Is cryptocurrency the greatest market bubble of all time?

[Joules MM1]

it will only rise.

this is interesting:

 

[Value Collector]

From what I understand it's a prepaid card in Australia. I'm not sure what options the Yanks have though.
Sorry but I'm not fully up to speed on it

Personally I think just the gas fees would kill it.
However if the above was done it would skirt a few tax laws as it's being used to buy goods.
I think we are a long way from that in Australia.

So more of a debit card than credit card, It probably operates the way some of the cards that tried the same thing with gold worked.

Eg. You have say 1 ounce of gold loaded in the account, and if gold was $2000 for an ounce you could spend $2000, but if gold dropped to $1000 you could only spend $1000.

and as soon as you make a $1000 purchase, $1000 of your gold (or Bitcoin) is sold to settle the transaction, in this case both gold and Bitcoin are being treated as commodities that are instantly sold converted into cash to settle the transaction, the bit coin and gold is not being used as a currency.

——————

It would be an interesting experiment to pay a group group of peoples hourly wage in Bitcoin, and have their credit cards and home loans converted into Bitcoin, and see how their employers go at paying them, and how their banks go at maintaining the loan.

may any given time either their employer paying their wage, or their banks holding their debt would be stressing.

 

[moXJO]

Crypto profits are about timing the momentum swings, those that hodl now are late to the party. Know many who bought and sold Bitcoin, none believed crypto mania would drive the price to current levels so they sold.

Referring to crypto as currency is a misnomer, you can only exchange it for currency. Those who trade the FX markets know that a 1-2% swing in a major currency pair is a big event. A 10% swing would be an extreme outlier event to say the least, not in the crypto casino.

‘Domino effect’ warning as $200 billion wiped off cryptocurrency market. This kind of volatility exposes the delusion that crypto can act as a "currency", store of value or reliable medium of exchange.

There are coins with supposed utility that were still moving.

I think a guy bought $13000 in shib last August and it was valued at $5.7 billion or something stupid. Obviously you would never see that amount as you would crash the market. But still hundreds of millions and a lucky trade.

I use "meme enthusiasm" as a get in. Seems like a legit measure in a batsht crazy casino.

 

[moXJO]

So more of a debit card than credit card, It probably operates the way some of the cards that tried the same thing with gold worked.

Eg. You have say 1 ounce of gold loaded in the account, and if gold was $2000 for an ounce you could spend $2000, but if gold dropped to $1000 you could only spend $1000.

and as soon as you make a $1000 purchase, $1000 of your gold (or Bitcoin) is sold to settle the transaction, in this case both gold and Bitcoin are being treated as commodities that are instantly sold converted into cash to settle the transaction, the bit coin and gold is not being used as a currency.

——————

It would be an interesting experiment to pay a group group of peoples hourly wage in Bitcoin, and have their credit cards and home loans converted into Bitcoin, and see how their employers go at paying them, and how their banks go at maintaining the loan.

may any given time either their employer paying their wage, or their banks holding their debt would be stressing.

Actually you might know the answer to a question.
Hypothetical:
I start a business and pay myself in gold coins. I think they have $100 for a once and it can supposedly be used as currency. So do I only pay tax if I sell the gold and does the company get to deduct tax from buying the gold at spot?

 

[Value Collector]

Actually you might know the answer to a question.
Hypothetical:
I start a business and pay myself in gold coins. I think they have $100 for a once and it can supposedly be used as currency. So do I only pay tax if I sell the gold and does the company get to deduct tax from buying the gold at spot?

I think a possible tax outcome would be as follows.

1, Company buys coins and writes the purchase price off as a cost of business, because it has used the coin to pay you.

2, You declare the face value of the coin ($100) on your personal tax return as income and pay tax on the $100 face value.

3, when you finally sell the coin for more than $100 face value, you declare a profit on your personal tax return and you pay capital gains tax on the “profit” you made selling your $100 coin for more than its face value.

Of course I am not an accountant, so you would have to check if this is the way it really works, I am not familiar with the rules of doing this.

I guess it could be a way of delaying your taxable income until you sell the coins, you might even save tax if you get the CGT discount, but you might also lose out if the price of gold drops more than the CGT discount.

 

[moXJO]

I think a possible tax outcome would be as follows.

1, Company buys coins and writes the purchase price off as a cost of business, because it has used the coin to pay you.

2, You declare the face value of the coin ($100) on your tax return and pay tax on the $100.

3, when you finally sell the coin for more than $100 you pay capital gains tax on the “profit” you made selling your $100 coin for more than its face value.

Of course I am not an accountant, so you would have to check if this is the way it works.

Someone must have come up with this idea before. I'd never attempt it as it looks like an automatic Ato a$$f@#king. But I always wondered about it.

Also that if you used it to buy goods and you didn't use the face value but spot price.

 

[Value Collector]

Someone must have come up with this idea before. I'd never attempt it as it looks like an automatic Ato a$$f@#king. But I always wondered about it.

Yeah, it would be ballsy, and might not pass the acid test in a court room when you have to explain why you did things that way.

but unless you claim the CGT discount, your aren’t really reducing your tax, you are just delaying it, because eventually you have to sell the coins, and will get a paper capital gain, which might push you into the higher tax bracket, where it might have been better just keeping the profit in the company and paying the company tax rate.

 

[cynic]

Someone must have come up with this idea before. I'd never attempt it as it looks like an automatic Ato a$$f@#king. But I always wondered about it.

Also that if you used it to buy goods and you didn't use the face value but spot price.

I don't have a specific answer, but do you remember a thing called "BarterCard"?

It was used as a medium for trading goods and/or services without the need for fiat currency.

Anyway, from memory the ATO recognised its tax avoidance potential and promptly responded with the introduction of some new rules.

 

[Trader X]

Interesting debate on Kitco between Peter Schiff & Alex Mashinsky on Bitcoin vs Gold. Mashinsky makes some interesting claims, gold is worthless, Bitcoin is a store of value (because the price has gone up), you should hodl not sell, and Bitcoin has intrinsic value because investors are voting with their dollars, preferring it over other risk assets etc. On one hand we can't predict the future, but Bitcoin should go higher because of past price performance. So people continue to place bets at the crypto casino because they think the odds are in their favor, yet they have no idea what their odds or probability of success are. This will no doubt end badly for most.

 

[greggles]

Interesting debate on Kitco between Peter Schiff & Alex Mashinsky on Bitcoin vs Gold. Mashinsky makes some interesting claims, gold is worthless, Bitcoin is a store of value (because the price has gone up), you should hodl not sell, and Bitcoin has intrinsic value because investors are voting with their dollars, preferring it over other risk assets etc.

Gold is not only used to produce jewellery, but it also has a range of industrial uses. On that basis alone, gold is far from worthless. Bitcoin, on the other hand, is used to buy drugs on the dark web. Does it have another use beside that?

 

[Value Collector]

I don't have a specific answer, but do you remember a thing called "BarterCard"?

It was used as a medium for trading goods and/or services without the need for fiat currency.

Anyway, from memory the ATO recognised its tax avoidance potential and promptly responded with the introduction of some new rules.

Yep, barter card dollars are treated exactly the same as Australian dollars on your tax return.

 

[Value Collector]

Gold is not only used to produce jewellery, but it also has a range of industrial uses. On that basis alone, gold is far from worthless. Bitcoin, on the other hand, is used to buy drugs on the dark web. Does it have another use beside that?

Yep, the is many areas where gold demand would increase as the price dropped creating a natural floor, for example as a bare minimum gold would never trade for less that copper, because its a better conductor than copper, so would immediately be used as a substitute for copper should the price ever drop close to the copper price, so it’s definitely not worthless.

However, it is entirely possible that one day Bitcoin drops out of fashion and there is no natural floor to support its price when people lose interest

 

[againsthegrain]

Yep, the is many areas where gold demand would increase as the price dropped creating a natural floor, for example as a bare minimum gold would never trade for less that copper, because its a better conductor than copper, so would immediately be used as a substitute for copper should the price ever drop close to the copper price, so it’s definitely not worthless.

However, it is entirely possible that one day Bitcoin drops out of fashion and there is no natural floor to support its price when people lose interest

If we are talking 0 scenarios it is possible for bitcoin to stop, if everyone switches off the miners and nobody hosts the network your bitcoins are all belong to cyberspace now. Can't bury in the backyard what you can't physically hold in your hand

 

[Trader X]

It would be an interesting experiment to pay a group group of peoples hourly wage in Bitcoin, and have their credit cards and home loans converted into Bitcoin, and see how their employers go at paying them, and how their banks go at maintaining the loan

This scenario, all prices denominated in Bitcoin, would imply that Bitcoin is acting as digital currency for all financial transactions and not just in your local economy. In most cases, Bitcoin volatility would demand that you immediately convert your Bitcoin into a more stable currency, reducing the risk of transacting at a loss.

If the purchasing power of your Bitcoin can fall 10 to 20% or more in a 24 hour period relative to say the USD, you have a problem. The overnight carry potentially causing restless nights. Whereas, if you hold USD, EUR, AUD etc. you can sleep like a baby. At the completion of a transaction, businesses in El Salvador will likely prefer USD in their bank account, not Bitcoin. If Elon does not want to price a Tesla or SpaceX excursion in Bitcoin, that should be something to take note of.

For the chartists here, Bitcoin looks to have formed a double top, if it completes the pattern then $40k Bitcoin is on the horizon.

 

[moXJO]

Quantum computers would probably put an end to bitcoin. Early adopters of the technology would no doubt wreck the space

 

[Value Collector]

This scenario, all prices denominated in Bitcoin, would imply that Bitcoin is acting as digital currency for all financial transactions and not just in your local economy. In most cases, Bitcoin volatility would demand that you immediately convert your Bitcoin into a more stable currency, reducing the risk of transacting at a loss.

If the purchasing power of your Bitcoin can fall 10 to 20% or more in a 24 hour period relative to say the USD, you have a problem. The overnight carry potentially causing restless nights. Whereas, if you hold USD, EUR, AUD etc. you can sleep like a baby. At the completion of a transaction, businesses in El Salvador will likely prefer USD in their bank account, not Bitcoin. If Elon does not want to price a Tesla or SpaceX excursion in Bitcoin, that should be something to take note of.

For the chartists here, Bitcoin looks to have formed a double top, if it completes the pattern then $40k Bitcoin is on the horizon.

Yeah that was my point, imagine a worker signing up to earn his wage in $X amount of bit coin per week, one week he could be king of the world and his employer going broke just to pay him, the next week he is in the bread line, begging for some free soup.

 

[Trader X]

Yeah that was my point, imagine a worker signing up to earn his wage in $X amount of bit coin per week, one week he could be king of the world and his employer going broke just to pay him, the next week he is in the bread line, begging for some free soup.

Taxation becomes interesting also, if bitcoin wage/business earnings are taxed nominally regardless of it's equivalent USD conversion rate, you could be on the breadline and be in debt to the tax office as well.

 

[qldfrog]

Quantum computers would probably put an end to bitcoin. Early adopters of the technology would no doubt wreck the space

Disagree here, first quantum miner will cream out for a month, might see a surge of sell and so temporary price fall but it is a one off and limit is still there....
More afraid of government intervention, as the west goes the chinese path in term of dictatorship, it means if gov say no, it will be No.
Btc is dead in China already

 

[againsthegrain]

Disagree here, first quantum miner will cream out for a month, might see a surge of sell and so temporary price fall but it is a one off and limit is still there....
More afraid of government intervention, as the west goes the chinese path in term of dictatorship, it means if gov say no, it will be No.
Btc is dead in China already

I understand that as quantum computers would put a end to it because brute force attacks on public wallets could find the private key in a short enough time span vs 100s of years for conventional hardware

 

[qldfrog]

I understand that as quantum computers would put a end to it because brute force attacks on public wallets could find the private key in a short enough time span vs 100s of years for conventional hardware

yes sure that could happen but need to be worth the effort.Cost quantum computer plus power vs gain in a single wallet.
And we are not there yet believe me..