South Korea considers cryptocurrency tax
reuters.com
reuters.com
Until the end of 2013, Bitcoin was predominantly traded for US dollars. However, after the crash of 2013, miners consolidated in China and Bitcoin mostly traded for Chinese yuan[1]. At the start of 2017, regulators in China cracked down on digital currency exchanges[2] and trading quickly moved to Japanese yen and, more recently, South Korean won[3].
All of the early buyers are selling. This won't end well.
[1]: http://www.businessinsider.com/bitcoin-trading-china-yuan-re...
[2]: http://fortune.com/2017/01/05/bitcoin-plunge-china-currency/
[3]: https://www.bloomberg.com/graphics/2017-bitcoin-volume/
After all, we have no real idea of "where" the bitcoin is held, if that means anything at all.
* Chinese energy producers and miners get cash into China from bitcoins they create and sell.
* Chinese (early) buyers of bitcoin sell their coins in the West for cash stored in Western banks, or turned into other Western assets.
I suppose the second stream is wider, but the first is not to be neglected, too.
The outflow of the capital from China via bitcoin must definitely be larger than inflow. And those who transfer wealth from China via bitcoin are keenly interested in bitcoin growing as much as possible without crashing. They likely have bought a lot for a much lower price, and want to cash out in the West, at least partially, without trouble.
Right now, a lot of mining is still taking place in China since energy is cheap. These miners sell their coins outside of China and bring cash back into the mainland to pay for the energy and hardware used for mining. So in it's most simplistic form, when you buy a bitcoin, you are adding to the earnings of Chinese energy companies and hardware companies (and some naturally goes to speculators and miner margins).
I just want you to be aware that those 2 sentiments are directly contradictory. A ledger has value -- an online, world-wide, decentralized, distributed, peer-to-peer ledger moreso. Estimate the value of the ledger (this is a significantly different endeavour than estimating market cap), divide that value by the total number of BTC in circulation, and you have estimated the value of a BTC.
Why? Based on what? That's like saying "a state machine has value". That might be true in some contexts, but an arbitrary implementation of a concept is not necessarily valuable. Certainly, the value prospect of the ledger has no relationship to how many cryptotokens the ledger accounts to one's balance (that is to say, buying up cryptotokens is purely speculative because owning more does not make the ledger more useful)
I suppose what I meant to say is there is technically no money sitting somewhere held for owners of bitcoin to lay claim to.
Some people claim the dollar has value because the government accepts it for taxes, but the IMF's SDRs function as currency (within an exclusive population), aren't backed by anything, aren't accepted for taxes by anyone, and are worth $300 billion.
Please also provide evidence that "all of the early buyers are selling".
Why wouldn’t the CNY/JPY/KRW markets have much higher volume when they have zero trading fees?
The magnitude of an exchange is measured by how many funds they have on deposit, not how often these deposits change owner according to the exchange’s internal database.
Actually it's a wealth transfer from china to the US. The chinese are using bitcoins as a means to evade CCP capital controls.
There's a reason why china cracked down on bitcoin. Do you think china would stop wealth transfer to china? Of course not. They are trying to stop wealth transfer from china to the US.
If you think Bitcoin is overvalued, fine. Pour yourself a stiff drink and accept some people might lose some money.
The sort of emotional hyperbole on here about "cryptocurrencies need to be banned by the loving, paternal, incorruptible government to save the world from ourselves" is not just getting old, its absurd.
Having a censorship-resistant, globally-accepted asset would grant an unparalleled financial opportunity. Even if Bitcoin falls short in practice – it’s closer to the mark than any non-crypto asset.
Being able to send money around the world with real-time market-based fees that are often lower than many alternatives is useful. Having a place to park value when banking is not available is also useful. The list goes on…
Do you trust the government and the financial institutions that much that you're willing to hand them back the reigns of your financial future?
Why is it "getting old"? It's a fair concern that something so volatile should be examined critically and relentlessly. People don't just "get a stiff drink and accept they'll lose money" if it goes down---they jump out of windows.
I'm hesitant to jump in cryptocurrency discussions because 1) I know too little about them, even at a technical level and 2) they're consistently filled with "emotional hyperbole" (that we agree on) from both ends.
I think governments/regulators should have some say the same way you'd want them to regulate any financial instrument and punish Ponzi schemers and pump-and-dumpers.
I'd like to think about the motives of both sides from being so passionate. For naysayers, I imagine it's a bit of sour grapes. For yaysayers, it's a bit more obvious---once the hype dies, they'll stop making money.
I agree - but backed with concerns based on legitimate understanding not "price is going up quickly, must be a scam".
> I think governments/regulators should have some say the same way you'd want them to regulate any financial instrument and punish Ponzi schemers and pump-and-dumpers.
Because they did such a great job in 2008? When are they planning to punish the architects of the financial crisis? Who's going after the banks when they launder money for mexican cartels and ISIS? You really think these people are trying to protect the public?
> I'd like to think about the motives of both sides from being so passionate.
I can't speak for anyone else but I come to these threads hoping to find sensible insight and technical analysis not "THIS IS A BUBBLE! BAN IT!"
> For yaysayers, it's a bit more obvious---once the hype dies, they'll stop making money.
There may well be a huge correction but the overall market is anti-fragile and here to stay.
An article that sums up my thoughts: https://www.callmegwei.com/2017/11/24/crypto-price-isnt-an-e...
Something that goes up and down so quickly and so frequently does warrant concern. Nobody has that understanding at the moment and it needs investigating.
> Because they did such a great job in 2008?
Maybe not the American government, but IIRC, Iceland is punishing the bankers (jail!) and the Canadian government has been praised for having kept a steady ship during the crisis through their economic policies. Governments can work.
Why is "going up and down so quickly" inherently bad? There's no moral or legal standard on volatility. It's just a metric, everyone is aware of it, and everyone should act accordingly.
If you're going to summarize the other side's position, do so in a way that they would agree with.
If there's something I've left out from this particular argument please let me know.
"On Monday, Financial Services Commission (FSC) Chairman Choi Jong-ku clarified to reporters at a luncheon meeting that “the FSC is mapping out measures to restrict [cryptocurrency] transactions to some extent,” which he did admit include “an all-out ban,” Yonhap reported. “The restriction is aimed at minimizing side effects of bitcoin transactions and reducing speculative investment,” the news outlet added. Choi was then quoted by Asia Economy:
We are discussing to what extent the government will regulate the trade, including the prohibition of trade. The chairman noted that the Ministry of Justice is currently reviewing measures to regulate cryptocurrencies. News.Bitcoin.com reported last week on this ministry being put in charge of a new Virtual Currency Task Force in order to “set up and implement the regulatory measures through consultation between the related ministries.”
And also "It is expected that the government measures related to virtual currency will not be a one-sided regulation that prohibits virtual currency trading altogether, but a regulation that limits investment amount and investment qualification."
https://news.bitcoin.com/south-korea-reports-ban-all-crypto-...
No it's not. It may be hard to prevent all SK citizens from using cryptocurrencies as SK is a reasonably open society, but it would be straightforward to ban their use.
So if you're saying its a commodity (and therefore should be taxed), it has value (and has to be based on something).
But semantics aside, taxation is theft, even more so in this case - there's no justifiable reason to hand over a portion of the gains to a government that had no involvement in the creation of the source of revenue.
No, not in the slightest.
Please keep generic ideological tangents off HN. They lead to angry-samey discussion rather than thoughtful-curious. Fortunately that didn't happen in this case, but then not all sparks lead to wildfires, even in a dry forest.
http://edition.cnn.com/2017/10/31/africa/zimbabwe-bitcoin-su...
http://abcnews.go.com/Technology/wireStory/venezuelans-bitco...
edit: Rather than downvote - could you please explain why you think crypto is not beneficial to the billions of people worldwide currently excluded from the financial system?
And then I'd like to see this contrasted with other hyperinflation instances were people abandon the local currency and start trading in either a neighbor's currency or even USD.
How is this propaganda? You're saying people in countries with hyperinflated currency have no use for crypto and don't use it? Can you back this up? Can you explain why there are significant premiums for Bitcoin when buying from exchanges from these countries? Or is this propaganda too?
Of course there isn't data (except of course from the exchange rates). These people are breaking the law and at risk of death or imprisonment. What type of evidence would satisfy you?
Of course it is. People paying money on foreign exchanges contribute to the price too. Foreign remittances are a fantastic use case for crypto (mostly to these same countries).
Also, what inspires many people to enter crypto, is general lack of trust in government and financial institutions. People choose to buy crypto rather than buying other asset classes or to hold fiat (this is a decision with a strong geopolitical basis).
> It seems like the large majority of trading is happening among people who live in other nations and who already have wealth.
Possibly, but thats besides the point. This argument is a refutation to several arguments that detractors make: - there's no use case for crypto - there's no underlying value to crypto - crypto can't replace a fiat currency
> This isn't a technology that protects the developing world against monied interests. Its a technology that amplifies inequality due to an enormous difference in cost depending on when you joined the network.
As the Big Lebowski said "that's just like, your opinion man".
Joking aside, there are good reasons to think that crypto could in fact allow many people who are currently stuck outside the financial system to have access. This may me a small use case right now but its still early days for the technology.
I'd encourage you to watch: A. M Antonopoulos 'What Bitcoin Means For Unbanked Economies https://youtu.be/xeSfDbbcN2c
I definitely don't agree about criminalisation of cryptocurrencies (which also didn't happen), but there are valid points that are not only about stealing wealth.
Pick 100 random Koreans who traded in any cryptocurrency in the past 30 days, and I guarantee that 95 of them will never figure out how to store their coins in their hard drive even if someone held a gun to their heads.
You don't have to bust doors to seize cryptocoins. Just make its usage sufficiently "socially unacceptable", and people will find it's not worth the hassle.
Sure, some determined people will keep using them, but they are not what the government is worried about. The government is worried about all those average Kims and Parks who threw their life savings into $(some coin nobody heard about), because when the inevitable hits these people and their families may lose jobs, career, and livelihood.
Just curious, what is it about speculation that has govs so worried? It’s quite clear at this point Bitcoin has grown far too large and most are now speculating on its value as a store so what benefit is there to step in, attempt to regulate it, and risk its undoing? To me, I’m reminded of Sean Parker’s Social Network quote about putting ads on TheFacebook, It’s like you’re throwing the greatest party on campus and someone’s saying it’s gotta be over at 11
What if I say they do something bad with that debt too, is it still OK?
b) Interest rates are being paid for decades via taxes, money that could have been put to use much better. I'd say it's similar enough and don't think "it works differently" is an argument here
Put as question: how much would you like legally binding financial advice by someone up to their ears in debt?
"Legally binding" and "advice" are mutually exclusive concepts. And it's 100% possible you can give great financial advice and be in debt. "Max out your 401k and a Roth IRA" is great advice in 99% of circumstances. Just because someone is paying off high interest credit cards instead doesn't make the advice invalid or their choice of priorities incorrect.
Anyone who has applied a modicum of thought to the issue. The US already has more per-capita public funding going to healthcare than any other nation, we simply don't get a good return on it because that is perceived as "socialism".
And pursuing a highly conservative fiscal policy (far off the right side of the Overton window) is not going to change that, nor advance the cause of said "socialist" policies. It's flabbergasting that you would suggest that as any kind of a reasonable cause-and-effect.
If I spend all my money but still owe creditors more, that's what I'm on the hook for. That's real debt.
https://en.wikipedia.org/wiki/Seigniorage#Seigniorage_as_a_t...
"Economists regard seigniorage as a form of inflation tax, redistributing real resources to the currency issuer. Issuing new currency, rather than collecting taxes paid out of the existing money stock, is then considered in effect a tax that falls on those who hold the existing currency."
That makes inflation distortionary, not some ideal tax on wealth. Governments can't just run away with inflation as an alternative to tax.
That's hundreds of dollars per person if each and every adult in the US bought exactly an equal share of all lottery tickets. In reality only x% of people play and the distribution is going to he heavily distorted. Lotteries are a major drain on society, but government's love the 'free' money. So we have them.
[1] - https://www.statista.com/statistics/215265/sales-of-us-state...
Because to me it should be easy to understand that Lottery isn't marketed/treated as an investment (crypto has started to be legitimately treated as such), and historical returns don't suggest it would work.
Crypto is just attractive enough it could pull the wrong type of attention from everyday people acting as investors.
I don't agree with direct regulation, but I can definitely see why the government would be worried.
Lottery tickets are almost always negative expected value which means you're basically lighting money on fire, and governments worldwide love them. More generally the US government acts as an oligarchy. Government self interest, followed by special interests are what generally drive government action. Public utility (and opinion) play a very minor role. And yes, I even have a source for this as well as I understand this is not what many people want to believe. [3]
[1] - https://www.fool.com/investing/2016/09/25/how-much-does-the-...
[2] - http://news.gallup.com/poll/193874/half-americans-play-state...
[3] - http://www.princeton.edu/~mgilens/Gilens%20homepage%20materi...
However, around 64% of Americans own their home [1]. How many of them are taking out HELOCs against their homes to buy lottery tickets? Once concern is people are taking out HELOCs for crypto speculation.
[1] https://en.wikipedia.org/wiki/Home-ownership_in_the_United_S...
Homeowner is not the right term for most of that 64%, because most have a mortgage balance, which when subtracted from their < $1,000 in savings, makes the picture even uglier, and makes most of their future financial well-being dependent and correlated with their local real estate market.
Edit: The stat actually means 64% of homes are occupied by their owner. But "owner" is still misleading, as the article linked to above says:
"However, homeowner equity has fallen steadily since World War II and is now less than 50% of the value of homes on average."
Lotteries explicitly and extensively inform the consumer precisely what their odds of getting a significant ROI are (namely "slim to none") and lotteries are heavily audited and regulated to make sure they deliver exactly those odds. When polled, those that play understand those odds for the most part and those who play the lottery compulsively understand that they have a problem, in spite of the compulsion.
A rather poor choice of analogy since I think all of us would be perfectly happy if these cryptocurrencies were managed the same way.
It would also all but entirely nullify a major chunk of government power and control. If a nation is unhappy with the economic direction of their country they can inflate or deflate the monetary supply, manipulate national holding rates, and more. Or take 'offensive economics.' If a nation wants to attack an individual, group, or even another country assets can often be frozen. And we haven't even gotten into the implications this would have on the international banking system.
It's funny in a way. You just don't know if you're on the doorstep of a complete shift of era in economics, or if you're just watching another boom bust cycle. One's certainly much more likely than the other, but if I had a major vested interest in one outcome over the other - I'd certainly be looking to take proactive action to try to ensure it.
In the 80s and 90s, we found a way of connecting many computers together and here we are.
Now we found a way to create programmable: trust, value, scarcity and incentives. If that's not going to change the society over the next 20-30 years, I don't know what will.
Only land ownership could remain in the space of interest of governments then (being immovable).
I've seen variations of this argument repeated often. It sounds sexy but then when you probe it's hard to nail down something big enough we can't currently do that becomes possible. Financial markets are already very sophisticated and if anything retail investors are still not using the great products out there as much as they should (index funds are huge and yet most people still prepare very poorly for retirement). Maybe it's just a case of we still not knowing the actual killer app of crypto currencies and contracts and this is just like connected networks in the 70s. Or maybe this is like the segway and smart people are convinced it will revolutionize things but in the end it's just handwaving.
Retail financial products are only just now entering the internet era. At least in UK, before 2017 we did not have Vanguard, Monzo, Revolut. Nutmeg was less known. Older banks and investment accounts are still relatively hard to use via the internet (e.g. requiring ancient identity verification methods) and understand for unexperienced.
Cryptocurrencies have a chance to bring much faster improvements to this space. I think the biggest question right now is whether crypto can become self-regulated in practice and avoid being regulated by traditional centralised means. If we can protect average Joe from scams and help him navigate the finance space cheaper and simpler, we don't need old government for this.
It's pretty much inevitable IMO, given enough time, because removing intermediaries reduces cost and friction of the flow of value. In the future, the average Joe might:
- create his personal wealth account with a portfolio, after evaluating his character and beliefs (similar to how robo-advisers work) - instead of keeping any wealth in cash money, a small chunk of his portfolio will be spent for each transaction he makes (while being converted on the fly to a chunk of seller's portfolio, with value expressed in a stable-coin)
I think the goal should be to stop using any form of cash as a store of value, which is just a part of pre-internet history now. With cryptocurrencies available now for anyone to invest, make mistakes and learn, we have a pretty good start.
No one should use any currency as a store of value, use actual productive assets. And your argument that we should make financial products enter the Internet era is completely true. I just don't see where the cryptocurrencies help.
Did you know, for instance, that in the past ~8 years we nearly quadrupled the US monetary base? [1] What are your opinion on the economic decisions that led to this? The Fed themselves seem to believe it has failed to achieve what they set out to do which was to increase inflation, and to indirectly increase the real GDP. Here are a couple of interesting articles. [2][3] What of increasingly speculative ideas like negative interest rates? How do you feel about the government's decision to more or less ignore the mounting debt of the US? If the US dollar lost strength, perhaps as we move beyond the petro dollar, do you think it will maintain it's value as world reserve currency? Do you believe that banks, the Fed, and the government have your best interest in mind when making their decisions? [4]
These questions are rhetorical because your response doesn't matter. Nobody's does. Except 7 people in a room (currently 4). They make their decisions, you live with the consequences. Decentralized currencies change this enabling people to place their 'value' into something that nobody can manipulate, beyond normal market forces. The current absurd rise of Bitcoin is indeed somewhat scary and looks like it should be due for a major price correction at the minimum. If there was a central body in charge of Bitcoin then now might be the next time they decide that the next few hundred blocks will yield 10,000 bitcoins instead of 12.5 - just to try to lower the price and 'stabilize' the currency a bit. But this will not happen. The currency will continue unabated, controlled by market forces alone. This could be a good thing, it could be a bad thing. But you can make a decision without having to worry about the implications of what 4 people in a room decide. Interestingly this [inflation of supply] could be done theoretically in a fork, but then again it would be up to the market to decide the value and merit of such things instead of our 4 people.
In my opinion taking trust and centralization out of anything is a good idea. And this is something that decentralized currencies offer. Currencies whose value tends to increase over time have a sordid past. On the other hand I think that rather begs the question of whether we've 'solved' economics, or are just building up for an even lovelier epitaph before we even hit the centennial of 1929.
[1] - https://fred.stlouisfed.org/series/BASE/
[2] - https://www.stlouisfed.org/Publications/Regional-Economist/J...
[3] - https://www.stlouisfed.org/publications/regional-economist/t...
[4] - https://today.yougov.com/news/2017/05/11/trust-banks-not-uni...
Bitcoin et al unlock a potential economic powerhouse the likes of which can be comparable to the internet. Just because you can do mostly everything that blockchain tech provides without one, doesn't mean it isn't incredibly valuable.
If you can already do everything that it provides that's pretty much the definition of not having any extra value. This is just extending the hand waving. What transactions will you be able to do with cryptocurrencies you can't already do with the modern financial system?
Suppose that bitcoin or similar are used as currency in practice (that it's very far of happening, by the way). Even if you are able to do all your operations in a cryptocurrency, you will need to pay taxes. Governments only accept their own currency, so, you need to get it to pay taxes, so, demand of national currency is going to exist always.
>> "economic vessels like national bonds and other treasuries that nations rely on to borrow money?"
This is only an institutional arrangement. Nations with their currency don't really need markets to get money. For instance, in the case of USA, the FED can produce so much money as they think is appropriate (1).
I think that cryptocurrency fans suffer from that old illusion that economy can be separated from politics.
(1).- Video of Greenspan explaining it: https://www.youtube.com/watch?v=DNCZHAQnfGU
If you need to pay your taxes where that currency will come from? You are going to need to win it somehow.
Instead of exchange currencies in order to be able to pay taxes, why not accepting payment in the government currency in the first place?
You don't need to exchange all your currency to pay taxes, and in the hypothetical scenario we're discussing you would want the rest to remain in cryptocurrencies because that is what you need to pay all your other expenses. Beyond the network effect, exchanging only the amount you need for taxes would improve security and limit your exposure to currency manipulation.
Your notion that crypto fans can't separate economy from politics doesn't seem right. Re-read the Bitcoin genesis block. Bitcoin began because of bullshit by bankers and barristers. Politics is the reason for Bitcoins existence.
Never mind the currency, crypto or not, you can expect inflation when real resources are reduced and you have to grow the monetary base to keep the economy working. See (1) for more details.
I didn't say anything about risk.
I didn't say that crypto fans can't separate economy from politics, quite the opposite, I said that, it seems to me, crypto fans think, erroneously, that economics can be separated from politics.
At the danger of being somewhat off-topic: The tv show Mr Robot explores a scenario comparable to that in a very interesting and well-made way.
You need to explain this. Many of us just think it's a good replacement for gold and other precious metals. Is gold a "financial weapon of mass destruction"?
how bitcoin will end looks very ugly to me in any case. either collapsing a global economy or bringing an unprecedented global inflation
But there must be something bad about it as well, right?
1- Limited supply prevents money printing and inflationary theft. Besides there are many coin alternatives and a BTC can be divided to a hundred million units.
2- No `central` authority is a big plus (probably the best property of it). Once crypto coin pass its infancy, the volatility will be much lower.
3-Ease of access. Another superb property.
2 - this is false. if you know how currencies work you will know that this whole "decentralization" makes no sense. central authority is required for a currency because price needs to be stabilized. unlike what some people believe, bitcoin will not "self-stabilize" because currency stabilization has nothing to do with how many people use it. currency stabilization works by an authority dictating how much it should worth and manipulating market towards it. this is not some conspiracy, it is a protection provided for all currency users. not only bitcoin offer zero protection (completely exposed to vol risk), but also it is not really decentralized as 40% of entire bitcoin owned is owned by 1000 people only.
3 - yes, this is a good property. so there should be a state sponsored coin.
Barely anyone uses bitcoin as a percentage of the world's total population, this isn't even remotely feasible today, or likely even in five years.
this comparisons are _not_ doing either bitcoin nor gold justice.
bitcoin is far more liquid, accessible and usable than gold ever will be. I will start calling it Internet Liquid Gold... because while the transactions might be slow, being able to transfer it across continents multiple times back and forth is possible before someone can go to their version of fort knox and put actual gold in a truck.
https://www.cnbc.com/2017/08/23/germanys-central-bank-just-s...
Precisely, because it's slow and expensive. If you're going to hold out transfers of IOUs in place of actual gold, that can work for any commodity; a Bitcoin IOU would function just as well as a gold IOU. As a practical example, most Bitcoin exchanges allow transfers between members instantaneously and without any notable fees. Of course, that reintroduces a trust relationship. The point of having actual gold in-hand, or actual bitcoins recorded on the blockchain, is that the transfer is completed and effectively irreversible. You don't get that with IOUs.
If we were able to infinitely replicate gold and bitcoins, gold would still have value, bitcoins would not.
as an aside, no one can make infinite of anything so I do not think that part of the comment applies.
Good news, crypto is still two orders of magnitude smaller
Collateralized Debt Obligations - every word in the acronym screams credit. A CDO is an instrument that guarantees you a cash flow based on debt. A guarantee for you is an obligation for someone else. Chains of these guarantees and obligations is what enabled the housing bubble. The breaking of these chains caused the Great Recession.
As far as we know, the crypto bubble is not highly leveraged. One Bitcoin is worth one Bitcoin. It could trade for $1 or $1 million, but you are never obligated to take the offered price as a buyer or seller. Yes, it's complex. But it is technically complex, not relationships-obligations complex.
"a period of civil disorder in Albania in 1997, sparked by Ponzi scheme failures. The government was toppled and more than 2,000 people were killed" .. "By January 1997, Albanian citizens, who had lost a total of $1.2 billion—the population being only three million—took their protest to the streets"
There are now reports of people taking out mortgages or HELOCs to buy bitcoin. That is a disaster waiting to happen - it was bad enough when the mortgages were underwater because they'd been invested in houses which lost value, but bitcoins can potentially fall a lot further. Or be easily lost entirely.
Sure there will always be some people that do this. And it makes for a good story, so the media reports it. But I don't think this is something that is happening in significant numbers.
There is a new wave of people who've read the 10,000% return articles on fb or whatever who now wanna invest every penny that they have into bitcoin
$50,000/year is the limit per capita for personal use.
BUT even then, you’d need a Korean bank account which is difficult for non-resident foreigners to get.
By going mainstream that sort of reasonable/safe approach has ended, and people are now happily risking their entire savings. This will certainly be great for some people, but it also has the potential to be absolutely devastating.
In America you may not care about that, but in my part of the world, this means that we're sitting on a real risk of society having to clean up after a bunch of people lose everything.
The old world financial system is regulated to prevent regular people from losing everything on investments. I suspect that in time Crypto will be regulated similarly.
This isn't very libertarian, I know, but I'm old enough to have seen a few bubbles burst and the result isn't pretty.
Like I said, probably reading way too much into your comment. Curious what you meant!
Plenty of young people are easily to dupe with get-rich-schemes too. And earning money is not that helpful, especially on the poorer end - I mean, imagine that right now all your savings went to 0. Somebody cleared out your savings account and all the spare cash you happen to store around the house. Are you comfortable with that situation because you still have your job? Now consider a person on a regular, shitty, low-paying high-demand job. A loss of all money buffer can, through small unexpected expenses, quickly push someone into poverty.
So now these people stop contributing to GDP, because they can't hold a job (had to sell a car to eat, etc.), and they get on welfare, and they are unhappy and spread that unhappiness around, and if there's enough of them, they'll make a stink in the media about government not doing enough to protect their people.
This is not something socially desirable.
[1] - https://www.fool.com/investing/2016/09/25/how-much-does-the-...
MFW banks are closed on Sundays.
It's not normal for bank-to-bank transfers to take two weeks to clear in TYOOL 2017. This is a US problem.
But what does that mean in practical terms? Sure, if the company gets bought out you might get some cash, and some companies still pay dividends. Aside from those cases, though, shareholders have no direct claim on the company's assets, and only the largest shareholders have significant influence on the company's board. Most profits made by shareholders come from selling their shares to another investor, not from the company itself.
> If one person owns 100% of a company and there is zero trading, it's still an extremely valuable property.
Assuming the company is solvent... plenty are not, despite a positive stock price. They are trading on the expectation of future improvement, not present value.
> If one person owns 100% of a crypto, it is worthless.
Every cryptocurrency (every non-commodity currency, for that matter) starts out owned 100% by someone. That doesn't make them all worthless. Say I create a new currency with one million units, wholly owned by myself. If I stop there, no one else will value my currency. However, say I also arrange to sell widgets (standard market value $100) in exchange for 100 units of my new currency. Now my currency has value, and people who want widgets may well be willing to trade other goods or services for it—perhaps not 1:1, due to the lower marketability, but at some discounted ratio. This makes more goods available; people who have no need of my widgets may still transact business using my currency and accept it as payment. At this point I no longer possess 100% of my new currency and it has taken on a life (and market value) of its own. Even if I stopped producing widgets the currency may well remain in circulation as a marketable commodity.
Concorde and supersonic commercial flight, 3D TV, video phones...I could go on but those are the few that came to mind off the top of my head.
As an investment: The world is already comfortable with “hot potato” investments that derive their value from the fact someone else will buy it later (ie non-dividend, non-voting stock). As long as a critical mass of investors continues to see it as legitimate, it will be.
As a way to avoid hyperinflation: Central banks can print money seemingly arbitrarily, diluting buying power. Cryptocurrencies present an alternative, where growth of money supply is constrained by known and predictable rules. What is inflation in the US, really? Is the stock market going up because real world wealth is increasing, or is it just printed money flooding into assets classes instead of “basket of goods” used to measure inflation?
As an alternative currency not tied to any particular central bank: The value of a currency is ultimately derived from the real-world value controlled by the individuals who believe in and use that currency. Most currencies have their basis in communities defined by countries and borders — with cryptocurrency, you introduce a new community, where the value of it is ultimately derived from the real-world value controlled by all the individuals who are willing to conduct business in that cryptocurrency.
As a check against authority in future with no cash: In a cashless future, there is great potential for abuse of power if all transactions must go through a central authority: 100% visibility and power to interfere with all private transactions of the population. Do you want to give someone power to see every little transaction you make, with power to stop it if they don’t like what you are doing? In this cashless future, trust-less peer to peer digital currency is essential.
As a way to diversify away from assets based in your own country’s currency: cryptocurrencies offer a relatively accessible and easy way to diversify away from holding all your wealth in one currency. To hold a certain currency is to bet in that country relative to world. For America, there’s a bet on how the USD will track against other currencies in decades to come. Is china gonna unpeg the yuan further and further and make a gun for the number 1 spot? Has America invested in the infrastructure, education, large scale coordination, and energy capabilities to stay on top not just in terms of dollars on paper, but real world value that underlies real wealth? Crypto is just one way to place a bet based on a thesis around this.
All this is based on the fundamental question: what is money? Money can essentially be seen as a “share” of the entirety of the worlds resources. These “shares” give you authority to allocate resources, such as food, materials, and other people. We all need a base level of “shares” to allocate the food and shelter we need to survive. Most big businesses use their “shares” to pursue one thing: getting more “shares”. And, your “share’s” constantly get diluted. No matter how many shares exist, in the end they only act as a distribution mechanism for the actual resources that exist. In this light, crypto is just as real as anything else; its just another made-up concept we use to coordinate society, just like traditional money.
What worries me most about cryptocurrency right now, is the underlying cryptography, and how long that will last. Will there be fork to new method in time?
Strong statement but if you have a valid argument then I can be convinced.
> Cryptocurrencies are scam and outright bubble that will bring down the world economy.
And that's not an argument, that is purely speculation as well.
> There is no currency without an authority to guarantee its value.
There is now, they're called cryptocurrencies.
> Cryptos are pure bubble.
2 things:
1. What's the difference between a pure and impure bubble?
2. Why is it a bubble?
> If there is any good in this thing, it's ease of transaction, which is a question of underlying technology - it has nothing to do with lack of authority or decentralized scheme that cryptocurrencies tout as so important (and fail to deliver).
? This doesn't seem to mean anything. Please explain?
Does your portfolio account for nuclear war?
You're being tolerated because most of the people here seem very nice and they allow that sort of thing, but I felt spouting insanity like you do over and over, well, that sort of thing should be called out. Apologies to the offended.
Bitcoin has many problems. That it's somehow bad because "you can buy for just a dollar" is not even close.
The argument could be made to say that statement isn't even realistic. Why would someone pay $1 for Bitcoin and then $10-20 in transaction fees? Pragmatically, this would be an immediate, minimum 80% loss of value. One would think that to be enough of a disincentive to "buy for just a dollar", no?
Serious question: how would you go about “banning” cryotocurrencies? The most you can do is close exchanges which would make crypto harder to acquire and liquidate.
Basically, declare cryptocurrencies to be similar to hard drugs or something and follow the same playbook. Obviously the real hardcore crypto lovers will still keep using it, and it will also not deter criminals who were outside of the 'regular' system anyway. But if you have a functioning law enforcement system like most western countries, you could certainly keep cryptocurrencies from playing any large role in your economy.
Many people seem to want drugs. Banning them often increases the price, due to the supply going down or being more costly to obtain versus a constant demand. To follow the same playbook, there seems to be a non-zero chance that Bitcoin would become rarer, and therefore more valuable, and therefore more attractive than fiat, increasing demand even more. I think it's a crap-shoot what role cryptocurrencies would play after a large-scale ban.
But, yeah, _if_ I wanted to do that, and I was a government, that would probably be the way I'd do it.