Take away all the fiat currency that backs crypto in terms of exchange and what is crypto worth?
If I have 10000000000 bitcoins and can not exchange it for fiat or goods sold under fiat what is its value?
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Super many services are starting to adopt digital currencies. You can even fly inside an airplane like with airBaltic by paying with Bitcoin. There are many consumer stores that sell electronics that you can pay with Bitcoin in Sweden you have webbhallen. You can buy cars with Bitcoin. Eventually you will be able to buy food with Bitcoin. It will be everywhere!
And Bitcoin has a limited supply of currently 16 million coins. So that keeps the value up considering how many humans are on earth 16M coins is nothing. The future world will have an increase in currencies and will be impossible for 1 human or team to control it all since so much new things is happening on a daily basis!
Yes it is considered a commodity. But has no backing value but for fiat.
Example VISA refuses to take Bitcoin and credit your acct in fiat, it would have to be converted to fiat first, they do not take commodities.
Example: I can not sent a 5 dollar chicken to VISA and have then credit me in fiat, neither can you bitcoin. But the chicken has value as a hard asset were as bitcoin is a unregulated sub fiat transacted in fiat currency.
Yes there will be a future in blockchain with the countries governments when they create their own and get rid of paper backed fiat bills. When that happens they also will not let a competing blockchain to be used in that country.
Example : in the USA Article I, Section 10, the states are not permitted to "coin Money; emit Bills of Credit; [or] make any Thing but gold and silver Coin a Tender in Payment of Debts...." Whereas the prohibitions on the states are clear and detailed, Congress's grant of power under the Coinage Clause is open-ended.
They did this so someone could not create a competing exchange like in the USA someone printing their own currency and it competing with the established one.
Right now blockchain is not a threat to the fiat dollar because its exchange is a middle man to the fiat dollar but when they go to blockchain it will be..
Thanks for a good comment. But the government trying to control new things we have seen how that has worked out in the past. For every new way they try to control things people will invent new ways of bypass. And since we are moving towards a borderless society and no nations world there will not be any country anymore.
They can and will work side by side the fiat and the new digital currencies. Of course the banks will adjust eventually they are smart. But with no nations world that central authority is more being removed. How far you can take that it's a good question. The term money is interesting because what we are doing here on Steemit is exchanging value. And that value is then being converted into digital "currency".
We are empowering people with technology so this was bound to happen eventually. The authority now becomes ourselves since we have so much power with these magical machines we call phones. But there will be a generation war since older people find it annoying that new technology is here and how it's changing so fast how things work.
We are moving towards a world with less ownership and more sharing. This will annoy people too that are highly invested in their house, car or any older system. But the truth is they can both work side by side in this world. The world is a big enough place for many ways of doing things. Especially now when world population going to 10 billion!
I guess my point was if the backbone of crypto is based on exchanging it into fiat currency it is in the hands of the governments to allow it, all they have to say is our country will not allow our currency to be part of this system and block / make it unlawful to have those transactions within their countries.
The ball is in their hands.
I think there is a general misuse of crypto versus "fiat". I appreciate when people realize there is fiat and commodity. I see crypto as a paperless fiat (I like the use of unregulated sub-fiat, and the chicken bartering example, in your comments).
I think the value of the crypto is in the decentralization that make taxation difficult, and the exchange opportunities. When there are lots of currencies, there is more chance to speculate correctly on value swings. But at the end of the day, the buyers need to hand over the money in the form that sellers expect.
If a government locks up the conversions, or decides to tax the exchanges such that their fees become unbearable, then the liquidity risk will scare people out of the market.
Yes i agree I think that the gov sorta ignored it all until vast sums of money ran through the system, that is money that is not in their own crypto system called the stock market 8 }
Now that they are taking a look at it and know in the end it has to be converted to fiat that is where the taxes will be. These taxes will be placed on all products purchased and bled into the price of the product with no way around it unless the merchant wants to pay your taxes on it. I see crypto as a mini stock market with no commodity backing sort of a poker game between friends.
Crypto is not a commodity and is backed by fiat
Fiat is not a commodity
Fiat however is backed by commodities.
The GOVs are taxing on end game now.
Example - you buy a 500k home with crypto converted to fiat well that transaction has to go through a bank the GOV has that info that is not a problem until on your taxes you report a 20k income... Then it becomes a big red light. IRS says errr where ya get the 500k last yr to buy a house and where is the tax statement on your income ???? Very hard to keep the eyeballs of the GOV, State, and locals tax laws off the purchase.
The problem I see will be on the inside of the blockchain where for the yr all that use it will have to claim capital gains and pay taxes on per yr. That is what will disrupt the setup. The sharp ups and downs of the blockchain could put you in a situation where you make millions by the end of December pay taxes on it and by January its crashed to nothing. This sharp movement is a result of no commodity backing. If it had a commodity backing it would level out the spikes a lot.
Once converted to fiat it becomes stable based on the dollar or euro ect backed by commodities to make it somewhat stable.
Another quick thought: you generally report capital gains or losses against what you cashed out, not against what you hold at the end of tax season.
So if you were a millionaire in December and a pauper in January, nobody would care because it could still go back up. HODL is not capital risk, it is liquidity risk. Now, if you were to sell despite the plummet because you needed to salvage some spendable money you could recoup some of the loss through a capital loss declaration and get some tax reprieve.
I said this on a different comment as well but how are Steem and SBD not fiat currencies? That is the only MANDATED and ACCEPTED form of payment within Steemit, which is a decentralized, self-governed environment. Also, as exchanging parties, we determine their value by paying what we think they're worth. Sounds a whole lot like the definition of fiat currency to me.
This comment is full of so many absolutely true statements, I love it.
If you live in the US you are expected to declare income to the IRS regardless where you earned it. If you reside in WI and earned money at a job performed in FL, you have to declare it on the WI state form (even though FL is state-tax free). If you earn money through a job, capital gains, a deceased relative, excessive gambling earnings, and even working a side-job for cash you are supposed to declare it and pay taxes to enjoy the programs offered by your country.
Obviously there are many situations where there is a "you don't report, I don't report" agreement...nobody wants to pay taxes if it can be kept. But theoretically you can report paying a housekeeper cash, and they can get in trouble if they don't report it, too.
It's just called tax evasion. Being a successful daytrader or currency exchanger doesn't give a hall pass. Eventually the government will audit purchase patterns and question where your money came from. If it came from unreported capital gains from the crypto market you'll have to pay back-tax, go through repo, and possibly serve jail-time.
Ideally yes they could do that, totally agree with you. But the countries that use force in history has that worked well? Usually what happens then is another nation can come in and out compete the other by offering more freedom.
What happens if they use too much force is that it will be bad business and PR for the nation as a whole. Best they can do is to offer a low tax incentive or they may cause a brain drain effect where the smart and wealthy leave the country for another place.
The only thing you can't buy with fiat for the moment is food but that will probably be possible very soon in the future. So you will not even have to trade crypto into fiat.
I suspect we will see massive drops in value of crypto because of fear but that it will after some time start to rise again. There is just too many people involved right now to stop it. People are invested and think something has value then it has value because people think so.