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Comment by dhosek | Hacker News Reader

US dollars are the only accepted means to pay taxes. This is the big thing that makes national currencies work. Having a government behind a currency may not be a sufficient guarantee of value but it is, at least so far, a necessary one.

For bitcoin at least, it's an intrinsically deflationary currency. There's no incentive to spend a bitcoin today if it will be worth more tomorrow, so it ends up being primarily a currency of choice for transactions which are unfeasible in any other way, which ends up being primarily illegal transactions.

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>US dollars are the only accepted means to pay taxes.

I agree with this, of course. But there is also a method that allows me to convert my AUS dollar in to US dollar. I just paid my taxes with $AUS?

Does the logic follow: $BTC->$USD->USTAXES ?

Your ability to convert your Aussie dollar holdings into US dollars with ease is contingent on there being a relatively stable demand for Aussie dollars, which are the only legal means of paying taxes in Australia, and settling debts denominated in Aussie dollars. Cryptocurrencies are not a legal means of payment of taxes and are not created as debt so lack that guarantee that people will want to exchange significant quantities of USD for that coin [I guess in theory some cryptocurrency could have the property of being emitted as debt, but I'm not sure decentralisation and credit creation go well together].

I think you missed the point I was trying to make. I haven’t had my coffee so that’s my bad.

As long as there is a means of conversion you can start with anything and end up being able to pay your taxes. You can’t directly pay taxes with your time and skills, but you can trade your time and skills for USD, and then pay your taxes. You can’t directly pay your US taxes with the AUS dollar, but there is a market where you can exchange that for USD, then pay your taxes. The logic is inclusive of BTC, which makes the ideology that BTC is bad because you can’t pay your taxes with it, at very least, murky.

Sure, you can convert anything to anything if you can find someone else that wants to complete the trade at a suitable rate.

Taxes provide [part of] the reason to believe a market to exchange Aussie dollars will exist in two years time: tax and Aussie-dollar denominated debt mean a lot of people need Aussie dollars. That's the only reason the Aussie dollar is worth more than the plastic its printed on. BTC doesn't have that reason [to any meaningful extent; credit is a tiny part of the economy and nobody needs BTC to pay taxes] and unlike the fruits of your labour [which I'd hope are more useful or entertaining than an alphanumeric string even if they can't be exchanged in future], it doesn't have any non-exchange-related reason to be worth anything either. The some-people-need-it-to-pay taxes argument is why Aussie or US dollars aren't bad despite being as intrinsically useless as BTC.

So the argument is that BTC is bad because both intrinsically useless and almost entirely lacking a mechanism [similar to taxes] to create a stable flow of future demand to acquire it

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