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The problem isn't that the government won't be able to collect taxes. The problem is it can't print bitcoins to cover the difference between what it collects i

by tsotha 13y ago

The problem isn't that the government won't be able to collect taxes. The problem is it can't print bitcoins to cover the difference between what it collects in taxes and what it spends.

betterunix 13y ago
As I said earlier, the government is fine with alternative currencies, despite the fact that it cannot print those currencies or manipulate their supply. At the end of the day, all that matters is that most American business is conducted with USD. It is partly because of the government's effectiveness at collecting taxes that businesses continue to use USD, even when alternatives are available. Even the majority of businesses that accept Bitcoin payments only do so via an exchange service/payment processor, because what they really want are payments in USD. Like I said, the government's real concern is that Bitcoin businesses follow the law and abide by the regulations that every other financial service in this country follows. Many of those regulations and laws were created to serve the interests of law enforcement, by targeting the weak point in any black market transaction: moving money out of the black market (money laundering). Bitcoin is not unique in this regard: exchanges, like MtGox, remain weakpoints in the Bitcoin economy. Now, I bring this up in every Bitcoin conversation, but let's just pretend that there was some kind of independent Bitcoin economy that did not require exchanges to survive. This would be superficially similar to the economic system in many developing nations, where people keep two sets of books: legitimate payments (on the record), and "black" money (off the record). With Bitcoin, however, it would still be possible for the government enforce regulations even on this hypothetical underground economy. The reason lies in the poor security provided by the Bitcoin protocol: anyone who computes hashes faster than the rest of the network combined can deny confirmations on transactions, and can do so selectively (a "51% attack" as the Bitcoin community likes to refer to it). The government might just assemble their own hardware for doing this, or go after miners operating in the USA. Thus miners are a second exploitable weakpoint in Bitcoin. So really, the government has nothing to fear from Bitcoin. They know this, and anyone who thinks otherwise is somewhere on the spectrum of "delusional."
- tsotha 13y ago
  >As I said earlier, the government is fine with alternative currencies, despite the fact that it cannot print those currencies or manipulate their supply. That's not true. If you went to Vegas thirty years ago you would have been able to use casino chips anywhere in the city. You could use them to buy a burger or get your hair cut. That's no longer the case, because the Treasury Dept decided casino chips were being used as an alternate currency and started cracking down. Various people have tried, over the years, to launch a competitor to the dollar and each time they've been shut down by the government. The reason the government hasn't cracked down on bitcoins yet is there isn't enough business conducted in bitcoins for it to matter. It may also be they don't know exactly what to do, since there isn't a single person or group providing bitcoins. They may need new powers from Congress to do so, and you can be sure if ordinary people start using bitcoins that will happen. >It is partly because of the government's effectiveness at collecting taxes that businesses continue to use USD, even when alternatives are available. That makes no sense. >Even the majority of businesses that accept Bitcoin payments only do so via an exchange service/payment processor, because what they really want are payments in USD. Because only a handful of techies and mathematicians really understand bitcoins. They're leery of getting stuck with a bunch of worthless bits on a thumb drive when they thought they had something of value. But that kind of thing can change quickly - there isn't anything more backing the US dollar than there is backing bitcoins. >So really, the government has nothing to fear from Bitcoin. They know this, and anyone who thinks otherwise is somewhere on the spectrum of "delusional." I don't think you realize how money really works. Of course the government is not going to allow a currency it doesn't control supplant the dollar. If that happened the US government would go bankrupt.
  - betterunix 13y ago
    ">As I said earlier, the government is fine with alternative currencies, despite the fact that it cannot print those currencies or manipulate their supply. That's not true." Except that there are dozens of alternative currencies in use in the USA right now: https://en.wikipedia.org/wiki/List_of_community_currencies_in_the_United_States https://en.wikipedia.org/wiki/List_of_community_currencies_i... ">It is partly because of the government's effectiveness at collecting taxes that businesses continue to use USD, even when alternatives are available. That makes no sense." Well let's put it this way: what currency can you use to pay your taxes? Now, if you are a business that actually pays its taxes (as most do), what currency will you need to do business in? Even if a business wanted to use something other than USD, it would eventually have to trade whatever currency it used for USD when it came time to pay taxes. "But that kind of thing can change quickly - there isn't anything more backing the US dollar than there is backing bitcoins." USD is backed by the law: tax laws, debt laws, torts, fines, fees, etc. It is the currency the government deals in, and most businesses must deal with the government. That is the reason businesses accept Bitcoin payments via payment processors, ultimately getting USD. "Of course the government is not going to allow a currency it doesn't control supplant the dollar. If that happened the US government would go bankrupt." First of all, there is basically no chance of Bitcoin supplanting the US dollar, for the reasons outlined above. Try doing all your business in Bitcoin, and see what happens when the IRS comes around to ask why you did not pay any taxes. That being said, even if by some miracle Bitcoin supplanted the dollar, the government would not go bankrupt, it would just start using Bitcoin. The switch from the gold standard did not bankrupt the government; why would a switch from fiat currency to Bitcoin bankrupt the government? Despite the ramblings of certain libertarians and anarchists, this is not Zimbabwe, we are not bankrupt, and we are not expanding the money supply to avoid bankruptcy.

by tsotha 13y ago

The problem isn't that the government won't be able to collect taxes. The problem is it can't print bitcoins to cover the difference between what it collects in taxes and what it spends.

betterunix 13y ago

As I said earlier, the government is fine with alternative currencies, despite the fact that it cannot print those currencies or manipulate their supply. At the end of the day, all that matters is that most American business is conducted with USD. It is partly because of the government's effectiveness at collecting taxes that businesses continue to use USD, even when alternatives are available. Even the majority of businesses that accept Bitcoin payments only do so via an exchange service/payment processor, because what they really want are payments in USD. Like I said, the government's real concern is that Bitcoin businesses follow the law and abide by the regulations that every other financial service in this country follows. Many of those regulations and laws were created to serve the interests of law enforcement, by targeting the weak point in any black market transaction: moving money out of the black market (money laundering). Bitcoin is not unique in this regard: exchanges, like MtGox, remain weakpoints in the Bitcoin economy. Now, I bring this up in every Bitcoin conversation, but let's just pretend that there was some kind of independent Bitcoin economy that did not require exchanges to survive. This would be superficially similar to the economic system in many developing nations, where people keep two sets of books: legitimate payments (on the record), and "black" money (off the record). With Bitcoin, however, it would still be possible for the government enforce regulations even on this hypothetical underground economy. The reason lies in the poor security provided by the Bitcoin protocol: anyone who computes hashes faster than the rest of the network combined can deny confirmations on transactions, and can do so selectively (a "51% attack" as the Bitcoin community likes to refer to it). The government might just assemble their own hardware for doing this, or go after miners operating in the USA. Thus miners are a second exploitable weakpoint in Bitcoin. So really, the government has nothing to fear from Bitcoin. They know this, and anyone who thinks otherwise is somewhere on the spectrum of "delusional."

tsotha 13y ago
>As I said earlier, the government is fine with alternative currencies, despite the fact that it cannot print those currencies or manipulate their supply. That's not true. If you went to Vegas thirty years ago you would have been able to use casino chips anywhere in the city. You could use them to buy a burger or get your hair cut. That's no longer the case, because the Treasury Dept decided casino chips were being used as an alternate currency and started cracking down. Various people have tried, over the years, to launch a competitor to the dollar and each time they've been shut down by the government. The reason the government hasn't cracked down on bitcoins yet is there isn't enough business conducted in bitcoins for it to matter. It may also be they don't know exactly what to do, since there isn't a single person or group providing bitcoins. They may need new powers from Congress to do so, and you can be sure if ordinary people start using bitcoins that will happen. >It is partly because of the government's effectiveness at collecting taxes that businesses continue to use USD, even when alternatives are available. That makes no sense. >Even the majority of businesses that accept Bitcoin payments only do so via an exchange service/payment processor, because what they really want are payments in USD. Because only a handful of techies and mathematicians really understand bitcoins. They're leery of getting stuck with a bunch of worthless bits on a thumb drive when they thought they had something of value. But that kind of thing can change quickly - there isn't anything more backing the US dollar than there is backing bitcoins. >So really, the government has nothing to fear from Bitcoin. They know this, and anyone who thinks otherwise is somewhere on the spectrum of "delusional." I don't think you realize how money really works. Of course the government is not going to allow a currency it doesn't control supplant the dollar. If that happened the US government would go bankrupt.
- betterunix 13y ago
  ">As I said earlier, the government is fine with alternative currencies, despite the fact that it cannot print those currencies or manipulate their supply. That's not true." Except that there are dozens of alternative currencies in use in the USA right now: https://en.wikipedia.org/wiki/List_of_community_currencies_in_the_United_States https://en.wikipedia.org/wiki/List_of_community_currencies_i... ">It is partly because of the government's effectiveness at collecting taxes that businesses continue to use USD, even when alternatives are available. That makes no sense." Well let's put it this way: what currency can you use to pay your taxes? Now, if you are a business that actually pays its taxes (as most do), what currency will you need to do business in? Even if a business wanted to use something other than USD, it would eventually have to trade whatever currency it used for USD when it came time to pay taxes. "But that kind of thing can change quickly - there isn't anything more backing the US dollar than there is backing bitcoins." USD is backed by the law: tax laws, debt laws, torts, fines, fees, etc. It is the currency the government deals in, and most businesses must deal with the government. That is the reason businesses accept Bitcoin payments via payment processors, ultimately getting USD. "Of course the government is not going to allow a currency it doesn't control supplant the dollar. If that happened the US government would go bankrupt." First of all, there is basically no chance of Bitcoin supplanting the US dollar, for the reasons outlined above. Try doing all your business in Bitcoin, and see what happens when the IRS comes around to ask why you did not pay any taxes. That being said, even if by some miracle Bitcoin supplanted the dollar, the government would not go bankrupt, it would just start using Bitcoin. The switch from the gold standard did not bankrupt the government; why would a switch from fiat currency to Bitcoin bankrupt the government? Despite the ramblings of certain libertarians and anarchists, this is not Zimbabwe, we are not bankrupt, and we are not expanding the money supply to avoid bankruptcy.