Interesting Idea!!

[MoonRise]

This is the first I've heard of this and it really is interesting. I wonder how this would change the world? How secure is it really? Is this like Credits in the Space Genres?

http://arstechnica.com/tech-policy/n...r-currency.ars

[GreyGeek]

Re: Interesting Idea!!

I ran it that scheme several months ago and checked it out.

It is a scam, plain and simple. Those who will or have benefited the most are the early adopters who "mined" bitcoins by having their computer "do work" (crunch some mathematical algorithm to arrive at a value, much like folks who let researchers borrow their CPU cycles to solve physics or biology problems the need computing power- I let my computer crunch SETI blocks for months). Think of the early adopters as the top of a pyramid scheme, much like Amway, or any other multi-level marketing scheme.

Perhaps you don't remember other Internet "money", like Beenz or Flooz?

Bitcoins growth was designed to peak out at $21M.
[img width=400 height=324]http://d2o7bfz2il9cb7.cloudfront.net/main-qimg-2ea0d38313baf1d19a317ae4ade8348e[/img]
That's the wrong kind of growth curve. It only helps early adopters. If more people pile on more money should be available:
[img width=400 height=302]http://d2o7bfz2il9cb7.cloudfront.net/main-qimg-c439334d18b8892058b9329789b471d2[/img]

As one of the comments pointed out, if your HD crashed it could wipe you out! (assuming, like most folks, you never back up).

When my ISP takes monthly Bitcoin payments I might consider it, but I doubt that Bitcoins will survive that long. But, regardless of what my ISP thinks about Bitcoins, Uncle Sam will probably clamp down because the IRS doesn't like transactions it can't trace, except for Gold transactions because out Congressmen didn't want their Gold transactions traced.

[MoonRise]

Re: Interesting Idea!!

Ahhhh.....

Think of the early adopters as the top of a pyramid scheme, much like Amway, or any other multi-level marketing scheme.

That makes perfect sense!!!! No further explanation needed and after you pointed out the graph that is exactly what that is!!!

[Detonate]

Re: Interesting Idea!!

Off the top of my head, and without doing any research, I also believe that the federal government here in the US will outlaw this, as under the law only they can issue money legally. And as pointed out, they do want to collect taxes.

[woodsmoke]

Re: Interesting Idea!!

I remember when, during the Carter economic "malaise", there was a nationwide trading thing going on that was run by an actual company.

If one had fifty gizmos, such as bottles of milk or chairs and wanted to trade some of them for a couple of widgets, such as radios or beans, the people got together and traded the stuff in terms of the value that each person put on his own gizmos or widgets. The company made money by providing the "place" for the trade, not a percentage or anything, just a flat fee. Kind of like haveing a flea market building that other people trade their stuff in only a flea market usually sells stuff not trades it(except between the dealers).

But, the Jimmy's IRS didn't like that and so.... when you traded you were supposed to figure out the actual, real, monetized value of the gizmos on the real, for sale market, such as at Target. Then the two people had to calculate what they would have paid "as if" they bought the gizmo and then pay sales tax to the local government and if one "made" more than the other then also had to pay income tax to the state and federal government.

I don't know that the IRS or anybody acually was "taken to court" over it, but I think they were "hassled" so much that they just gave up or something.

And also, in a "consumer" society, people are supposed to "consume" objects and buy new ones not trade them.

What is curious is that "barter" is the penultimate example of "the people" in action as opposed to the "government" in action and that the very people who decry "big business" were/are the people who do not want "the people" to trade.

And then we also have the interstate commerce clause that says that if a business can prove "possible loss" by people either giving away something or trading it, then the people who "might" cause harm to another business are given a cease and desist or other things...

woodsmoke

[MoonRise]

Re: Interesting Idea!!

Yes, that is why this country has gone down hill. The People are no longer. It's all government even from those who are trying to "reduce" government are not as they are moving in another area and trying to give some of it over to big business under the guise they will solve everything and make it better for all while at the same time taking the money and stowing it for themselves. We The People..... long forgotten.

[Detonate]

Re: Interesting Idea!!

Yes, I remember that. They also bartered services. Paint my house and will repair your water heater. Stuff like that. But the IRS jumped on that too, requiring bookkeeping and reporting the value of the service received as income.

[GreyGeek]

Re: Interesting Idea!!

If the Dollar craters and becomes worth less or worthless then bartering will become the standard method of business, IF you have something of value to barter. If you don't then ... tough luck.

If I trade my knowledge of computers, helping someone to set up theirs, or clean out the viruses, or what ever and they give me a rump roast I doubt very seriously that the gov would ever be able to determine who "gained", and without one side "profiting" there is nothing to report in the way of income. Besides, what would they collect taxes with? The Dollar?

[dibl]

Re: Interesting Idea!!

The last time I looked into it, the IRS views anything you "earn" as "constructive income", even if it was a rump roast earned by fixing a water heater. Their view is that you owe income tax on the value of the "constructive income".

Not that they have time or resources to investigate such things. And of course, the tax on the value of a rump roast wouldn't normally be worth an investigation. But if they decided they didn't like the cut of your jib, then ..... :P

[GreyGeek]

Re: Interesting Idea!!

AND, it has never been a problem for the IRS to spend a million bucks to investigate a $1,000 difference.

[Detonate]

Re: Interesting Idea!!

I heard this on the news earlier today. I don't know anymore about it than what I am reporting here. But it seems some states have have recently declared gold as legal tender. That's very interesting.

[GreyGeek]

Re: Interesting Idea!!

That was Utah.

The law recognizes gold and silver coins issued by the federal government as legal currency in the state. The coins do not replace the current paper currency, but may be used and accepted voluntarily as an alternative.

The law exempts the sale of gold and silver coins from the state capital gains tax, since you would simply be exchanging one form of legal tender currency for another. It also calls for a committee to study alternative currencies for the State and a means for Utahans to pay their taxes with gold and silver coins.

Here is the KEY parts:

Gold and silver coins issued by the federal government are already legal tender, of course, and can be used to purchase items and pay debts owed. However, they could only be used at the face value of the coins -- which is ridiculously lower than the value of the precious metal content of the coins. If you were to use them at the actual value of the coins, you would face a capital gains tax on the "profit" you gained over the face value.

The capital gains tax rate for individuals is currently at one of its highest rates ever and is at 28% while the corporate rate is at its greatest level in history, namely 35%. There is an inequality with capital gains tax in the fact that people must pay taxes on all of their gains but are only able to deduct a portion of their losses. This particularly applies to investments that fluctuate between gains and losses over time.In many states taxpayers are liable, not only for the federal capital gains tax but also the state’s own form of capital gains tax. This can actually take the combined rate to almost 40%. California, Montana and Rhode Island are amongst the highest in the country.

All Utah did was eliminate the STATE tax liabilities of using Federal stamped Gold and Silver coins. They cannot remove the capital gains tax that the IRS could levy on each and every transaction involving those coins. So, every time you use Gold coins for goods or services (instead of merely buying or selling the coins themselves, which doesn't have to be reported because our Congressmen didn't want their Gold transactions tracked) you must report the transaction to the IRS and include the 28% tax with your filing. It wouldn't take long for the IRS to tax out your Gold, unless you concealed such transactions to dodge taxes. It's sort of like Las Vegas casinos where they promise 93 cents back on each dollar you gamble. By the time the night is over they have the entire dollar.

Also, when buying and selling Gold coins, there is a paddle that you use which is actually a weighted scale. Put the Gold coin on one side and it should teeter on level if it is Gold. But even a phony Gold plated Lead coin can do that. What it can't do is pass through the slot on the other end of the paddle as well.