Comment by benchaney | Hacker News Reader

Comment by benchaney | Hacker News Reader

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I spend a fair amount of time telling people not to overhype Bitcoin/blockchains (I even did so in another place in this thread), but even to me this is stupid. Some highlights:

> The USA has the world's largest GNI by some measures, it holds thousands of tons gold in Fort Knox and other places. In 1971 the dollar was an abstraction of its gold reserves, since then its been an abstraction of that abstraction.

Bitcoin is an abstraction of an abstraction of that abstraction. Care to explain why 2 levels is fine but 3 levels is obviously worthless?

> Any how, the Bitcoin scam claimed a magic wand could create value, so unsurprisingly other scams arose - Ethereum, Ripple, NEM etc. all currently have billion dollar market caps.

Bitcoin has value for the same reason that anything has value. Because people value it. No magic wands needed.

> Bitcoin was not created by a Ponzi, but by some criminal who has kept their identity completely secret. If this doesn't wake you up to the con, I don't know what will.

This is the icing on the cake of stupidity. You call him a criminal. What law has he broken?

Comparing bitcoin or similar to USD misses one big thing:

You have to (if you live in USA) pay taxes in USD; if do not you will be met with the force of the state.

This creates a default demand for USD and there is nothing comparable to that for bitcoin.

I keep hearing this argument and it continues to make no sense to me. With the exception of fixed levies (like property taxes) all other taxes are proportional to income valued in USD. Multiplication is commutative, though -- if I earn 100 BTC, and say my tax rate is 30%, then I own 30 BTC in taxes, at the prevailing exchange rate -- the demand for dollars is an illusion here; regardless of the value of dollars relative to BTC, I owe 30 BTC worth of dollars; if dollars are worth a lot, then I owe few of them, if they are worth little, then I owe a lot of them. There is no function forcing value into USD.

There's a question here that affects your story somewhat because governments do require you to calculate value in their currency (USD in your example).

Let's say you earn 100 BTC at the start of the tax year, and your tax rate is 30%, but BTC drops from 1000$ to 100$ over the course of the year. How much in taxes do you owe at the end of the year? 30000$ or 3000$?

I don't actually know the answer for certain, but my guess is you owe 30000$ -- and if you didn't sell your BTC early, you're screwed. You could perhaps offset some of your taxes by claiming an investment loss, but that usually only works to offset capital gains taxes, not income taxes.

On the other hand, what if BTC rises from 1000$ to 10000$? I expect you'd still owe 30000$ in income taxes, plus capital gains taxes if/when you sell your BTC.

Basically you're saying that what gives the dollar value is that without it the government would imprison you for not paying taxes? In other words, it's a kind of like a freedom (from jail) token according to you.

> What law has he broken?

Stop and identify yourself, apparently.

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