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Comment by parsimo2010 | Hacker News Reader

parsimo2010

This is part of the same reason many people don't use Bitcoin- you can't actually do much with it because retailers don't accept it. But China is definitely thinking about how to fix that problem, and soon they will make it possible to pay directly in CNY in other countries. Once you can buy things with it, the CNY is attractive from a practical perspective. A lot of your stuff is already manufactured in China, once/if using CNY makes your purchase easier then it's going to gain ground on the USD.

https://www.atlanticcouncil.org/blogs/econographics/what-to-...

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Retailers don't accept crypto not because of the technology so much as the fact it is a capital gains event every time you transfer crypto, which means both the buyer and seller are now forced to keep a log of their gains/losses against the dollar everytime they buy a pack of gum.

Obviously that's extremely impractical and at best you're hiring a 3rd party to streamline that for you. It's a clusterfuck at tax time (edit: stable coin doesn't help here -- you must still report gains on stable coins as it is still a $0 capital gain which is different than no capital gain).

Retailers already dealing with capital gains and with high chargeback rates love it though. For instance, it's usually the cheapest same-day clearing way to buy precious metals online since credit card rates are high (chargeback), ACH takes days, and wires tend to cost $15+ with many banks.

Reticence among retailers predates the capital gains policy of the IRS. The volatility of Bitcoin's value induces excessive exchange risk. However, we don't see capital gains nor exchange risk with stablecoins. I assume that network effects are insufficient to drive retail demand for stablecoin support.

> Reticence among retailers predates the capital gains policy of the IRS. The volatility of Bitcoin's value induces excessive

The IRS policy is irrelevant, the law always required payment of capital gains. It's consistently been the hardest thing about accepting Bitcoin for payment.

Foreign currency payments are largely exempted.

The volatility of bitcoin is why there is capital gains on every trade, it has nothing to do with the IRS's new crypto policy.

If a bitcoin rises or falls by a calculable amount between when you received it vs when you spent a portion of it, you have gains/losses. That has always been required by the IRS to be reported, whether that is a BTC or chicken feathers.

You do not need to report a $0 capital gain when using stablecoins. Sure crypto can seem like the wild West with CPAs having different opinions on what little official guidance is out there but that one is simply absurd.

CPA Miles Brooks claims you do[]

   You are required to report capital gains and losses from stablecoins on your tax return (though it’s likely that your gain will be close to 0).

[] https://coinledger.io/blog/stablecoin-taxes

Funnily enough you can use Bitcoin at most merchants that use a Square PoS device, which is like 25% of merchants in the US. It just takes time for folks to change their behaviors. And why would they, if they're getting X% cashback on all purchases using their credit cards?

The other thing about Bitcoin is that it's deflationary, which leads to people holding the currency rather than spending it, as predicted by Econ 101.

We've witness deflationary forces in computer hw for decades and no one is holding off their purchases. Time is scarce and it ultimately forces consumption because otherwise, what would you be saving for?

Don't need Econ 101 to understand this basic reality.

Computer hardware actually does things - it is an economic value producer.

Bitcoin is an economic value consumer just to hold it. It does nothing if you have it.

Well there is a difference between people not buying anything at all and being significantly less than they are now. Consumer goods and services is only the tip of the iceberg.

How much do you think debt would cost and how easy would it be for businesses to get credit?

Combining a deflationary currency with a growing (or at least non static) economy is bad a everyone who has a basic understanding of history prior to the 1930s can see that. Something like bitcoin would be even much worse than the gold standard.

You're forcing business to produce something valuable in real terms instead of nominal terms and you're making that calculation easier to do for economic actors because the measuring stick is now controlled by an algorithm as opposed to charlatans.

Having less of that garbage fiat short-termism is a good thing for society.

> Having less of that garbage fiat short-termism

Yet having more of endless boom and bust cycles with major economic depressions lasting for years (outcomes of the gold standard was a good idea).

> You're forcing business to produce something valuable in real terms instead of nominal terms

I don't quite understand what does that mean. Pricing goods in oil or grain? (coincidentally either of which would function better as a currency than bitcoin).

Computer hardware isn't trying to be currency. Bitcoin was supposed to be, but hardly anyone who uses Bitcoin these days is using it to buy things--it's used as a store of value or a speculative asset, not a means of transaction.

Paying Chinese companies in RMB isn’t the issue. If I sell something and a Chinese company pays me in RMB, I can’t really do anything with a billion yuan. Can’t buy a company (limitations on foreign ownership), can’t buy property (99-year lease that can be canceled on the whims of the government at any time), can’t buy Chinese debt (terrible yields, very small foreign market access, incredibly opaque laws and accounting), and nobody else in the world wants it so I have no choice but to sell it back to China in exchange for a real currency at whatever horseshit exchange rate they’ve concocted.

It’s worthless money and I don’t see anything out of china that would cause that to change.

> Can’t buy a company (limitations on foreign ownership)

This is quickly going away[1].

[1] https://www.nortonrosefulbright.com/en/knowledge/publication...

I mean, you can buy goods and services within china, and you can sell those goods and services. The “horseshit” exchange rate can’t deviate too far from the real value or it incentivises laundering too much. The exchange rate isn’t _that_ bad as a result.

I guess this is naive, but can't you use it to buy (or sell it to people who want to buy) Chinese products? It's not like China doesn't have an enormous amount and range of products on offer.

Thats a feature not a bug.

The Chinese government spend a lot of money keeping the value of the RMB low.

This is actually an interesting point. Wouldn't it be bad for China if the US isn't the reserve currency/the RMB gains a lot more in value relative to the USD? It would proportionally, negatively, affect their export profits, no?

Germany did relatively fine though? Despite the German mark being the second largest reserve currency and their economy being heavily reliant on exports.

Mostly it’s just what I’ve read, I don’t know if it’s true, which is why I asked. If you get less yuan-people-hours per dollar (and materials cost increase for the same reason), you would get less per dollar than previously, I think?

Eventually you hit an inflection point where it’s cheaper to manufacture elsewhere. Which is why China is working Africa, huh?

Interesting stuff, in a vacuum.

It would make Chinese manufacturing more expensive for both home and abroad. china's whole deal is to be the world's manufacturing and science

plus it would make Chinese debt more expensive as well.

What about buying rare earth metals or containers of electronics or purses? It's a bit more work, but it's not impossible to solve the problem.

Also, it's not like a 99-year lease has no value. That's your entire lifetime+.

I think OP's point is that a "99 year lease" isn't worth very much without a firm guarantee that the least in fact lasts that long. I don't really have an opinion on land leases in the PRC, but it doesn't seem facially unreasonable to suspect that a foreign lease holder's land value wouldn't be a priority for China's leadership during an economic crisis.

This is on full display with the US's Venezuela problem: no one believes the US will hold it, so oil companies don't want to invest because last time exactly this happened - they had everything seized.

Imagine if you'd invested in lithium mining in Afghanistan 15 years ago: you'd likely have paid a lot, made little money, lost employees and then lost it to the Taliban.

Because if I am running a business I just want to be paid in money that I can pay my bills in. I don't want to have the additional task of managing rare earths and electronics inventory. That's not "a bit more work." It's running an entirely different business that I don't know how to run.

Don't we already pay in foreign currency? I do this online with foreign websites and credit cards.

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