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Patrick Watson of Mauldin Economics says Bitcoin isn't money, rather it's another risk asset like gold, shares, or pork bellies

Patrick Watson of Mauldin Economics says Bitcoin isn't money, rather it's another risk asset like gold, shares, or pork bellies

By Patrick Watson*

The Bitcoin digital currency’s dollar price is hitting new highs. Good news if you own some.

But here’s a question: Is Bitcoin really a “currency?”

Maybe so, if by “currency” you mean an asset you can trade for other goods and services. A growing number of merchants accept bitcoin.

Tesla (TSLA) is the latest and maybe the largest example. They’ll take bitcoin and give you an electric car in exchange. The company also invested US$1.5 billion of its own cash in Bitcoin.

I like Tesla. I have one and it’s the best vehicle I’ve ever owned. I wish the company great success, even if the stock has gone a bit crazy. But the fact Tesla is taking bitcoin shouldn’t fool anyone.

Bitcoin may keep growing in value, but it’s never going to replace the US dollar.  

Source: Wikimedia.

Public advantage

Everyone agrees the US dollar is money. Yes, it’s prone to debasement and price manipulation. But it’s widely recognized, relatively stable, and has a sophisticated global banking and payments system behind it. You can use dollars to buy pretty much anything, anywhere.

A key part of Bitcoin’s appeal is that the government doesn’t issue it. That’s true, and it matters, but governmental sponsorship brings advantages, too.

For instance, every paper dollar has a little legend saying it is “legal tender for all debts, public and private.”

Tesla didn’t triumphantly announce it will now accept dollars because it always has accepted dollars. That was never even a question. The government says we have to accept dollars, so we do.

Nothing prevents us from accepting other currencies as well. You’re free to use Canadian dollars or Mexican pesos. You can trade chickens for cows, or vice versa, if all the parties agree. I was talking to a friend last week who is exchanging one piece of real estate for another.

The law allows this and sometimes even gives it some tax advantages. But it’s not practical for more routine transactions.

Dollars have a giant head start in being the most widely accepted money in the US. Bitcoin could take some of that role, but the amounts will be a GDP rounding error for a long time.

There are bigger problems, though.

Source: Flickr.

Resistance is futile

As long as you are a human being within US jurisdiction, and you earn income or do other taxable things, you will have to pay taxes. And you will have to pay in dollars, because that is what the IRS demands. It doesn’t take bitcoin.

Libertarians and anarchists call this theft. That’s not the point. The simple fact is government has the raw power to not just tax you, but define exactly how you must pay taxes.

Their terms are pretty simple: You will pay in dollars. If you don’t have enough dollars the IRS will send armed people to take whatever you do have, and then throw you in prison. If you resist you will lose, because government agents have more and bigger guns than you do.

This being the case, Bitcoin (or any other alternative) can at most be a parallel currency with the dollar. Everyone will still need dollars to pay their taxes. This necessarily limits the opportunity for another currency to gain market share.

But that’s not the only barrier.

Accounting challenge

Government power goes beyond what it will accept as tax payments. Government also gets to define how it pays everyone else.

If you are a government employee, or you have some kind of government contract or benefit (like Social Security), you don’t get to choose the currency you receive. The government pays in dollars.

The government being a giant part of the economy, this is another big hurdle any other currency would have to overcome. All the people who get dollars from the government have dollars to spend. Merchants will want to take those dollars because that’s what their customers have.

All this buying and selling generates accounting information that feeds into tax filings, which have to be in dollars. Multi currency accounting, while possible (and normal for large international businesses), is a complication most individuals and small businesses don’t need. So they have a big incentive to just do everything in dollars.

If using the same currency for all your spending and investing is easy and convenient, government-issued money has a giant advantage over Bitcoin or any other competitor.

Source: Pixabay.

No replacement

When national governments start accepting bitcoin for tax payments, and paying their troops in bitcoin, you can fairly call it “money.” Until then, it’s simply another risk asset like gold, stocks, or pork bellies.

Note, I’m talking specifically about Bitcoin here. The underlying distributed ledger or blockchain technology has many potential applications. But if the goal is to create a new currency, governments and central banks will probably be the ones to do it.

None of that means Bitcoin is worthless. You can buy and sell it and maybe come out ahead. It just won’t replace your dollars anytime soon.

The fact that many people wrongly think otherwise, and are “holding” Bitcoin because they’re sure it will be real money someday, is one reason its price has gone up so much.

It is vulnerable to a fall when they realize their mistake. And they will.


*Patrick Watson is senior economic analyst at Mauldin Economics. This article is from a regular Mauldin Economics series called Connecting the Dots It first appeared here and is used by interest.co.nz with permission.

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135 Comments

Mmmmmm pretty much as I commented yesterday but in a lot more words. Didn't think about the tax angle payment though but then again, tax collection will be the big government bonus when we finally move to a digital only currency. The big question is when will it happen or what sort of event will it take to make every citizen go woo hoo give me that digital currency because at present there would be plenty of pushback.

12
up

The event will be central banks turning the real purchasing power of your salary and savings to custard.

It's happening now.

Governments also delegate some money creating powers to the banks which is where most of the money creation is happening at the moment. QE doesn't give banks money to lend as the RBNZ tells us here. https://www.rbnz.govt.nz/research-and-publications/videos/money-creation...

Carlos
IRD have already moved to taxing cryptocurrencies - from memory they stated this in at least 2019.
https://www.ird.govt.nz/cryptoassets/taxing
For those purchasing Bitcoin etc as an investment, then profits or capital gains are income and taxable. Many of those on this site involved in Bitcoin have referred to declaring profits as taxable income - well they say that :) .
I suggest that unless one could show that purchase of Bitcoin et.al was for a purpose - such as use for buying goods - then one would find it difficult to argue with IRD that it wasn't for investment and gain purposes. Also keep in mind that banks do have reporting requirements.
The good news is that losses on Bitcoin etc are tax deductible (not sure about the situation regarding ring fencing), and being the cynic that I am, there could be some who will be relieved with this.
Worth noting that IRD comment "If you held cryptoassets that were stolen, you may be able to claim a deduction for the loss".

P8 where do you get your reasoning from?? Any investment capital gain is not taxed until it's realised i.e. until you sell. And even then the IRD has prove "intent". Most of the BTC aficionado's here seem to be buy and hold types. The losses on BTC are most certainly NOT tax deductable unless they are "stolen" due to a proven hack.. note the phrase "may be" in their comment. Any losses incurred in the normal business as usual trading year are most certainly not deductable - it is what it is, although there won't be many losses atm.

Hook
Where do I get the information from? Try reading the link to IRD.

"Before you can put your cryptoasset net income (or loss) in your tax return you need to:
- calculate the New Zealand dollar value of your cryptoasset transactions
- work out your cryptoasset income and expenses."

Yes, it is on "transactions " so it is on net income on buying and selling (realising profits) of cryptocurrency trading.
However, you are incorrect that "The losses on BTC are most certainly NOT tax deductable".
That is contrary to what IRD say - "Before you can put your cryptoasset net income (or loss) in your tax return" . . . note reference "or loss" contrary to what you assert.
Yes, IRD often use the word "may" as they do in most general information statements such as this. It is line with their practice to avoid a definitive position as they assess every individual's situation on a case-by-case basis. If one comes out of the blue with a one-off loss then they are unlikely to look at that favourably.
Whether or not one holds their cryptocurrency for a short or long period is irrelevant - IRD consider what was the intent at the time of purchase. And don't think its is not IRDs responsibility to prove intent, it is yours; if they think one way, you will find the onus on you to prove otherwise as they simply apply the tax (with the potential of penalties) until you can prove otherwise and as far as IRD are concerned they are more than happy to go to court to uphold their decisions

I don't believe it - pedant8 doing his own research on the internet. All things truly are possible ⣿⣦⣀

Ezy
Name calling or slagging of with personal attacks is a sign when one can not put up something of worth.
Clearly me pulling you up on your two posts with clearly erroneous information has upset you.

I'm not upset at all. Rather quite amused. You and Hook are the Waldorf and Statler of interest dot co dot nz and I chuckle every time I read your posts.

Lol

You're missing the underlying point.. no one sells at a loss unless forced. As you say it is on "nett income" so the assumption is you're trading. To claim a loss from trading assumes you are a regular trader and it is your primary source of income. A one off "loss claim" by a non trader would at best result in a please explain and at worst an audit. IRD are merely pulling BTC into the fold as they have done with equities. For example I've lost 200K with the current drop in equity value - I'd love to claim that but I can't, BTC is no different. I very much doubt most contributors here are professional traders so therefor there is no tax liability.. I'm happy to be corrected

Hook
No one sells at a loss unless forced to do so?
I agree that anyone with a history of trading would put themselves at more risk with IRD. However, trading need not be your “primary source of income” - any activity intended to generate income is liable to taxation; and one does not need to be a “professional”. There are numerous investments and other secondary activities that most are involved in which are liable to income tax.
However, I agree and as indicated a one off loss out of the blue would definitely have a please explain and the occasional profit would go beneath the IRD radar. However in the later case one should be aware that financial institutions have increased reporting responsibilities.

You may want to realise the loss in a given financial year if you had other income you wish to offset for cash purposes by reducing the tax you owe. You could do this by selling and buying back your property shares/btc at a wash? This seems a bit dodgy and I'm not an accountant so not sure if that's legal tegal.

P8 there are many activities people are engaged in that are technically taxable - everyone knows that. To try and split hairs by saying they are taxable but the IRD doesn't tax them is disingenuous. Fact is, if you try and claim a loss on any speculative investment (equities or BTC or whatever) you will be subjected to two outcomes - disappointment or an audit

I have just been reading the ir3 help pdf, and I believe it is all about intent. So if the shares or other property were bought with the main purpose of resale or to make a profit then the income is taxable. I have bought and sold shares in gld/slv etf that don't pay a dividend and was below FIF limits so was trying to work out if I owed tax. I guess that makes me professional trader? And btc of course thanks rona.

16
up

God, I wish I had the time to prepare a proper response to this article. The article is a statist's view of bitcoin. Has the author read The Bitcoin Standard?

The mere fact that the dollar is backed by the state's monopoly on violence is the whole damn point of bitcoin. We are going to separate the money from the state, just like the church was separated from the state.

Hodl on comrades, we're going to fix this.

"The mere fact that the dollar is backed by the state's monopoly on violence is the whole damn point of bitcoin. We are going to separate the money from the state"

Not much of a state without control of the Money....
Is you foreseen future some Bitcon trillionaires in their gated community?

As I keep pointing out, Fiat & leverage is what gives the masses some buying power ... and Bitcoin wants to restrict this? Good luck

Bitcoin does not restrict fiat money. It's the antithesis of fiat. That is one of its key benefits.

"It's the antithesis of fiat. That is one of its key benefits"

Therefore
1) the masses require never ending FIAT to get their spending power. Otherwise the economy / economies to scale breaks.
2) Bitcoin can only be used as an inflationary hedge AS LONG as there is a greater fool to buy it at a high price

=> You have just concluded, Bitcoin is nothing but a Greater Fool scheme.
I agree.

You're dreaming if you ever think the central banks will give over to bitcon. Mr Gadaffi (and countless others) have tried similar and it always ends in tears (via carpet bombing, assassination or whatever.

But you see, they dont have to "give"over to Bitcoin. It is a non violent, opt in system. So even if they try people will jsut elect to use the Bitcoin network rather than their shitty fiat currency and there is SFA they can do about it.
Nigeria recently banned Bitcoin, now it is trading at a 30% premium over there just due to lack of supply. Its like the soviet union trying to ban Jeans back in the day...look how that turned out. Or the war on drugs for that matter, yeaaa im sure they can ban a digital token from being used. LOL

Did we just become best friends?

Central banks won't. have. a. choice.

Hell yea! Think theres about half a dozen of us trying to educate both the authors and readers of Interest.co.nz on Bitcoin :P

You are comapring Nigeria with the might of the USA! The USA could kill btc in the blink of an eye.
But they dont need to... they no it will ultimatley eat itself.
Take a look at Mr Gadaffi and his efforts to avoid the $USD.

"The USA could kill btc in the blink of an eye."

Please enlighten me how you think they would go about this, sir.

I, too, am eagerly awaiting a reply...

Wouldn't a carbon tax on all transactions effectively kill it? Given it takes approx. 467000% more energy per transaction than visa?

No.
1. You can't tax transactions you don't know about. Tax miners? Jurisdictional arbitrage solves this within weeks.
2. Energy FUD is tiresome. https://nakamotoinstitute.org/mempool/bitcoin-does-not-waste-energy/

Just because you don't like the energy problem doesn't make it untrue. The proof of work aspect is an absurd waste, full stop. It hardly matters how it compares to gold or what have you, because if we're adopting something new it shouldn't be stupidly designed.

Easy. Declare it illegal and confiscate any assets purchased under proceeds of crime. There are numerous ways.

I think bitcoin, _if_ it continues to exist will eventually be owned and controlled (manipulated) by central banks and other large financial institutions.

11
up

Ignoring the contradictory statements "Bitcoin isn't money" but "a growing number of merchants accept bitcoin", I think most hodlers would be comfortable with the opinion that" (Bitcoin is) simply another risk asset like gold, stocks, or pork bellies." The argument used to be that BTC wasn't even an asset - now, it appears, many mainstream commentators state that almost as a matter of fact.

First we need to define the difference between currency and money. Is bitcoin a store of value or not?

I used to think of all the cryptocurrencies as a solution looking for a problem. But for the past year, Bitcoin has appeared to be a better store of value than NZD, when it comes to certain things - like houses.

The 'money printing' to drive and support the property bubble is destroying the value of NZD and the value of labor, particularly for younger people.

Which is what currencies (not money) are designed to do, lose value until they are extinct.

Store of value? The evidence to date is the you will *eventually* get back what you put in, but the timing might not always suit. So store of value, yes.

Bitcoin is digital base money, not a currency. Seven transactions per second is not current. And this is long acknowledged:

"Actually there is a very good reason for Bitcoin-backed banks to exist, issuing their own digital cash currency, redeemable for bitcoins. Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient. Likewise, the time needed for Bitcoin transactions to finalize will be impractical for medium to large value purchases.

Bitcoin-backed banks will solve these problems. They can work like banks did before nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserve while others may be 100% Bitcoin backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others.

I believe this will be the ultimate fate of Bitcoin, to be the “high-powered money” that serves as a reserve currency for banks that issue their own digital cash."—Hal Finney https://en.wikipedia.org/wiki/Hal_Finney_(computer_scientist)

(from "Layered Money: From Gold and Dollars to Bitcoin and Central Bank Digital Currencies" by Nik Bhatia)

"Bitcoin banks" are likely to grow out of the plethora of exchanges and when they become hubs in the Lightning network, interesting times. Reserve currency, no, reserve money.

Bitcoin offers the restoration of the structural separation of currency and money with the weaknesses of the barbarous relic removed and a floating exchange rate rather than the fixed redemption of the gold window. Fiat won't be "anchored" to gold, instead digital gold will be available to far more people if they wish to escape the fiat frolics we are currently obliged to endure.

Central banks should hasten to disintermediate the incumbents control of payment networks, do digital cash (and apply a broader, lower, and immediate transaction fee (AKA sales tax)) to all transactions.

This is pretty much the basis of MMT. A currency is a governments unit of account which only it has the authority to create and issue and our need to pay taxation in that currency creates a demand for it.

Yes. MMT is part of the Keynesian family. Some would say part of the fraud.

I wouldn't say it's part Keynesianism, but MMT can be applied to other schools of thought as it's primarily just a different way to view government expenditure and taxation.

A school of thought not based in the concept of sound money.

I here Patrick Watson still gets around via horse-n-buggy, still believing cars won't catch on.

Sad for Mauldin Economics. When the market speaks some companies and people prefer to listen to themselves.

Zack, if you read the article you'll see this line from Patrick:

I like Tesla. I have one and it’s the best vehicle I’ve ever owned.

1 Bitcoin is worth more than a Tesla and your Tesla can be purchased using Bitcoin.

Can the vehicles value be tied to the bitcoin value? Or is it simply $30k US worth of bitcoin?

Be an interesting way to vastly inflate the fiat value of your product range (if bitcoin goes up).

Funny how the BTC is always valued in fiat?
Hands up would sell a house today with settlement in 3 months at a BTC only value? Nah thought not.
Its not a currency a store or anything. Its only what the next fool thinks it is.

1 BTC = 1 BTC

1 DOGE = 1 DOGE.

No more, no less.

1 BTC = 100,000,000 SATS is more accurate :P

SATS THE STANDARD

In summary, until central governments find a way to manipulate and profit off of BTC, it isn't relevant.

REEEEEEEEEE
The fact that it is being recognised as a valued asset class after existing for only 12 years is good enough for me.
Lets just give it time and see how things develop. Im of the opinion that is will tend to infinite value in USD, as the usd will crash and burn just like the Weimar republic and every other Fiat currency throughout history.

Some great Bitcoin resources if anyone would like to learn more: even if you just admire the pics :)
Overview and comparison to previous forms of money:
https://chrisgimmer.com/bitcoin-reserve-asset/#:~:text=Portability%3A%20....

7 Misconceptions about Bitcoin
https://www.lynalden.com/misconceptions-about-bitcoin/

Examples of peoples savings being debased by shit governments and the reason to have a free money
https://medium.com/original-crypto-guy/as-bitcoins-price-hits-a-new-all-...

Podcast smashing common misinformation
https://www.coindesk.com/podcasts/coindesk-podcast-network/breakdown-bit...
Tweet version: https://twitter.com/danheld/status/1324782900156403712

Bitcoins Energy usage is efficient:
https://danhedl.medium.com/pow-is-efficient-aa3d442754d3
TLDR version: https://twitter.com/danheld/status/1040621230691213314

There are several states that already accept Bitcoin for taxes, such as Ohio back in 2018:
https://techcrunch.com/2018/11/25/ohio-becomes-the-first-state-to-accept...

In NZ it is legal to get your salary payed in Bitcoin (the first country in the world to do so):
https://www.coindesk.com/new-zealand-tax-office-makes-it-legal-to-pay-sa...

Miami is setting its self up as a Bitcoin hub with very progressive legislation and plans.

Blackrock who manage over 8 Trillion in assets have come out that they are dabbling in Bitcoin
https://www.cnbc.com/2021/02/17/blackrock-has-started-to-dabble-in-bitco...

A son asks his father for 10$ in bitcoin
The father responds: Son there is no way in hell I'm giving you $9.78... what the hell do you need $11.32 for??

High time preference thinking from the father.

Nailed it, lower your time preference and lengthen your time horizons people. Zoom out...

Having said that, volatility in Bitcoin is beginning to taper off as it reaches more 'sustainable' levels, this is possibly why larger organisations are seeing this as a good time to start investing in and accepting Bitcoin.

Maybe. The Bitcoin bubble might just be getting started. Of wallets holding BTC, approx 90% hold less than 1 bitcoin.

If BTC investors actually want this thing to be a currency (which I'm not sure that they do), then surely it is a terrible thing that the value in dollars has gone up so much.
If my actual assets (like my house) are now worth much less BTC than previously, then this is deflation, which is much worse for the economy than inflation, which is why the reserve bank targets inflation of 1%-3%.
Why would anybody buy an asset using BTC if they think that the asset is going to drop in value?

Exactly, why would i buy this shitty item today, when I can wait patiently and defer my immediate consumption for a greater amount of consumption in the future. The difference between a high (spend and consume now) and a low time (save now and get more goods in the future) preference.

You have missed my point about deflation. I am not talking about saving up to buy an asset that inflates or keeps its value over time.
I am talking about the fact that if BTC was our currency right now, we would be experiencing deflation, and nobody would buy anything.

Correction: No one would buy anything that is worthless and non essential. People would still buy, they would just value objects and items comparatively less than their savings. So luxury items would actually be luxury items, not something you just borrow money to buy now and pay for over the next 5 years.

Still missing the point about deflation. Any form of currency that results in goods and services deflating in price causes people to stop buying goods and services.

Bitcoin has simply turned out to be a financial tool to enable large corporations to over inflate their assessed market value and line the pockets of their CEO's through more share buy backs.

So another instrument of inequality.

Sorry interweb libertarians.

Do you have a problem with companies and individuals preserving wealth?

Please explain your theory of increasing is the same as preserving.

It's not a theory. BTC is deflationary. Fiat is inflationary. The former is a condition for preserving wealth.

It will be concerning for the global economy if all of the sudden all these inflated assets need to be converted into dollars god forbids a market or cryptocurrency crash! These bubbles are holding inflation from happening at a massive scale for now but might not last for much longer.

BTC is one bug away from being worth $0.

Money needs to do 2 things, store value over time and space. Gold, which has been used as money for thousands of years does a good job of storing value over time but is terrible over space. Fiat is terrible over time but fairly good over space.

Bitcoin does both and that is why it is a better money. It is the best money we have ever had.

You're also only focusing on bitcoin the asset, not bitcoin as protocol. Even if the fiat value of the bitcoin token was still $1, the protocol would still have HUGE potential. Have a look at what Jack Mallers and the team at Strike are doing. Blowing up international fiat payment networks using the lightning network. The bitcoin asset value is almost irrelevant in that process.

Strike is incredible. XRP is highly underrated too, despite what the Twitterati say.

Excuse my ignorance but what I do not get is if people are trying to get away from FIAT currencies since they are controlled by central banks why would you even consider XRP which is controlled by a private company?

Excuse my ignorance but what I do not get is if people are trying to get away from FIAT currencies since they are controlled by central banks why would you even consider XRP which is controlled by a private company?

Ripple has never claimed XRP is a decentralized currency. It's not a store of value. Completely different use case. It's primary use is for cross-border payments and as a bridge currency.

I get that, but still don't get understand why people would "invest" in it. Makes no sense since Ripple can issue as much XRP as they wish at the stroke of a mouse click.

Makes no sense since Ripple can issue as much XRP as they wish at the stroke of a mouse click

No they can't. In fact, the opposite could happen. Ripple can burn their holdings in escrow if the community pushes for it.

Strike is incredible. XRP is highly underrated too, despite what the Twitterati say.

But to quote Peter Schiff "Bitcoin has no intrinsic value!!" Hahahaha

Neither Bitcoin or any other cryptocurrency (except for stablecoins) can be used as a means of exchange (i.e. currency) given the current rates of growth (you would not spend X on a car when you know your car tomorrow would have cost you .95X) and uncertainty as an asset that can as well been deprecated either by institutional action (BTC fan girls will jump at me by this one but yes, it is possible just by introducing legislation to not allowing crypto conversions into fiat currency) or by a much better, efficient technology (Bitcoin is effectively a deprecated technology compared to newer crypto algorithms).

Bitcoin common tators are getting more like old time priests
"Believe in the mystery. Because we can't explain it to you so it makes sense, it's your fault for being an unbeliever"
Maybe they could switch to posting in latin. That was once a great way to confuse the masses.

What would you like explained, sir?

Please no.

Everything seems like magic to people who don't understand it. Like getting the printer to work for a boomer.

Satis credo, si qui tunc fit illud normalitatis

Except we can explain it to you, you just choose to bury your head in the sand and remain ignorant.
“If you don’t believe it or don’t get it, I don’t have the time to try to convince you, sorry.”
— Satoshi Nakamoto
Also:
Everyone buys Bitcoin at the price they deserve it.

That's my favourite quote from Satoshi.

Satoshi says ".....I don't have time to try and convince you......."
Please take Satoshi's advice. Just stop trying to convince us. Please please, we beg you.

BTC, is the next frenzy one after free CGT housing - Every investment class on the planet, really wanted to avoid the tax man, imagine the pressure vessel tube, the relief pressure will always goes to the weakest point.

Bitcoin is not a commodity as it has not utility. In my opinion it can be most accurately defined as modern art.

Bitcoin is not a commodity as it has not utility

Rubbish. It has plenty of utility. For ex, being able to send value across the internet without an intermediary.

Commodity utility dummkopf, I realise it can be exchanged duuhhhhh.

Bitcoin is a commodity. Produced by electricity and CPU processing power. Just because you cannot conceptually consider it a 'commodity' like iron ore, doesn't mean it isn't.

Using the same rationale the text on the message I am writing should be a commodity too.

( ͡ಠ ʖ̯ ͡ಠ)

My point precisely b21, an excel file is not a commodity and neither is bitcoin.

Using the same rationale the text on the message I am writing should be a commodity too.

No. The text on this page can be copied and replicated, unlike Bitcoin which is a commodity of value that can transferred across the internet.

Well said Te Kooti - it truly is in the eye of the beholder

Just wondering if anyone else in here is buying Pax Gold (PAXG) as your avenue for buying physical gold?

Why don't you just go buy physical bullion?

Because it's so much easier, esp in NZ. I buy a token of PAXG I'm buying into an oz of physical gold in a Brink London vault (the Eth address of the token gives ownership to a serial number on a gold bar), no storage hassles for me, no security issues, I'm holding gold in a digital wallet, which I can sell in a couple of minutes.

Stablecoin such as PAXG, and tokenisation (it can be of any commodity) is a huge advantage of the blockchain.

Did you ever look at Bullion Vault as similar to PAXG?

That's another way to buy physical gold, but still doesn't have the convenience of simply buying PAXG.

It exists and is increasing in value - it is being accepted as currency by some vendors worldwide
The issue is who controls it....

Maulden like the sound of their own voice too much as reading their posts makes fro good bedtime reading and adds no value to my life

The banks pray it will never be money. Its popularity is a very public vote of no confidence in FIAT currency.

i think it was about 1400 years ago that china invented paper money -- sure it was never going to catch on then either ... online banking anyone

Like it or lump it -- its only a matter of time before cyrpto currencies become suitable for everyday transactions

Like it or lump it -- its only a matter of time before cyrpto currencies become suitable for everyday transactions

It's a reality already.

To all the BTC (and cryto in general) aficionado's here. Crypto won't ever be more than an anomaly until Joe public is prepared to be paid for their efforts in crypto - a medium that has a 3-4% volatility index daily. It'll never be mainstream. No employee wants to risk earning 5% less at the end of the week and no employer will risk paying 5% more at the end of the week. BTC and co is the ultimate ponzi scheme - makes NZ housing prices look positively benign

https://www.swanbitcoin.com/why-bitcoin-is-not-a-ponzi-scheme-point-by-p...

I would actually. Just convert what i need to Fiat and save the rest in Bitcoin. Also you can get visa cards that instantly convert your Bitcoin to NZD and can be used everywhere.

What do you think would have happened if Bitcoin or other crypto was around (and semi popular) when Zimbabwe's hyperinflation period hit in 2007/2008/2009. If your employer could access a supply of this potential store of value, easier than access to USD, would you consider accepting it in return for your work?

So far, governments have only managed to ban themselves from bitcoin to their own detriment.

Ban = price goes up
Tax = price goes up

Haha true that.. you forgot one thing - frenzy= POP there goes the bubble.
Same comments from the disciples here about BTC as there were about Tech in the "Dotcom" years

You mean like it has POPed in 2013, 2015 and 2018? But yet it still comes back to not only exceed the previous all time high, but smash it...
I have a question for you, at what price, stage or time as a functioning network will you swallow your pride and admit you were wrong?

And in the meantime a lot of people will lose their savings, it is a sound plan as a store of value.

BTC progress flipping gold market cap

█░░░░░░░░░ 10%

8.26% :P
We're still so early fam.

BTC Market cap: $955,058,188,716

vs

GOLD Market cap: $10,000,000,000,000

INT not FLOAT. I use Swedish rounding :P

Haha nice ASCII art, comments like this show why Bitcoin is a bubble. I have noticed that most invested in it do not even understand the issues with its underlying blockchain algorithm, fees, etc. and how weak it is as a technology compared to other cryptos.

Yawn. Another Khal of Krypto.

We should add sigs to interest. Mine would be something like:
_______________________________________________________________

Predictions I was laughed at for that came true:

20K before Christmas 2020
Bounce back past 50K
☐ 100K by May
☐ 350K peak this halving

Your comment is funny yet pointless, plus also proves my point.

What other cryptos, sir?

There's social media networks better than Twitter, and chat apps better than WhatsApp. Whats your point though?

My point is there are historical and cultural reasons why gold has had its status for thousands of years, unlike assets like tulip bulbs which had a good run, until the next year when everybody was able to grow their own ones, the same has been now happening for some time with cryptocurrencies. Add this to the fact that there is no reason for Bitcoin to have a higher status than any other crypto and being one of the first ones makes no difference, plus the underlying technology is deprecated and there have been serious bugs with it in the past. We do not even know who Satoshi is, that should not help adding much trust either

¯\_(ツ)_/¯

I have noticed that most invested in it do not even understand the issues with its underlying blockchain algorithm, fees, etc. and how weak it is as a technology compared to other cryptos.

You are describing yourself sir.

Bitcoin isn’t tulips. It provides the world with the best digital store of value ever created, allowing people to store value that is hard to seize and transmit it to anyone else in the world without permission.

The Bitcoin network has been functional for 99.9860955965 % of the time since its inception on Jan 3 2009 02:54:25 GMT and has only ever been 'down' due to two software bugs years ago. And software = bugs anyway. There's tonnes of bugs in every application on the internet, which is why they have bug bounty sites. You should go and scratch the surface of any of our major banks tech stacks as an example - it would give you nightmares suddenly realising how woeful parts of their code base is.

The underlying technology has been forked countless times, and yet BTC is still pumping completing over 600M transactions to date transferring trillions of dollars on a completely decentralised network. The whole point of trusting BTC is the network rather than a fallible individual like Satoshi.

I agree there are better blockchain based solutions than BTC for everything. Many of them are layer 2 solutions like the lightning network, which means Bitcoin will continue to be King as Gold 2.0 for the foreseeable future. The only thing that can derail it is some sort of black swan anomaly, of which I can think of none right now.

By the time folks like you are admitting how wrong you were there will be few BTC transactions occurring under $100M. The last time I checked it cost a lot more than $5 in fees to move $100M (2.5 tonnes) of gold. And gold (like future BTC) mostly stays put anyway, because it's the layer 2 solutions over the top of it as a store of value that allow for people to transact.

What you don't understand is that for something to have some value there must be a majority consensus about it, and both workers and employers must be willing to pay the fruits of labor on that currency. Excuse me for not being a fanboy as well but rationally there is no value in BTC beyond being a speculative asset yet very profitable.

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☐ 100K by May
☐ 350K peak this halving

https://cryptopotato.com/famous-gold-bull-jeffrey-gundlach-says-bitcoin-...

Ups, sorry I thought this was an adults conversation, logging off for now.

Bitcoin is the best financial innovation since that charming Italian in the 1920s.

My children are into it. I encourage them as they will either make a killing or be left holding the baby. Either way it’s a good life lesson.

Il Duce had his time, I would not recommend him to my children though.

I’m not expecting them to hang, just get a bit of life experience. I’d say they will be burnt but they can afford to lose what they are ‘investing’.

BITCONNNNEEEEEEECT!

Ask Michael Saylor

So your not a crypto owner nor have been letting people know about the wealth that can be gained. So it is you that do not understand that 1 btc is 1 btc. The value of the dollars has decreased against btc OK buddy

Bitcoin or blockchains use proof of work mining. Environmentally, what that translates to is the bitcoin network producing as much CO2 annually to function as the whole of New Zealand. The fees associated with the network are currently approaching $30 per transaction. Both CO2 production and fees rise with the price. Bitcoin at best is a proof of concept and a good start. It’s equivalent to what the phonograph did for music. It will never be a store of value, or a digital currency, the next iteration that comes along will likely have a better chance at this, and that won’t be bitcoin or any blockchain based cryptocurrency.