[Steve C.]

What Should Congress Do About Bitcoin?

https://www.dailysignal.com/2022/05/...as-some-ideas/

( Information provided in this post does not represent any endorsement. And unless specified it is not based on personal experience and is offered for general interest only )


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[MatthewKlein]

Originally Posted by JLMounce

This argument is used a lot with bitcoin (or any decentralized currency) because the transactions only exist as a consensus on a digital ledger. There's only a record the transaction took place. Nothing about who the participants were or what the transaction was for.

This is unlike the SWIFT system that knows who is involved in the transaction and what goods or services are being transacted for with fairly good granularity.

That doesn't however mean that digital currencies are exclusively used by the scourge of the planet. Plenty of fraud exists within the current banking system. Because of the difficulty in even measuring fraud in an anonymous system like Bitcoin, making such a statement is itself complete speculation.

I would also point out that the same inherent issues occur where cash is transacted.

Maybe you're the one to help me understand. So far to me bitcoin seems more fiat than standard dollars.

No one is compelled to take bitcoin as payment for a transaction. I cant buy gas or groceries with bitcoin. To spend a bitcoin legally I need to convert in into dollars.

Outside tax evasion, I don't understand the benefit.

Do you have an idea of what legal transactions are completed daily with bitcoin?

I can understand the desire to give the government a big middle finger, but I don't understand how this can stay viable long term. The government LOVES it's taxes.

thank you

[JLMounce]

Originally Posted by MatthewKlein

Maybe you're the one to help me understand. So far to me bitcoin seems more fiat than standard dollars.

No one is compelled to take bitcoin as payment for a transaction. I cant buy gas or groceries with bitcoin. To spend a bitcoin legally I need to convert in into dollars.

Outside tax evasion, I don't understand the benefit.

Do you have an idea of what legal transactions are completed daily with bitcoin?

I can understand the desire to give the government a big middle finger, but I don't understand how this can stay viable long term. The government LOVES it's taxes.

thank you

Until such time as wide adoption of Bitcoin happens (if it happens at all) it exists in a state of only really being useful as an investment tool as an asset class against dollars.

Peer to peer transactions take place on wallets all the time, but again like cash who knows what’s being transacted.

The problem with trading it is what may or may not happen with the dollar specifically. If the dollar inflates beyond reason, or the government and institutions start restricting what people can and can not do with dollars, then Bitcoins, uses cases broaden.

Guns are always a hot topic, but it’s a good example. There is already ample evidence that payment processors and banks are cutting down on legal purchases of guns and ammunition because of a political agenda. So what do you do if you’re a gun shop owner and now your livelihood is at risk? You can accept payment from a crypto currency like Bitcoin. Because it’s decentralized, there’s nobody that can say no to the transaction.

[MatthewKlein]

Originally Posted by JLMounce

Guns are always a hot topic, but it’s a good example. There is already ample evidence that payment processors and banks are cutting down on legal purchases of guns and ammunition because of a political agenda. So what do you do if you’re a gun shop owner and now your livelihood is at risk? You can accept payment from a crypto currency like Bitcoin. Because it’s decentralized, there’s nobody that can say no to the transaction.

How would a gun shop owner launder bitcoin payments from frowned upon gun sales

Owner of the shop needs dollars to pay the mortgage, utilities, gas, food. If there is an audit he's got to explain its origin

[pont3]

Originally Posted by JLMounce

Questions answered above in bold.

Thank you Mr Professor! I'm still lost but you made it somewhat more understandable.

[JLMounce]

Originally Posted by MatthewKlein

How would a gun shop owner launder bitcoin payments from frowned upon gun sales

Owner of the shop needs dollars to pay the mortgage, utilities, gas, food. If there is an audit he's got to explain its origin

In small quantities you can use exchanges to cash out. Or you can borrow against the value of the coin like you can do with stocks. That’s why Bitcoin is inelegant when viewed alongside the dollar.

Let’s say you’re transacting on digital wallets with your customers. Just like taking cash to your bank, you can deposit the coin from your wallet onto an exchange or an intermediary. Many people use what is known as a stable coin for this. Stable coins are pegged to a specific currency. The most popular is USDTether. You trade your Bitcoin for USDC then sell those for dollars. You book the cash in your accounting software as if the transactions were made via cash/card.

You’re not hiding the payment from the government and you’re still paying taxes on it. But you bypassed your payment processor that may not like you. Possibly saving money on transaction fees at the same time.

The SWIFT system that includes payment processors use what’s called an MCC code with individual transactions. Here’s the current lists of codes. https://www.citibank.com/tts/solutio...gory-Codes.pdf

There is not currently a code specifically for weapon dealers as congress quashed that attempt last year. We aren’t talking guns but it’s when, not off that category gets added and tracked, giving any payment processor using SWIFT the technical capability of stopping that type of purchase if they wanted to.

Since Bitcoin’s ledger doesn’t have these MCC codes or any other type of transaction detail, it can’t stop the transaction for any reason as long as the network has consensus.

The end goal of course would be to pay your bills using bitcoin, not dollars. That is a long way off though unless there is some sort of black swan event that kills fiat currencies.

[71GP76TA]

Back in 2017 I went to a Bitcoin "seminar". I had a chance to buy in at $1,700 a coin. I didn't trust the people putting on the "seminar".. After some research I discovered that there was nothing "backing" it. Needless to say I did not buy in... Hindsight is 20/20.

[poncho-mike]

Greed makes people do dumb things.

When I was in college, I remember the professor talking about financial bubbles. The Tulip Bulb Mania in one of the European countries was a model he used to show how investor psychology could drive prices to extremes.. People were investing all of their life's savings into tulip bulbs of all things. At the peak, the price of one of the rarest bulbs was equal to the price of a mansion. Prices soared, then the market crashed. I'm not saying this could happen with Bitcoin, but it is an example of how investor psychology can drive prices to extremes that are not sustainable.

[pont3]

[QUOTE=JLMounce;6478519]In small quantities you can use exchanges to cash out. Or you can borrow against the value of the coin like you can do with stocks. That’s why Bitcoin is inelegant when viewed alongside the dollar.

Let’s say you’re transacting on digital wallets with your customers. Just like taking cash to your bank, you can deposit the coin from your wallet onto an exchange or an intermediary. Many people use what is known as a stable coin for this. Stable coins are pegged to a specific currency. The most popular is USDTether. You trade your Bitcoin for USDC then sell those for dollars. You book the cash in your accounting software as if the transactions were made via cash/card.

You’re not hiding the payment from the government and you’re still paying taxes on it. But you bypassed your payment processor that may not like you. Possibly saving money on transaction fees at the same time. "end quote"

Now there you go making things complicated again. Seems to me, you have to know a lot about monetary transactions, and, still, I cannot seem to grasp the concept of bitcoin existence. Nevertheless, I can't help wondering why the stock has soared so much. I remember when it plateaued at 40some k then fell to 17k and has since rebounded to 47k. So does that 47k represent the value of ONE bitcoin? Or how, exactly is it represented on dow?

For me, it is not the clandestine ways of transferring funds that interest me, but the idea of making a profitable stock trade. But with something so complicated I just don't see it as a sound investment.

You sound like you are an investment banker or some other arm of our financial system, and I really appreciate your input. You have given me/us the most detailed explanation of this crypto stuff to date. Thank you!

[pont3]

Originally Posted by 71GP76TA

Back in 2017 I went to a Bitcoin "seminar". I had a chance to buy in at $1,700 a coin. I didn't trust the people putting on the "seminar".. After some research I discovered that there was nothing "backing" it. Needless to say I did not buy in... Hindsight is 20/20.

This is the reason why I posted this question. Back then I was ready to invest 50k in something I did not understand but the rise was almost irresistible, but I, too, resisted.

One thing that I do know is that people "in the know" always come out ahead. I'm just hoping that someone explains to me how I can become one who's "in the know". Guess I'm just not smart enough.

[Half-Inch Stud]

Would be at least worthy of a conversation if ebay,Amazon, etsy and Paypal accepted crypto for purchases, and sent the Sellers either crypto or dollars.

Until then!

[poncho-mike]

One risk that hasn't been mentioned is that governments could seek to protect the dominance of their currency and outlaw cryptocurrency. I know China made it illegal a few years ago.

[JLMounce]

[QUOTE=pont3;6478559]

Originally Posted by JLMounce

In small quantities you can use exchanges to cash out. Or you can borrow against the value of the coin like you can do with stocks. That’s why Bitcoin is inelegant when viewed alongside the dollar.

Let’s say you’re transacting on digital wallets with your customers. Just like taking cash to your bank, you can deposit the coin from your wallet onto an exchange or an intermediary. Many people use what is known as a stable coin for this. Stable coins are pegged to a specific currency. The most popular is USDTether. You trade your Bitcoin for USDC then sell those for dollars. You book the cash in your accounting software as if the transactions were made via cash/card.

You’re not hiding the payment from the government and you’re still paying taxes on it. But you bypassed your payment processor that may not like you. Possibly saving money on transaction fees at the same time.

Now there you go making things complicated again. Seems to me, you have to know a lot about monetary transactions, and, still, I cannot seem to grasp the concept of bitcoin existence. Nevertheless, I can't help wondering why the stock has soared so much. I remember when it plateaued at 40some k then fell to 17k and has since rebounded to 47k. So does that 47k represent the value of ONE bitcoin? Or how, exactly is it represented on dow?

For me, it is not the clandestine ways of transferring funds that interest me, but the idea of making a profitable stock trade. But with something so complicated I just don't see it as a sound investment.

You sound like you are an investment banker or some other arm of our financial system, and I really appreciate your input. You have given me/us the most detailed explanation of this crypto stuff to date. Thank you!

The best way I think I'd explain the bitcoin concept would be the Green Back. It's easy to carry and easy to transact with and is backed up by sound money. Bitcoin is backed by energy because it's required to mine it. So think of the coin in your crypto wallet as being a greenback for the energy sector as a whole (petroleum, coal, natural gas, wind, solar etc.)

I'm in Finance, but just a lowly director at a smallish music education company. I just like this stuff and have spent a while researching it.

Originally Posted by pont3

This is the reason why I posted this question. Back then I was ready to invest 50k in something I did not understand but the rise was almost irresistible, but I, too, resisted.

One thing that I do know is that people "in the know" always come out ahead. I'm just hoping that someone explains to me how I can become one who's "in the know". Guess I'm just not smart enough.

When it comes to crypto, the prices you see for Bitcoin specifically are more of a reflection on the weakness of the dollar than anything. It's becoming more widely adopted, which means that there's less to go around, making it strong against the dollar.

Bitcoin isn't a great trading coin anymore because it's lost a lot of it's volatility. It's still quite volatile compared to many stocks, but the ability to rapidly make lots of money isn't there as much as it used to be.

However, it's still Early in this sector. So early that this conversation is happening and that governments don't know what to do with it. With the ETF's opening up within the last couple days, there's now trillions in market cap that can potentially flood into the coin. You haven't missed the boat, passengers are just now embarking.

[MatthewKlein]

Originally Posted by poncho-mike

Greed makes people do dumb things.

When I was in college, I remember the professor talking about financial bubbles. The Tulip Bulb Mania in one of the European countries was a model he used to show how investor psychology could drive prices to extremes.. People were investing all of their life's savings into tulip bulbs of all things. At the peak, the price of one of the rarest bulbs was equal to the price of a mansion. Prices soared, then the market crashed. I'm not saying this could happen with Bitcoin, but it is an example of how investor psychology can drive prices to extremes that are not sustainable.

This is exactly what comes to mind when I think about bitcoin.

[MatthewKlein]

Originally Posted by poncho-mike

One risk that hasn't been mentioned is that governments could seek to protect the dominance of their currency and outlaw cryptocurrency. I know China made it illegal a few years ago.

This is ultimately what I believe will happen.

[MatthewKlein]

Originally Posted by pont3

I remember when it plateaued at 40some k then fell to 17k and has since rebounded to 47k. So does that 47k represent the value of ONE bitcoin?

47k was the value of 1 coin. They can be divided limitlessly.

So if you own one whole bitcoin you could trade it for 47,000 dollars. Or tomorrow if a majority of people lose confidence in imaginary money it could be worth nothing.

[moneypit]

As they say hindsight is 20/20. As I was getting my ducks in a row preparing for retirement I almost pulled the trigger on one bitcoin. Several people at work had invested and followed all the ups and downs. I think it was spring 2019, bitcoin was on the way down from 20K to around 4K. It went back up to around 8K. I told my guys that if it came down to 7K that I would be in for one coin. It didn't. I bought silver! One of my employees who had invested early tells the story of cashing in one coin when it was around $300 to buy camping equipment. A few years later he realized he had a 30K coleman tent and stove!

[poncho-mike]

I don't understand values attributed to many things. Certain baseball cards may be extremely rare, but how do you establish value? It is based on perceived value, and once buyers lose interest the prices will collapse. Art falls into the same category. It is easily destroyed, will deteriorate over time, and you really can't do anything other than look at it or display it. But society gives tremendous values to these assets, as long as there are people out there with the means that want possess them. Our cars fall into the same category, I can't understand how some old muscle cars reach $250K or more valuations.

[59safaricat]

Had a coworker try to convince me I should invest in Bitcoin back in 2009. I thought about getting $1K worth for fun but didn't like that fact it's essentially backed by nothing (same with our current system at this point, really). Wish I pulled the trigger on that. He's probably a gazzilionaire by now if he played his cards right.

Also wished I pulled the trigger on Tesla when it crashed down to $150 a share in May of 2019 before it went crazy and split twice. Hesitation is a beotch.

[BOB VIDAN]

This simple mind gets easily confused. How can anyone limit how many are "mined" when they started with nothing and they are backed by nothing? If you can give me a logical answer to this, maybe you can figure out why I take crappy pictures for my ads.