Is Crypto dying or just dropping for the moment?

[Jimmy Higgins]

The trouble with gold as currency is the same as Bitcoin, just with a much smaller amount (but still way too high) of instability. The US dollar has worked, for the most part, in keeping things stable for currency. Nixon fucked things up into the 70s, but otherwise, it has worked out. But the gold bugs want MGGA, when it was never a great currency basis to begin with.

 

[TomC]

Hasn't happened, and very unlikely to happen.
Not impossible, but I use cash as much as possible.
Tom

Has as it did. Several stores were hacked... or just had their info hanging out there.

It didn't happen.

I don't do business the way the vulnerable do. It isn't likely to happen. I'm more likely to be a victim of a home invasion, which is also extremely unlikely.

If my bank got hacked, then I'd have a problem. But I've also got FDIC, I think. I dunno. I take precautions, but don't sweat the remote possibilities.

Tom

 

[southernhybrid]

My understanding is that the reason for today's crypto crash is due to people finding out that they have to pay federal taxes on the money once they use it. So, that 40K that was made on the 10 dollar purchase would be taxed as soon as it was spent. At least that's what CNBC is giving as an explanation for the crash. Apparently, a lot of people didn't understand how complicated the tax laws are in regards to crypto. It's like buying a stock. You pay the tax once you sell the stock, assuming you made money on it. You only pay the capital gains rate if you held it for over a year, otherwise it's taxed the same an other income. OF course, that's just US tax rules. I have no idea how this works in other countries.

True, but I was given the impression that some of the Bitcoin investors weren't very sophisticated when it comes to investing. Or maybe they simply weren't thinking since crypto is imo, a rather weird and risky investment. Then again, so are stocks when you really think about it.

I don't know why it's crashing (it had no business inflating in the first place), but the tax laws regarding crypto are quite a bit simpler than those governing steock sales. No wash rule, to begin with.

Anybody who's ever invested in anything ought to be familiar with the idea that if you sell something for more than you bought it for you will pay tax on the difference...

I was given the impression that a lot of Bitcoin investors weren't experienced investors and didn't really understand tax laws when it came to such investments. I would imagine the bigger investors knew what was going on. Crypto has been extremely volatile since it's creation, unlike the dollar which fluctuates very little compared to crypto.

 

[funinspace]

My understanding is that the reason for today's crypto crash is due to people finding out that they have to pay federal taxes on the money once they use it. So, that 40K that was made on the 10 dollar purchase would be taxed as soon as it was spent. At least that's what CNBC is giving as an explanation for the crash. Apparently, a lot of people didn't understand how complicated the tax laws are in regards to crypto. It's like buying a stock. You pay the tax once you sell the stock, assuming you made money on it. You only pay the capital gains rate if you held it for over a year, otherwise it's taxed the same an other income. OF course, that's just US tax rules. I have no idea how this works in other countries.

True, but I was given the impression that some of the Bitcoin investors weren't very sophisticated when it comes to investing. Or maybe they simply weren't thinking since crypto is imo, a rather weird and risky investment. Then again, so are stocks when you really think about it.

I don't know why it's crashing (it had no business inflating in the first place), but the tax laws regarding crypto are quite a bit simpler than those governing steock sales. No wash rule, to begin with.

Anybody who's ever invested in anything ought to be familiar with the idea that if you sell something for more than you bought it for you will pay tax on the difference...

I was given the impression that a lot of Bitcoin investors weren't experienced investors and didn't really understand tax laws when it came to such investments. I would imagine the bigger investors knew what was going on. Crypto has been extremely volatile since it's creation, unlike the dollar which fluctuates very little compared to crypto.

Funds like GBTC and ETHE can get one exposure to Bitcoin and Ethereum without the fuss, and if in an IRA, without the taxman...whether or not the mishmash of cryptocoins are heading for a long term downfall or not...is another thingy I'd hate to try and predict.

 

[funinspace]

Only people I know on Crypto are idiots and drug dealers/buyers.

I'd expect that there is also quite a bit of interest from people in autocratic countries that want an escape hatch that their government would have a hard time steeling; never mind countries like Venezuela, Lebanon, Iran, and a third of Africa with high inflation rates, and not wanting to stuff 20 dollar US bills in their mattress...

 

[TomC]

Only people I know on Crypto are idiots and drug dealers/buyers.

I'd expect that there is also quite a bit of interest from people in autocratic countries that want an escape hatch that their government would have a hard time steeling; never mind countries like Venezuela, Lebanon, Iran, and a third of Africa with high inflation rates, and not wanting to stuff 20 dollar US bills in their mattress...

There's another interesting question about cryptocurrency.

If you buy with rubals or euros or something, and the dollar value goes down while the other currencies rise, then what?

Tom

 

[RVonse]

Some will argue that Bitcoins have a "real value" related to their mining cost, which — if I haven't erred — is about the same as Bitcoin's current market price! However the huge sums spent on computation have not created anything with intrinsic worth. Just the opposite: bit-mining is deliberate "busy work." Wasteful computations are a deliberate feature of the "clever" blockchain design.

The electricity wasted on Bitcoin mining ($18 Billion worth in the most recent 12 months) will seem shameful when we recall that humanity wants to reduce power usage to cut CO2 emissions. I think this problem is what Elon Musk reacted to.

AFAIK, Bitcoin has NEVER been hacked. Ever. And no other cryptocurrency can make that claim. An easily transported safe store of wealth with no counterpart interest that can not be hacked or stolen is the value added that bitcoin advertises.

So there is real value more than just data bits on the computer screen I'm just not sure there is really $50000 worth of value.

 

[TV and credit cards]

I never got why gold has value other than it’s shiny so people like it. It has no utility. Bitcoin, near as I can figure has no utility either. I tried to find why some of the others might have value based on some utility and end up reading about their blockchain. The blockchain looks to have some utility, like Ethereum but the coin associated with it? I can’t make the connection. Ripple has a coin that has a definable utility but other than that, I don’t know. I haven’t read them all and have no intention of doing so. I suppose I’m just missing the connection between blockchain and it’s associated coin.

 

[Swammerdami]

I never got why gold has value other than it’s shiny so people like it. It has no utility. Bitcoin, near as I can figure has no utility either.

It's an exaggeration to say gold has no value. For example, a typical smartphone contains almost $2 worth of gold. (Engineers count pennies, and would be delighted to cut the manufacturing cost of a phone by 5¢.) Samsung and Apple don't add gold to their phones for decoration! If a cheaper metal satisfied their needs they'd use it. If the price of gold fell dramatically, there would be a lot more applications where gold was the cost-effective ingredient.

We may agree that some of gold's high price is due to a particular monetization of scarcity. The same is true of Bitcoin. A difference is that a Bitcoin Version 2 may show up to sop up another $1 Trillion of wealth; then a Bitcoin Version 3 and so on. Gold's scarcity, however, is likely to be permanent.

 

[Patooka]

I'm pretty certain cryptocurrency has always been this erratic. Proclaiming its death merely one week after a single SNL skit is a tad premature.

 

[Elixir]

I never got why gold has value other than it’s shiny so people like it. It has no utility.

Art has no utility, but has been a good investment for a long time. In fact, the primary guasi-utilitarian value of gold is that it is easily worked into art objects and it's appearance is durable (unlike that of silver which has far more inherent "practical" value.)
I'd say bitcoin actually has negative utility, considering the billions in "wasted" energy. It might be argued that it's an entertainment medium for its "players' and that as such it has some value... whether or not it offsets the energy/environmental cost, is another question.

 

[bilby]

I never got why gold has value other than it’s shiny so people like it. It has no utility.

Art has no utility, but has been a good investment for a long time. In fact, the primary guasi-utilitarian value of gold is that it is easily worked into art objects and it's appearance is durable (unlike that of silver which has far more inherent "practical" value.)
I'd say bitcoin actually has negative utility, considering the billions in "wasted" energy. It might be argued that it's an entertainment medium for its "players' and that as such it has some value... whether or not it offsets the energy/environmental cost, is another question.

Of course art has utility.

Gold, on the other hand, has very little. It can be turned into jewellery; But that's not just gold anymore. Investing in bullion because gold can be made into jewellery is like investing in paint because paint can be turned into works of art.

Bullion just sitting in a vault isn't useful for anything.

 

[bilby]

All money has purely imagined value; what makes it real is its acceptance by social convention and powerful economic institutions, not any inherent property of the medium. What Cryptocurrency has crucially failed to do is gain acceptance as anything other than the identity marker of a certain very narrow societal subgrouping, a demographic slice that is wealthy but largely inconsequential to the basic economic processes that move the world along.

Of course, but the dollar is backed by the US government. As long as there is trust in the government, the dollar has value. What exactly backs Bitcoin? Everything humans make up are based on myths.

The dollar is valuable not because of US government backing, but because the US government requires that you use dollars to pay your taxes, and won't let you pay in anything else (and certainly won't let you not pay at all).

 

[funinspace]

I'd say bitcoin actually has negative utility, considering the billions in "wasted" energy. It might be argued that it's an entertainment medium for its "players' and that as such it has some value... whether or not it offsets the energy/environmental cost, is another question.

Vegas?

 

[J842P]

I think this board more than most should be able to get behind Skepticoin. I'm going all in. To the ground!

 

[Artemus]

I never got why gold has value other than it’s shiny so people like it. It has no utility. Bitcoin, near as I can figure has no utility either. I tried to find why some of the others might have value based on some utility and end up reading about their blockchain. The blockchain looks to have some utility, like Ethereum but the coin associated with it? I can’t make the connection. Ripple has a coin that has a definable utility but other than that, I don’t know. I haven’t read them all and have no intention of doing so. I suppose I’m just missing the connection between blockchain and it’s associated coin.

Gold was in many respects the first fiat currency. A government decided that a worker's time was worth so many grains of gold, and prices were set relative to that. (A soldier's pay is often given as the example, but I don't know if that is correct.) It worked well at the time: it was durable, easily recognized, easily carried, easily transferred, easily divided into smaller parts, and difficult to counterfeit. The problem was that the supply was controlled by how much you could dig out of the ground or steal from conquered lands. A country that doubled the size of its economy would need twice as much gold, or suffer crippling deflation. Huge finds, on the other hand, would be inflationary. The current fiat currencies are equal to or better than gold in all respects, provided that the issuing government is responsible. But until societies reached that point gold was the best we had.

Bitcoin, however, is useless as a currency. It is inherently deflationary with its limited supply, is not easily transferred (ten minutes and a huge amount of energy with a transaction fee to transfer *any* amount), is not easily recognized, and is not durable (I forgot my password/reformatted the disk drive/dropped the flash drive in the lake and ALL my money is gone!). I really don't understand the hype.

 

[Gospel]

I made 250k off bitcoin so I'm biased.

 

[Patooka]

I made 250k off bitcoin so I'm biased.

That implies bitcoin can only have value whilst it is dependent on other currencies.

 

[Gospel]

I made 250k off bitcoin so I'm biased.

That implies bitcoin can only have value whilst it is dependent on other currencies.

To me, it was just being lucky for being born in 1973 and group mining sometime afterward then holding (in my case discovering) until Elon Musk became a thing. My only regret is that I had to convert to a non us currency first (long story).

 

[barbos]

So Colonial Pipeline paid ransom, at least bitcoins are useful for that