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Comment by superquest | Hacker News Reader

> "Nobody actually transacts in cryptocurrency," Goldbard says. "So making something that people can actually use is our first goal. And then we want to find additional ways that people can implement it over time. But initially all we want is to make it so people can actually complete transactions."

Amen. Too few projects have this focus.

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On reason, in the U.S. at least, is that you're supposed to pay capital gains on every little bit you spend. There's a bill in Congress right now to exclude crypto transactions under $600 from capital gains, which would be a big help.

Even if you do want to hold long term, you could just replenish what you spend along the way, if it weren't a tax reporting nightmare.

You also do so in the UK and virtually every other country I can think off.

In the U.S. there's already a small-purchase exclusion for foreign currencies.

Bitcoin is not a currency for tax purposes in the USA.

Right, which is why you can't exclude small transactions now. The bill I mentioned has been introduced to fix that.

Certain states now require you to report bitcoin gains... so actually it is.

All states require you to pay capital gains tax on Apple stock...it must be a currency then

There are a lot of ways of defining what a currency is or is not. Taxing gains on it is one way. Another way is having an official body say so, which has happened in several US court cases.

Nope. You only have to report capital gains in excess of your annual allowance, which is £11,300 at the moment.

You still have to record them. Also don’t forget that if you have an ISA, other savings and investments that allowance isn’t that big.

As an individual if you mine you have to record the value as it was at the time of mining if you buy you record it at the time of purchase and you pay capital gains if you exchange the crypto for fiat currency or goods or services directly on the difference between the values. It gets more complicated since you can’t select an individual currency unit form your wallet but atm you are allowed to use creative accounting for that.

The fact that you have an allowance doesn’t mean it’s not taxed and if you have any substantial amount you’ll blow throgh that allowance pretty darn fast.

You only record them if you otherwise self assessment for tax. If you do t eve self assessment you do not claim if the gain is below £11k unless the total sale is in excess of £45k

I don’t believe any assets held in an ISA have any bearing at all on your capital gains allowance.

This is correct, gains in ISAs are tax free and have no impact on cgt allowance. So if cryptocurrencies were a good investment an ISA would be an excellent place to hold them and convert gains to currency you can spend, but I don’t think any isa providers support them.

They don’t have impact unless you sell or cash out.

The same goes for many other assets you pay cgt only when the profit is realized.

No, you don’t ever pay cgt on gains in an isa, that’s the whole point of them. So if you could hold bitcoin (at the moment only an etf is possible), there are no taxes on gains.

https://www.gov.uk/capital-gains-tax/what-you-pay-it-on

Which is a particularly useful case for Bitcoin ETFs

Not wishing to be overly pedantic, but you have to report in any of the following circumstances:

* Capital gains in excess of £11,300 * Disposals (sales) in excess of £45,200 * Losses that you wish to claim

https://www.gov.uk/capital-gains-tax/work-out-need-to-pay

Worth noting e.g. if you receive stock under US company schemes and sell even if you have already been taxed on the gain versus FMV as income. You can be in a circumstance where the taxable gain is under the threshold but disposals are high.

The limit is $10k of cost basis in australia. No CGT for anything less.

Is that based on a yearly tax allowance which means it’s tied to other investments or is this for an individual transaction?

Do you have link to the proposed text for this bill?

This is secondary to there being no benefit to the average user for transacting in crypto vs Visa. What incentive is there for an end user to use even a hypothetically optimal crypto system? Then is that incentive sufficient to overcome network effects?

The appropriate and interesting applications of crypto seem to be totally leaving p2p cash behind - it just doesn't seem like a good fit.

The hypothetically optimal crypto system would be cheaper for merchants, correct? So it would have wider adoption than Visa, at the very least.

I do agree that crypto keeps drifting away from p2p cash ... that's a good observation. But I hope people keep shooting at that target.

> The hypothetically optimal crypto system would be cheaper for merchants

Incorrect. Decentralization is always more expensive and slower than centralized system(both hypothetically optimal) due to extra sync cost.

You're mixing cost and price. Let's say the cost of a Visa transaction is 0.1% and the price is 2.5% while the cost and price of a MobileCoin transaction are 0.2%. It costs more but it's still cheaper for merchants.

Cash is cheaper for merchants, but people have only continued to use credit cards more. Further, if crypto becomes attractive from a cost perspective Visa will just be forced to bring down fees and stay competitive. It's pretty near impossible to imagine crypto with costs less than Visa's database.

Cash isn't necessarily cheaper for merchants once you account for handling, security, and theft.

There's a shop near me that has had its card payments out of commission for about a week. They are having to bring in staff for additional hours due to the fact that the transactions typically take longer and you have the cash to handle at end of day. I doubt it's a negligible additional cost.

Credit cards are more convenient than cash. If crypto can be equally convenient (which I think it can -- see venmo), I imagine people will use it. Are the savings of centralization really enough that Visa will be able to stay competitive and profitable?

I don't doubt Visa will continue to be used, but I imagine it will be for fraud protection rather than cost.

A wire transfer fee to China would cost me ~$45. Sending it in bitcoin would cost ~$17.

While you take on a huge amount of risk. Congratulations on "saving" that $28.

Not to mention since you can't really spend bitcoins you'll have to pay more for conversions to national currencies on both ends.

This is a great example of where crypto would be useful. But it's not the same as paying for pizza.

Actually, even less than that. To get an avg sized txn sent within the next 14 hours it would cost:

226 * 100 * 0.0000001 * $17761 = $4.01

https://bitcoinfees.earn.com/

How much was the exchange difference?

No idea. I just went into the bank and said I needed to send money to China.

What's the benefit of using email over equivalent closed systems?

Pseudonymity/anonymity, for one. You can freely transact across borders, for another.

That's really only useful to a small number of users, relative to the overall size of the economy, and many of them are doing things that aren't legal. Not a market I'd probably target if I was going for mass adoption.

Anonymity is something people give up without knowing. If all cryptos opted for default privacy, things would have been different.

With bitcoin, merchant you make payments to can potentially find your wealth, or another can deny transaction to you bwcause you donated somewhere.

These are not doomsday scenarios, this happens today and will happen more if we do not choose privacy.

Gambling and porn are both quite popular.

For me, it is privacy. Cash is too cumbersome to deal with, that is probably the only reason i use credit cards.

Because you can't get rich building it and you can't get rich hodling it and the press won't create much buzz.

Why can't you get rich building it?

I doubt one would get rich as Bitcoin creators, but one could still make a killing ....

Edit: And this stands to reason. We're relatively later in the game, and so new contributions are less fundamental by definition.

> Why can't you get rich building it?

Because it defeats the point. There is no "coin" that will exponentially appreciate in value, making you a billionaire. There is also no centralisation, so you cannot be the owner of the payment system in the same way that Paypal or Visa are.

At best you can be the Linus Torvalds of your payment system non-profit. Which would be a good gig in itself. But that comes with lots of hard work, not the easy riches that you can do from some hype-pump-dump scam in less than 6 months.

To build on this comment, the purpose of a currency is to facilitate the transaction of value, not to store value.

If an instrument stores value, it's an asset, not currency. One can of course transact business with assets, but it's a lot more complicated because you have to agree to a valuation. And without a currency, how do you measure that?

Plus, the incentives for assets and currencies are opposed. Currency exists to be spent, but if an asset is appreciating, you'll want to hold it, not trade it.

Bitcoin was advertised as a currency but it's acting like an asset. (And it's regulated like an asset.)

If you create a new class of asset, you can buy in early, hold on, and get rich on appreciation.

But if you invent a new currency? It's like inventing the inch. Even if everyone uses it, that doesn't give you any more length of your own.

This is being solved by Shapeshift.io and XMR.to. I transact in cryptocurrency all the time using these intermediary services with BTC as the usual medium of exchange. It's opened my skeptical eyes about the future of how things will work.

https://xmr.to/ looks waaaay too complicated for the average person to use, which is a nonstarter for the average person.

And it still processes a Bitcoin transaction, correct? So it will be no faster than Bitcoin?

>https://xmr.to/ looks waaaay too complicated for the average person to use, which is a nonstarter for the average person.

OK, that's fine, but services like that could - and will - get much friendlier. I'm just rebutting the quote which is the blanket "no one transacts in cryptocurrency" which is certainly not true for me, even though I felt that way just 2 months ago. Now that I am an active miner of various currencies, I find myself using it quite frequently for random goods/services, even though the plan was really just to convert it quickly into USD fiat to continue reinvesting into the mining operations or to pocket it.

Fair point. I think "no one" here is a rhetorical exaggeration meaning "not very many," which might resolve our disagreement ...

Doesn't lightning network fix this problem?

Tell us all about all the problems Lightning Network fixes once it is actually implemented.

I'm not sure if you're trying to imply that Lightning Network is vaporware, but there are currently three implementations that pass the integration tests:

https://github.com/lightningnetwork/lnd https://github.com/ElementsProject/lightning https://github.com/ACINQ/eclair https://cdecker.github.io/lightning-integration/

Oh, please. You and the other replier knew what I meant by "implemented."

"Code written and passing integration tests" seems like a pretty typical definition to me..?

By that definition I've implemented a search engine, several video games and many other projects that never launched.

Lightning Network has not launched, in the sense of, it is not being used by the community it was designed for. And it never will.

Not vaporware but vaporidea. They never solved incentive model to open channel so it is more like real software no one will touch.

What's the problem with the channel-opening incentives? I'm out of that loop, I'm afraid.

Special for you https://medium.com/@homakov/why-lightning-and-raiden-network...

Ah, thanks Egor, I hadn't seen that.

Not only has the Lightning Network been implemented across three codebases, version 1 release candidate was released a week and a half ago:

https://medium.com/@lightning_network/lightning-protocol-1-0...

Doesn't Litecoin already use Lightning Network?

Doesn't solve usability, but it solves the slow transaction speeds.

Note: transaction speed is a component of usability

That's possible, but the commenter above you isn't talking about that. He is talking about the fact that it is yet to launch and solve all of the problems it purports to.

It's the best possible fix, one that isn't implemented yet! There's toy-level alpha implementations, with the most naive possible path-finding algorithm that will literally scale to tens of nodes.

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