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Understandable, but wasn't this always going to be inevitable given people treating BTC as an investment for USD instead of as a crypto currency? Sooner or late

by csydas 10y ago

Understandable, but wasn't this always going to be inevitable given people treating BTC as an investment for USD instead of as a crypto currency? Sooner or later, regardless of the Government/Country combination, you're going to get the attention of various agencies when an online currency starts to be used to store irl currency. It's why it's always been somewhat ironic to me that despite the original intent of cryptocurrency, people still listed their holdings in USD, as if BTC was their portfolio. I understand to a degree the argument of what you do with your money should be your business, and if you want to store it in BTC and believe you can convert it to necessary currency later on, that's fine; I'm not being sardonic either, that's your choice with your money. But I don't think that BTC was really designed or intended for this purpose as it brings the exact sort of scrutiny that one would hope to avoid with a cryptocurrency, and with scrutiny, regulation. Maybe if the total value of exchanges on BTC without the injection/interaction of irl currencies grew large enough (i.e., there were enough transactions for legal goods/services), the same scrutiny "might" be applied, but I'm not really convinced that governments would care much one way or another. Bitcoin's own reputation has also helped bring this scrutiny down - even if the level of anonymity is questionable, most government officials and agencies hear "anonymous" and "exchanges" and immediately want to have controls set in place. Even if they figure out that there is a very traceable paper trail, there's still an interest in ensuring that it's not being used to launder. Their curiosity will not be satisfied with people's assurances that "it's an online currency, that's all." Basically, the gold rush with BTC sort of led it exactly to the state it's in, and brought the eye of government to it. As long as people treat it like gold or silver or any other commodity, the government is going to want a piece of it, or at least keep a solid eye on it.

wtbob 10y ago
> Understandable, but wasn't this always going to be inevitable given people treating BTC as an investment for USD instead of as a crypto currency? Fundamentally inevitable, no — there's no inherent reason for countries to care about the movement of currency — but practically inevitable, yes. As long as we have such financial 'crimes' as money laundering (which is only against the law because it's easier to prove than the real crimes it's designed to hide), we're going to have KYC requirements and all the rest of the incumbent-protection measures which make it so hard to have a financial startup.
- csydas 10y ago
  > there's no inherent reason for countries to care about the movement of currency Wouldn't appropriate taxation give them reason? Say, for example, buying cigarettes in a US state with a high sin tax. Or suppose a workplace that pays employees in BTC; how do you apply holdings to that? I would imagine that if it gain significant traction, it would warrant interest.
  - lowpro 10y ago
    Fundamentally, governments don't need to tax currency movement. If they implemented a flat income tax only, or even better a flat consumption tax, it could survive off a single tax and not need to worry about income or movement.
    - csydas 10y ago
      Mmm, understandable position. I guess I must admit that my original statement came with an assumption of "BTC deployed in the current real world setting." I do agree that given the scenario you and the other commenter provided would not require government scrutiny as they would have no interest. Though, also both scenarios exist as "what-ifs" of the real world and an ideal world setting for BTC, not an idea use scenario for BTC>
  - wtbob 10y ago
    With an inflatable currency, a government could always just inflate its currency in order to fairly tax everyone who holds any of it. It's also possible to build an anonymous, auditable cryptocurrency such that a government can verify that taxes on transactions have been paid, but not not know the identities of the transactors unless they don't pay. Which is pretty neat.

by csydas 10y ago

wtbob 10y ago

> Understandable, but wasn't this always going to be inevitable given people treating BTC as an investment for USD instead of as a crypto currency? Fundamentally inevitable, no — there's no inherent reason for countries to care about the movement of currency — but practically inevitable, yes. As long as we have such financial 'crimes' as money laundering (which is only against the law because it's easier to prove than the real crimes it's designed to hide), we're going to have KYC requirements and all the rest of the incumbent-protection measures which make it so hard to have a financial startup.

csydas 10y ago
> there's no inherent reason for countries to care about the movement of currency Wouldn't appropriate taxation give them reason? Say, for example, buying cigarettes in a US state with a high sin tax. Or suppose a workplace that pays employees in BTC; how do you apply holdings to that? I would imagine that if it gain significant traction, it would warrant interest.
- lowpro 10y ago
  Fundamentally, governments don't need to tax currency movement. If they implemented a flat income tax only, or even better a flat consumption tax, it could survive off a single tax and not need to worry about income or movement.
  - csydas 10y ago
    Mmm, understandable position. I guess I must admit that my original statement came with an assumption of "BTC deployed in the current real world setting." I do agree that given the scenario you and the other commenter provided would not require government scrutiny as they would have no interest. Though, also both scenarios exist as "what-ifs" of the real world and an ideal world setting for BTC, not an idea use scenario for BTC>
- wtbob 10y ago
  With an inflatable currency, a government could always just inflate its currency in order to fairly tax everyone who holds any of it. It's also possible to build an anonymous, auditable cryptocurrency such that a government can verify that taxes on transactions have been paid, but not not know the identities of the transactors unless they don't pay. Which is pretty neat.