PwC Hong Kong first Big Four firm to accept bitcoin | Hacker News Reader

PwC Hong Kong first Big Four firm to accept bitcoin

economia.icaew.com

82 pointsczl_my139 comments

Here's a dilemma about the extremely bullish Bitcoin market: I would be happy to get paid in Bitcoins, but do people want to pay in Bitcoins? Everyone I've heard wants to hoard them ("hodl").

I only remember buying a single item with Bitcoins and that was because the online store had difficulty with my credit card.

I have a bitcoin debit card. I use it every other day. I call it my magic internet beer money card.

Legitimately curious how a bitcoin debit card works

Put x$ in bitcoin on card exchange. Put y$ in card account. Use card from y$. 15 minutes or so later, y$ account is topped up from x$ account. Txn never touches the chain. Sure it's a risk having a bit of money on an exchange, but that is the price of convenience. When the amount on exchange is too high, i shift to my bitcoin wallet.

Does this complicate filing your taxes?

Nope. As long as the money i spend on the card is less than the money i place on it i only have unrealised capital gains. If and when i want to spend more than that, i will have to pay capital gains on that component. It's no different than a high interest savings account.

That's what bitcoin is; A decentralized banking account. Except you are your own bank.

I thought what you meant by it reloading USD from btc would mean a sale of btc (which is taxable event?), no?

The event doesn't lead to a capital gain.

Ok my knowledge of tax is shaky at best, but this is confusing.

Timeline:

day 1: you buy bitcoin (or mine it and take tax as gross income), bitcoin is valued at $1k USD / bitcoin, you bought 1 bitcoin

day 10: you use the $100 in your debit card to buy many beers, bitcoin is valued at $1.1k USD / bitcoin

day 10 +15 minutes: something sells some of your bitcoin to replenish $100 in your debit card

You now have 10/11th of a bitcoin, valued at $1000 USD, plus $100 of taxable gain for which you probably need to pay the IRS like $15 or something. Or what's wrong in my timeline there?

I would suggest contacting a tax-accountant in your jurisdiction if you are unclear of your obligations. Every place will have different requirements.

K I'll ask my CPA in a bit

Ok yo, at least for US jurisdiction you would need to report those individual bitcoin sales as taxable cap gains events (either loss or gain depending on the cost basis). Does whatever exchange you're using make calculating cost basis easy? Like do they send you an 8949 or all the details easy to fill out? Otherwise that sounds like a huge pain to get everything straight for every purchase (even if it's just daily sales). If the exchange makes it easy it might not be that bad. My 8949 / sched D already got like dozen+ entries on it, what's a few dozen more? lol. But if the exchange doesn't provide easy cost basis and makes you calc it on your own, ugghh no thanks.

They also went into some detail about wash sales, which is going over my head.

But yea this sounds like it would vastly complicate your tax preparation. Unless you just don't report it and cross your fingers that you don't get audited I guess?

Of course, this is now 3rd hand from a CPA, and only applies for US federal taxes.

I don't live in the US. Good info to have in the US if you do though.

If that is true, there should exist cards that let you load other assets on them to cover the cost of spending. Like a card that sells your Google stock to cover the cost of your beer. The ability to sell capital assets without paying tax should make these cards very popular.

If these cards do not exist or are not popular, I would take that as evidence that selling a capital asset is taxable, whether or not it was triggered by a card purchase.

It is true where I come from. America is not the only country in the world you know. In fact, it is one of many. I have no desire to live there again TBH.

>As long as the money i spend on the card is less than the money i place on it i only have unrealised capital gains.

Either you aren't in the US, or you don't understand how capital gains work. What you describe is exactly a taxable event (could be a loss, could be a gain).

Selling X shares of a capital asset for $Y is always taxable, no matter if you also buy X more shares, or $Y more in the same period of time. See also: wash sale [0].

[0] https://www.investopedia.com/terms/w/washsalerule.asp

I am not in the US.

https://en.wikipedia.org/wiki/Capital_gains_tax_in_Australia

> CGT operates by having net gains treated as taxable income in the tax year an asset is sold or otherwise disposed of.

Why is this preferable to using a credit card? The only "advantage" I ever see people mention is "no chargebacks," but that's not in my interest, as a buyer.

> Why is this preferable to using a credit card?

My money isn't being debased while I hold it. Quite the opposite.

In that case the credit card is even better, because your debt is being "debased" until you get a bill.

I prefer to control my expenses thanks. Going into debt to pay for my consumption is not how I like to manage risk.

Anybody sensible who is making a software engineer's salary pays off credit cards in full at the end of each month, which is only "going into debt" in the most technical sense and incurs no interest charges.

You are, of course, always free to exercise whatever risk profile suits your requirements. I don't like that system thanks. If it works for you, who am I to criticize?

What exactly is the "risk"? That I won't have the exact same money I would spend now in two weeks?

it's a visa card that you send BTC to your account and when you spend they remove the amount of BTC at the current exchange rate

One thing I've heard from people is that they would buy something with bitcoin, then exchange traditional money to replace the bitcoin they spent.

Yep. Every two weeks when i get paid i put aside my spending money for the next two weeks by transferring to my bitcoin debit card. Then i use that card. The thing is, it is increasing in value faster than my pretty average spending requirements. Holding the money in my spending wallet in bitcoin just means it increases in value rather than being debased.

Well, companies can just convert instantly to Bitcoin on transaction.

They can hold with their other money.

We all want to get rich by hoarding money. The only difference is, that the value of bitcoins compared to classical currencies is currently increasing. And because the monthly increase is so high, so many want to join the game.

As soon as everybody has some bitcoins the bitcoin value increase should slow down. At that point there would be no point in hoarding bitcoin more than any other currency.

> At that point there would be no point in hoarding bitcoin more than any other currency.

Oh yes there is. Bitcoin is deflationary, so your money isn't debased while you hold it. I don't ever intend to exchange my bitcoin for any other currency unless I'm purchasing something.

Why not just hold bonds?

My banking account can never be seized by a govenment, and I can liquidate them whenever I choose, wherever I choose. Indeed, I can buy a beer with my bitcoin at any time of my choosing.

That's not really a threat vector that most people worry about.

Most people don't understand or appreciate risk, no.

Okay then. What's the probability of the government seizing your bank account?

High.

https://en.wikipedia.org/wiki/Executive_Order_6102

https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United...

I think when bitcoin is measured in the multi-trillions, the temptation for the US government to raid american bitcoin exchanges will be too great. And they have form.

What is "high" probability? 80%? 70%?

What's more, Bitcoin is subject to risks your bank account is not.

Every fiat currency is inflationary. Bitcoin is designed to be deflationary, so every Bitcoin will be worth more and more forever. Using Bitcoin as a currency makes no sense.

It makes a lot of sense if you want to, say, have a mortgage that you keep paying, but your equity never increases in your home anyway.

Personally, I've grown quite accustomed to things becoming cheaper to buy. It allows me to buy more things.

yes, but when this happens enmass, the people making things are going to see that nobody is buying their widgets, and go out of business before it becomes cheap enough. Then their employees get fired, and now there's less things to buy, with less people who have money to buy.

In that theoretical world that punishes savers by telling stories of deflation bogeymen, I'm sure. In the real world, I like beer, and when I want to buy a beer, I buy a beer. Except now I can buy more beer, because my savings haven't been debased.

A beer is one thing. Only a madman would take out a mortgage, auto loan, or large business loan denominated in a rapidly deflating currency.

> Only a madman would take out a mortgage

Oh that's the crux of it alright. And why should someone take on debt for a fixed asset? Why exactly should a fixed asset increase in cost? Without debt to fuel that fixed-asset price increase, prices will again align with income, not the amount of debt people are capable of servicing. People will no longer acquire housing, leaving it empty, simply for the capital gain.

Bitcoin is the reckoning for that fixed-asset debt bubble.

> large business loan

If they have a business plan that allows them to create capital by having income greater than expenses, people will invest in their business. If they are just going to sit on assets and expect inflation to take care of it, they won't.

Because a house I can live in now is worth more to me than a house I can maybe live in in 30 years?

Even if you are unconcerned with mortgages, though, loans are the basis of most business operations; in a world where taking out loans doesn't make sense presumably we'd see a lot less economic activity and a lot more just sitting on money waiting for it to deflate. Unless you have some sort of alternate economy in mind (and I haven't met many Bitcoin guys who are planned-economy enthusiasts) switching to a deflationary model would be a complete economic disaster.

I think bitcoin will finally separate the good debt from the bad debt. It is my personal belief ( as in i don't know of any formal theory ) that debt should only be incurred for the use of building a productive asset. That covers completely your business loans argument. In a deflationary currency, this encourages businesses to ensure that productivity increases will have greater returns than savings. Instead, our financial system has encouraged the acquisition of debt for fixed assets. The only thing this has done is bid up the price of those fixed debts with debt, and handed over the money for supporting that system to banks and their owners. In order to stimulate growth in such a system, the only way that you can function is to tax savings. That's what inflation is. What it forces people to do is to invest in increasingly risky assets, because of the loss of their purchasing power. Hence bubble after bubble after bubble. Crisis after crisis after crisis.

Bitcoin will eventually stabilize to an ever appreciating value asset. But what it will allow you to do is save for a house. If you have a business proposal that encourages people to pay you for a good or service, people will invest their savings in it and take on that risk. Banks will instead move back to providing capital to businesses, using savings from people that are willing to invest. Businesses will again focus on productivity increases, because that's how you get access to capital.

I also don't think it is going to be resisted quite as much as people think it will be. People still need to pay their taxes, and that is not going to stop. The main thing it is going to do is prick the bubble of consumer debt, and remove the banking middle-men from that space. That alone is a multi-trillion dollar industry, let alone the annuities that banks own and graft from, from those assets. Removing these people (i.e. banking debt suppliers) from positions of power, by strangling their access to capital, is a justification for bitcoin in its own right. Imagine a world in which banks didn't control governments.

That's the way it is supposed to work i think. It is pure genius.

Frankly I think the outcomes of adopting Bitcoin as a legal currency would be wildly different from the picture you're painting.

We are going to find out.

Probably not. What basis do you have to think that any government, let alone all of them, are going to adapt it?

It doesn't matter what they do. That's the great thing about bitcoin. No-one is forcing you to use it. If you don't think it suits your requirements, don't use it.

This seems like a non sequitur if we're discussing it being a "legal currency", by which I meant one you pay your taxes in.

I have no problem spending in whatever currency, whenever required, for whatever purpose, and keeping my savings in bitcoin.

That's dodging the question.

He said : > > What basis do you have to think that any government, let alone all of them, are going to adapt it?

I said : > It doesn't matter what they do.

They can adopt it, or not adopt it. It makes no difference whatsoever.

Notice you could only make this "summary" by skipping most of the beats in the conversation. Also, I'd say it actually matters tremendously whether Bitcoin becomes legal tender somewhere or remains a marginal element of the world economy that only a handful of true believers buy anything other than weed with.

I'm off to the pub to buy a beer this very second, on this rainy sunday afternoon. And I'll be using my bitcoin debit card to buy them. I can buy about twice as many as I would otherwise be able to, given the value of bitcoin increasing since the money was placed into my bitcoin account.

You should try it. It works really well. And beer is delicious.

Would you give it a rest with the beer stuff? If that is what makes it a real currency then a gift card to the liquor store is just as relevant. And the fact that the USD exchange rate changing immediately means you can buy more stuff makes the opposite point of the one you're trying to make.

Buy gift cards if you like. I'll use bitcoin. Let's compare notes in a year.

Having another delicious beer right now on my bitcoin debit card. It has been a good day.

Why not put a $10,000 bet into escrow right now, since you're so confident on Bitcoin being used as a currency a year from now?

Where you say 'bet', I say 'adopt'. I have adopted crypto as my store of value reference. It's working out quite well.

When I say bet, I mean bet. It's a way to back what you're saying. Your using semantics to dodge further proves your repeated comments are just hot air.

Talk about missing the point.

https://imgur.com/a/vmdbW

It tastes real enough.

The interest rates would be correspondingly different. Look up the no-arbitrage principle. It explains why all of these concerns are silly. If you can’t be bothered to do that, just know that the general premise is “it all works out”.

In particular, the risk-adjusted deflationary returns are already priced in to the asset’s current price, so you can’t actually make any (time-discounted) expected money just from holding on to a deflationary asset. You can, on the other hand, lose money by holding on to dollars, but only because its utility from convenience sort of counteracts the deflationary loss of future value (up to some small amount of dollars, at which point you start thinking “I should buy stocks or something instead”).

As long as those stocks are related to productive pursuits, I completely agree. Risk and reward. Stocks that are geared towards only capital growth through monetary inflation will do poorly. As they should.

> A situation in which all relevant assets are priced appropriately and there is no way for one's gains to outpace market gains without taking on more risk. Assuming an arbitrage-free condition is important in financial models, thought its existence is mainly theoretical.

Perhaps more to the point, we live in a world where governments can stimulate investment in stocks by manipulating the interest rates of bonds and maintaining steady inflation, and yet I am to believe that if, in effect, you could collect interest with zero risk by just holding your money, it wouldn't have any effect on the economy? Just as many people would be investing as in the current situation, where if you do that you're losing money? It seems hard to justify all the rhetoric about "war on savers" if that's the case. How does the no-arbitrage principle actually explain this away?

This argument is silly and people should feel silly for repeating it over and over. The same is true of almost any traditional investment, and yet people obviously liquidate such investments to purchase things. The only reason people don’t directly trade in appreciative assets all the time is that they’re bulky and infungible.

By its very design Bitcoin encourages deflation. The money supply is over time going to shrink, rather than grow, as does every major reserve currency.

I've been taking a portion of my paycheck in Bitcoin (via bitwage) explicitly intended as spending money for a while. I buy things regularly with it. The payment flow using a mobile wallet is pretty great.

Genuinely interested in your perspective: In January '17, 1BTC was $800 and it's currently >$10,000. How can you justify spending X BTC on a good or service as you've now paid ~10x the original asking price?

If you save some of the wages you get in bitcoin from 800 - 10k I'm sure you'll be pretty happy, not like the fiat increased in value.

The same way I justify not having spent every cent I could spare buying BTC over the last eight years.

I mined hundreds of BTC in 2011 to 2012, and sold pretty much everything as I went. If I'd saved it all, I'd have "fuck you money" right now, but at the time even $100/BTC seemed like a moonshot.

I'm not going to beat myself up over not having prescient knowledge of BTC or any other thing I could have invested in.

Would you still be happy to be paid in bitcoins in an environment where people would be happy to be paying you in them? Because that would only be in a bear market.

This ad-hoc definition doesn’t make any sense. Everyone is happy to buy or sell bitcoins at a certain price. Whether that is (for you) higher or lower than market price depends on if you’re more bullish or bearish than the (weighted) average market actor.

From what I have read people are using Bitcoin more and more for purchases.

https://blog.bitpay.com/bitpay-growth-2017/

Welcome to the enigma - Is it a currency or an asset?

Serious question: How is BTC going to ever achieve the price stability required for a currency?

... or the transaction volume?

The volume will increase in line with adoption.

Isn't this tautological? What does "adoption" mean if not "transaction volume"?

I assume the parent was referring to the trade volume, which is significantly lower than more established assets.

Ah, I interpreted it to mean transaction volume, since that's an indicator of BTC's utility beyond speculation.

Is that before or after they figure out how to do more than 7 BTC transactions a second?

Why are people so obsessed with stability? Prices can float freely.

Currencies, at least traditionally, are a store of value. You don't want stores of values to be volatile.

Though I suppose the end game for BTC could be a transfer mechanism that no one actually holds. It would still be subject to flash crashes, though.

As a person who uses bitcoin as a store of value, i am quite ok with it being worth 10x what it was less than a year ago. More volatility for me please.

you might be a lot less happy when that means 1/10th of the value.

If i were you I'd be dumping my USD then.

Which is better, a currency that's guaranteed to decrease in value over time, or one with a fixed supply that has historically increased in value consistently?

I think with the volatility everything tends to average out. And the economic theory that currency must be inflationary is widely accepted as correct, but I don't really understand why or what the first principles are behind that claim.

If you're explicitly asking about USD vs. BTC, I'll definitely take USD, which has a strong history of stability. BTC certainly doesn't have that. Maybe BTC is going to appreciate or stabilize for the next century, but why would I risk that?

But consider the hypothetical scenario, where you have two currencies that have been around for the same amount of time, with similar reputations. One is inflationary and one is deflationary. Which one would you choose to save your wealth in?

Obviously deflationary. What's your point?

I was alluding to your comment regarding price history and track record. People put their money in bitcoin (and other assets) based on future expectations. It's very risky now because we don't know if it will deliver on it's potential, but it definitely has some attractive features.

Like several other people in this discussion, you point to the deflationary nature of Bitcoin as a positive. I do not doubt Bitcoin would be deflationary if widely used, but what I do doubt is that an economy that converted to a deflationary form of currency would be anything other than miserable for most people.

Currencies are the store of value of poor people, because unfortunately they don't have the sophistication to manage their wealth using assets that don't loose their value. And that is unfortunate because they are taxed the most by the continuous devaluation of currencies. Wealthy people avoid the devaluation of their wealth through various sophisticated method, which leads to increasing inequality. Of course, this is only one perspective in the nebulous economic system.

I suppose directly most people don't store value in currencies, but indirectly, they definitely do. Bonds are denominated in currency, and the value of stocks are derived from companies that hold assets in largely cash and bonds.

Perhaps a lot of people own houses too, but still, I think the majority of people don't even own bonds or stocks (which can have a return). I think US people are more sophisticated when it comes to using financial tools but my impression is that in Europe most people have no clue about investing their money besides buying a house. Hell, most of my peers in my generation barely have any savings.

Most people have some kind of pension and most work pensions are invested in some kind of diversified portfolio involving stocks and bonds.

Around half of Americans own stock. http://news.gallup.com/poll/190883/half-americans-own-stocks...

> my impression is that in Europe most people have no clue about investing their money besides buying a house. Hell, most of my peers in my generation barely have any savings.

If there are more Americans in the stock market it's probably because the American social safety net is very weak.

And also a unit of account, which you definitely want to be stable.

Because this: https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe

Another great example for why you should use Bitcoin.

It is likely that volatility will drop a lot once and if it gains widespread adoption.

I don't know much about monetary policy. Why does adoption imply price stability?

I don't think there are any guarantees, but the reasoning is that widespread adoption implies that the violent capital inflows have subdued and a more stable equilibrium is reached. Of course, panics can still happen for various reasons (security breaches, outlawing it etc).

What about violent capital outflows?

Right now there are still trillions of dollars that could go into Bitcoin (potentially), and the more of that money gets converted into Bitcoin, the more its price increases (because the number of Bitcoins is relatively stable from month to month or even year to year, so it's logical that 1BTC will cost more when $1 trillion are put into Bitcoin than when $100 billion are put into Bitcoin).

As Bitcoin gets closer to its "maximum potential" (which could very well be the total world transactions being done in Bitcoin, or say 50% of them, if Bitcoin's share of total cryptocurrency market cap remains the same as it is now), the price should stabilize, as there wouldn't be extra money that could be put into Bitcoin, or at least not much more than there already is.

Also, there's a big difference between adding $100 billion into Bitcoin when the total Bitcoin market cap is $100 billion before that, and adding $100 billion when Bitcoin's market cap is $10 trillion. That's why when Bitcoin's market cap will represent a much larger share of the world transactions, its price should become increasingly more stable.

> the price should stabilize, as there wouldn't be extra money that could be put into Bitcoin.

I've heard some wild logic from BTC fans, but this takes the cake. BTC will stabilize because no more money can be put into it, huh? What about, you know, money that can be taken out?

I'm not an expert, but from what I've read it sounds like derivatives (i.e futures) might help.

https://qz.com/1144262/the-cftcs-green-light-for-bitcoin-fut...

Ah, I didn't realize derivatives were illegal until now. Thanks!

Why haven't derivative exchanges popped up in unregulated markets, the same way that ICOs have avoided US regulators.

Well, traditional currencies were stable because of the gold standard, but nowadays the stability of bitcoin comes from the miners and the difficulty setting, while the stability of national currencies is controlled by institutions like the FED.

Nevertheless, at the moment there is an increased global demand for bitcoins due to the many people and organizations who are joining the system. The only problem is that due to high demand the bitcoin value to normal currencies quote increases so rapidly that it attracts even more people, which could lead to many people loosing their interest in bitcoin as soon as the growth rates cool down.

So let's hope the cool down will happen gradually. That way we should not be afraid of the bubble.

> the stability of bitcoin comes from the miners and the difficulty setting

The mining system controls the supply, not the value.

Only in the short term. The difficulty adjustment eventually makes changes in mining capacity moot.

I consider the difficult adjustment to be part of the "mining system". My point is that BTC self-regulates supply, not value. Value is determined by the (volatile) market.

And I thought 'supply and demand' define 'value'. So when you control the 'supply' you should be able to control the value to some extend. Granted, as the mining system can only add coins the control is limited.

OK, so we have shown that inflation of Bitcoins would not be likely if they were in wide use. Have you considered deflation at all? Deflation is great if you're holding the currency to speculate, but not if it's running an economy.

Stop the fucking mantra of "deflation is bad". We've had way more crisis caused by inflation than by deflation. Stop thinking that the problems caused by printing more money can only be solved by printing more money!

And actually, maybe these days our planet needs a bit of deflation, to stop all that mad consumerism of our society.

Wow, with such a well-reasoned argument how could I not be convinced?

It's the person that makes the assertion the one that needs to give proof. Most of the "deflation is bad" arguments are never argumented. I'm calling them out.

As I've said repeatedly, deflation is bad because it discourages investment and buying, and would grind our economy to a halt. Also more Americans are net debtors than not. You are the one looking to argue against essentially every economist on Earth here.

With derivatives.

But why would an accounting company accept fake internet bubble money that obviously has no value? /s

I know you added a /s, but real answers could include: 1) they want to ride the bubble, and 2) they want to sell services to people who use the fake internet bubble money.

The beer that i buy using my bitcoin debit card doesn't taste fake.

Just curious, have you drank more in beer than you've bought in Bitcoin?

Not yet!

Because, if they can quickly convert it to real money, they're hopefully safe.

Their announcement lacks details, but it's probable they are using an existing Bitcoin checkout service and never have to touch BTC themselves.

Thumb up, just like the top drug dealers don't abuse drug themselves

Typically retailers who accept Bitcoin do just that.

PWC don't charge "cup of coffee" money for anything so I guess accepting bitcoin could work for them, despite the high transaction fees.

Bitcoin fees are pennies. I paid 25c for a txn yesterday, and that's just because i didn't want to wait a week for the chain commit, which normally i couldn't care less about. The value of bitcoin is already greater compared to the amount i transferred + the txn fee.

An accounting company (Arthur Andersen) created $100B revenues out of thin air, internet bubble money sounds like a very useful ingredient for high level 'creative accounting'.

It’s a marketing play. Appear innovative and differentiate commoditised accounting services. Sell advisory services to governments and big business on crypto. Good idea really.

Scarcity and demand drives worth. As well, interestingly, scarcity itself can drive demand for certain goods...

Clearly running BTC services are just a training ground for PwC infosec teams to better learn to secure stuff. Protecting consumer/business data is just so damn boring because nothing happens if you get it wrong. /s

I am a Hongkonger, please listen to my advice: https://www.youtube.com/watch?v=6y1o_DblVmA Cryptocurrencies will be another bubble story.

I think EY Switzerland was actually the first.

People don't consider EY Switzerland as one of the "Big Four". You're right though EY Switzerland did this same move roughly one year ago.

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