From NewsThump:
"Look, if you want to invest in crypto, go for it. Personally speaking, I think fireworks are a much more entertaining way of setting fire to your money, but each to their own.
“But remember, the value of other people’s Bitcoin holding depends solely and entirely on your interest in buying it. There is no underlying or intrinsic value in Bitcoin. If you don’t buy it, or express interest in buying it, then they lose money – well, even more money – so take any advice to invest in Bitcoin from someone who owns Bitcoin with a sack load of salt.”
The slide back to zero continues unabated.
Thursday, 16 June 2022
NewsThump explains BitCoin
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9 comments:
Indeed. Given that GBP has similar 'properties' - no intrinsic value or underlying value - it's only differentiation from Bitcoin is universal acceptance and that the government mandates that taxes are measured (if not actually paid, e.g. you can pay taxes in gold say) in GBP. At some point the users of GBP are going to realise it's a crock too and rush to get out of it and that failure will make the Bitcoin nonsense look like a flea bite.
L, "it's only differentiation from Bitcoin is universal acceptance and that the government mandates that taxes are measured (if not actually paid, e.g. you can pay taxes in gold say) in GBP."
"Universal acceptance" is questionable. In most places in most countries, GBP wouldn't be (you have to go to the bank or money changer to buy local currency). In Zimbabwe for a time, people wanted to paid in USD not whatever their currency is or was. And any UK trader is entitled to demand payment in anything they like. They'd still have to pay tax in GBP. We UK people just use GBP for convenience.
What underpins govt currencies is that you have to pay taxes in them. That's the beginning, middle and end of it.
You cannot pay in gold. You have to sell it for GBP and then hand over the GBP. In extremis, the tax office could take your gold and sell it for GBP, but let's not debate corner cases and legalistic stuff.
This might be unpalatable to some (I'm not saying it's a good or bad state of affairs), but it is how it works. And all theory to the contrary, in practice it works fine.
Sure, inflation and a falling exchange rate erodes it a bit every year, but everything can fluctuate in value.
MW. we are making broadly the same point. GBP only 'works' because coercion and universal acceptance in the UK.
The 'decline a bit each year' is the killer. All paper currencies trend to zero value and GBP is ~ 2% of what it was in 1947.
And your point about HMRC taking gold 'in extemis' and selling it is what I was getting at. Or your cow come to that.
L, the coercion is on the tax side. No law says you have to trade in GBP, you are perfectly entitled to use any currency you like. Many do.
Nominally, prices or wages have gone up fifty-fold since 1947. So it looks as it 98% of the value of 1947 GBP has evaporated, but if you had put your money on deposit, it might be 50% or something. So a rubbish long term way of saving, but if you are saving up for a few years to for pay a deposit on a house or for a new kitchen, it's as good as anything else. Again, nobody is forced to save long term in GBP. It's largely laziness.
Whether you swap your gold to GBP and pay, if they seize it and swap it for GBP there is still the same demand for GBP.
Coercion follows the legal tender laws, (ses he arguing with a lawyer....)
Of course one can agree in and by private contract to trade, exchange, in whatever method of payment the parties agree on. You can see this in the shops in towns along the EU littoral. Prices can be EU and GBP. (That was the case last time I was there in about 2016...).
I am not sure it is laziness re savings (I am in the savings business). I think it's convenience and/or universal acceptance (in the UK). Anyway, it is going to end in tears if you decide to save in USD say when your primary income and costs are in GBP. Look at all those idiots that got their fingers burned using currency mortgages to try and arbitrage interest rates.
L, legal tender law is actually something different. That just says if the court upholds a debt to somebody else, you can pay it in GBP. So even the unpaid trader is suing for an unpaid invoice that was in USD or EUR or anything else, the debtor can pay in GBP. Fair enough. If the trader wants USD or EUR, he has to ask for payment up front.
Other two points - agreed.
MW. Now that is interesting. I thought that if a contract was made and the payment terms agreed and stated to be in, say, USD then it had to be in USD.
L, court will convert USD due into GBP.
"The slide back to zero continues unabated."
OTOH, the average value of Bitcoin was about $6,000 until 2020, when it suddenly took off, possibly because people got bored in lockdown and started pissing around with Bitcoin. It will be interesting to see what happens when the value gets back to around the $6,000 mark again.
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