscal year; that at least in Italy.

I don't see why things should be made more complicated in the future only for bitcoins.

Regarding the banning of bitcoin tout court by a single country (already been discussed as just pointed out), I think that that would be a big mistake for the country that is making such a decision, because its businesses would be damaged internationally with respect to other businesses that can accept bitcoins.

Best regards,
ilpirata79

You could just have said at the start without much beating about the bush that government would outright ban Bitcoin, and nobody would be arguing with you on that point. Though this has been discussed so many times here that you could hardly add anything new to the debate and that would be boring...

No my argument is that bitcoin wont become a media of exchange because government enforces its monopoly on money with all its might.

Now one of the way it does so is by taxing other media of exchange (if you cant grasp that I cant help you).

Other ways are (as explained above):

1) Prohibiting merchants from accepting bitcoins 2) Raiding exchanges 3) Raiding miner networks

The list is endless.

Why do you think gold is not used as money? If the market before chose it to be money? Any guess.