Crypto

[Menger 79]

4 hours ago, azda said:

Actually, in some places you can pay your taxes with bitcoin 🤓

Yes - but those taxes are denominated in fiat currency.  Only if bitcoin becomes a fiat currency (so that the taxes are denominated in bitcoin, and not a $€£¥ equivalent) would bitcoin have an equivalent “intrinsic” value that could save it from testing zero.  Alternatively, if some dentist devises a way to use bitcoin to fill teeth, it will also have a safety net. 

[Menger 79]

4 hours ago, azda said:

Doubtful it will see zero with hedge funds now entered into the area. In fact one CEO hedge fund manager got booted for not entering inTO THE BTC ETF, but now it will never go to zero as there’s trillions, not billions available.

I don’t think the hedge funds are acting differently from anyone else: they are speculating. They are not seeking to substitute bitcoin as a form of “money”. As speculators, Hedge fund can go short as quickly as they can go long.  It is precisely this “speculative” essence of bitcoin which means it can test the moon, or zero - and will test the latter before it becomes “money” (which it never will). 

[Peckris 2 2,044]

National currencies are as notional as crypto, except in two critical respects:

1. they reflect the 'real' economy, i.e. the GDP of a nation

2. they are underwritten by the national bank(s)

you cannot say either in relation to Bitcoin

[Menger 79]

7 hours ago, Peckris 2 said:

National currencies are as notional as crypto, except in two critical respects:

1. they reflect the 'real' economy, i.e. the GDP of a nation

2. they are underwritten by the national bank(s)

you cannot say either in relation to Bitcoin

National currencies are fiat currencies and so exclusively mandated by law for the settlement of tax and legal liabilities in the jurisdiction.  This is a tether to reality - a real demand for the given supply.  That real demand (like the real demand for gold, to fill teeth or make jewelry) prevents price action being arbitrary and purely speculative. Fiat currency can be inflated to zero - but for a given supply it has a demand separate from any purely speculative demand.  Prices of fiat currencies can go up and down (denominated in gold or other fiat currencies) but not to the moon or (absent aforementioned inflation) zero. This gives them relative stability, so they can be used for savings. As such, they can be generally accepted as a means of payment - “money”. 

Edited March 23 by Menger

[ozjohn 552]

On 3/24/2024 at 7:26 AM, Menger said:

National currencies are fiat currencies and so exclusively mandated by law for the settlement of tax and legal liabilities in the jurisdiction.  This is a tether to reality - a real demand for the given supply.  That real demand (like the real demand for gold, to fill teeth or make jewelry) prevents price action being arbitrary and purely speculative. Fiat currency can be inflated to zero - but for a given supply it has a demand separate from any purely speculative demand.  Prices of fiat currencies can go up and down (denominated in gold or other fiat currencies) but not to the moon or (absent aforementioned inflation) zero. This gives them relative stability, so they can be used for savings. As such, they can be generally accepted as a means of payment - “money”. 

IMO crypto is a scam and a vehicle for money laundering. National currencies are not perfect by any means but as mentioned earlier do relate back to the real economy, Whereas crypto has no intrinsic value whatsoever. Where the money goes to after the purchase of crypto is anyone's guess but one thing you can be sure of is it is not held in reserve in case of a run on the particular crypto. Crypto has all the hallmarks of a Ponzi scheme and would collapse tomorrow is there were a serious run on it.

[Menger 79]

4 hours ago, ozjohn said:

IMO crypto is a scam and a vehicle for money laundering. National currencies are not perfect by any means but as mentioned earlier do relate back to the real economy, Whereas crypto has no intrinsic value whatsoever. Where the money goes to after the purchase of crypto is anyone's guess but one thing you can be sure of is it is not held in reserve in case of a run on the particular crypto. Crypto has all the hallmarks of a Ponzi scheme and would collapse tomorrow is there were a serious run on it.

Two quibbles: The money does not “go” anywhere after purchase of crypto, other than into the pockets of the person who sold the crypto (and from there into the hands of anyone he subsequently purchases goods and services, including more crypto, from).   Crypto does have “intrinsic” value in that it can be used as speculation or as a (very short term) means of exchange. But it cannot be used for savings due to its volatility and so cannot be “money” itself.  So it will test zero before it becomes money (which it won’t). 

Edited April 16 by Menger

[ozjohn 552]

3 hours ago, Menger said:

Two quibbles: The money does not “go” anywhere after purchase of crypto, other than into the pockets of the person who sold the crypto (and from there into the hands of anyone he subsequently purchases goods and services, including more crypto, from).   Crypto does have “intrinsic” value in that it can be used as speculation or as a (very short term) means of exchange. But it cannot be used for savings due to its volatility and so cannot be “money” itself.  So it will test zero before it becomes money (which it won’t). 

Sorry we will have to agree to disagree Crypto is nothing but a giant Ponzi scheme. At least with tulip bulbs you can plant them in the garden. I think I will stick with physical gold.

[Menger 79]

2 hours ago, ozjohn said:

Sorry we will have to agree to disagree Crypto is nothing but a giant Ponzi scheme. At least with tulip bulbs you can plant them in the garden. I think I will stick with physical gold.

Agreed. Not a scam nor a ponzi: a speculative instrument that will test zero before it becomes money.  Like a tulip. 

[ozjohn 552]

In Australia and assuming you cash in your crypto  at a profit you will be subject to capital gains tax at your marginal  tax rate. If the asset is held for more than a year the capital gains tax is 50% of your marginal tax rate. If you make a capital  loss on crypto then you can offset that against other income. This is true for most investments, shares, real estate, etc. I don't know what the tax implications are in the UK or US but there are probably some.