BITCOIN

Aegis

silvercue said:

Understood.  And I think it is wise to only buy into assets you trust. 

But then Gold has no real value other than the value we attribute to it.  There are similarities to be drawn there, yet gold has not collapsed (yet).  

I agree, and as I have said elsewhere I don't invest in gold either, despite the fact that it has the long term price stability that offers a non-correlated inflation resistance in a portfolio that might otherwise only hold equities and bonds.  Basically I won't invest in anything that doesn't generate a cash flow somehow, which means I won't hold commodities of any sort, including crypto-assets.

I suppose the one thing you could say about gold is that it does have uses in both industry and jewellery, so there is some demand for it beyond the simple storage, but I agree that the vast majority of demand just comes from the fact that it is seen as a store of value.  In other words, it has value because people think it has value.  To me, that's not a good enough reason to invest in an asset.

User232002

Notepad_Phil said:

You really haven't thought about the many potential routes of attack have you - maybe it's time to DYOR.

www.blockchain.com/explorer / www.etherscan.io / Bitcoin source code

These were the 3 sources I mentioned in the previous discussion. If you think there is anything at all in these 3 sources that would lead to a computer vulnerability you could somewhat easily make between a couple million up to a couple hundred million dollars. 

You are completely clueless and have no idea what you are talking about.

Notepad_Phil said:

It was your point that self custody was possible by memorising 12 words. I was just countering with potential issues with the method that you seemed to think was a definite plus over other systems. But as it's so easy and would entail an empty set I look forward to the lack of reports of newly lost bitcoins going forward.

My argument wasn't that there will no more lost Bitcoins. You raised a point about senile people not being able to remember 12 words which is preposterous as if that matters.

FYI, the article posted on this thread even conceded that the current amount of lost Bitcoin does not affect the operation of the network.

Notepad_Phil said:

Except you didn't say that, you said "The emission and availability of Bitcoin is known in perpetuity. It is unknown for gold.". The emission schedule is certainly written in the code, but availability in perpetuity requires systems to be running in perpetuity, which is a lot more time than 1000 years. You seemed to think that was a plus point of Bitcoin, now you don't.

I didn't see this omission as being a big thing, but yes; I believe there will be a copy of the Bitcoin source code and the architecture to run it in 1000 years if people wished to do so. Thus, it will be available. No, I don't imagine it will be used then. I've already said that I would hope we have something better by then.

Again, this is a silly strawman point. Only an idiot is thinking about something happening in 1000 years when making investment decisions today for rather bloody obvious reasons.

Notepad_Phil said:

You  seem to have mistaken me with someone who loves gold. Gold helps to make some nice jewellery, but it's not something that I would consider as fit for investing, but then many other things aren't either.

As much as I give gold a hard time, its outperformed the S&P500 since 2000 so it seems perfectly fit for investing. It hasn't performed particularly well since 2011 (ish).

User232002

Section62 said:

Two different things.  1) Whether governmental borrowing is sustainable 2) Whether governments should be restricted or 'banned' from borrowing (aka 'living within their means').

The latter allows expenditure on things that couldn't be paid for in full 'today'.  If governments had to borrow in Bitcoin then their flexibility to finance projects/emergency expenditure would be curtailed.

Borrowing - sustainably - to fund large capital expenditure is not 'bad' in itself - hence the comparison with mortgages which most people consider to be an acceptable form of personal debt.

Only one poster suggested that governments borrow in Bitcoin and he hasn't returned, so please stop presenting this as an argument. My argument is not that governments should not be allowed to borrow - it is that they should 'live within their means.' Some borrowing is fine and the general theory that borrowing can increase tax receipts and pay for itself is sound. However, the question is one of degree and my assertion is that we are way past the point of sustainability.

Section62 said:

Not really.  Because the person will be expected to pay back the money within a fraction of a lifetime - 25 years or something like that.  Hence the risk of them not getting that 'better job', or worse becoming ill an unable to work at all, is quite high.  (Most) nations are going to be around a lot longer than that.

We are though drifting slightly away from the point.  Which is that governmental borrowing is not wholly bad. If you forced governments to borrow only via Bitcoin it is inevitable bad stuff is going to happen.

Regarding the first paragraph, these factors shift the dial but don't change the overall picture. Our government has tax receipts of £800BN. That's gross revenue though, so how much of that do we think is 'disposable' (for lack of a better word) income? Lets go with £100BN, which at 12.5% of revenue seems ridiculously generous. The governments current debt is £2.7TN which, if we assessed this on the same basis as a mortgage, would be 27:1. With some fairly generous assumptions...

The idea of debt to GDP as a ratio is a bit silly, because GDP isn't income. Regardless, you can see that the situation isn't exactly sustainable with these approximate numbers. Nation states are a pretty recent historical phenomenon btw and not nearly as permanent as people would like to believe.

Regarding the last paragraph, thats not the point I've been arguing against. I accept government debt can be a good thing. Borrowing money after WWII and rebuilding the country, creating universities etc created growth and a golden age - but thats not happening in our modern time.

Section62 said:

Why are you assuming I'm talking about you ?  I thought we we having a theoretical discussion here?

I completely agree about sensible monetary policy - that's one of the reasons why I see the flaw in the argument that borrowing in Bitcoin would help - but on the other hand, if you think a nuanced argument can be made for the middle ground then I'd love to see how you would sell the idea of reducing the NHS budget by 0.1%.

Fair point, but by 'me' I meant the argument I was presenting. 

Again, nobody invested in this thread is suggesting governments borrow in BTC - that's ludicrous. Some time ago I suggested that fiat will exist in parallel with BTC and if a government borrows fiat currency it will cause BTC to appreciate against that currency by a reciprocal amount. So BTC operates as a reserve asset outside of nation state control, but nations are still free to inflate their currency if they believe it serves them.

Regarding the last bit, its impossible because of incentives; I accept that. The money printer has been turned on and its never being turned off again because people will just vote someone in that will turn it back on. The natural continuation of this doesnt end well for fiat currency obviously.

User232002

silvercue said:

I avoid everything on ERC20 due to the insane fees.  I will be jumping on board Sundaeswap when it goes Live (soon) on Cardano network..

The opportunities for passive income from Crypto are incredible right now.   The problem is in the UK they have decided to tax stake rewards, yield profits and other "earn" profits as Income and not Capital Gains.  Frustrating.  

Yeah, I was reading the IRS documents about this a couple of days ago - thing is though I just have no idea how they are even going to attempt to enforce this kind of stuff. 

IRS suggests that you are liable for tax on the asset when it comes under your control (which is ambiguous to start with) but for an auto compounding pool are they suggesting that you calculate the price every few seconds that you are credited with a fraction of a token? Seems really bizarre and basically impossible to do.

Not to mention that I've been airdropped a bunch of tokens that have some value (according to an exchange) but that I can't actually sell because they are scam tokens and will clean your wallet out as soon as you authorise them. So are we saying that we could airdrop everyone 1BN 'HMRC' tokens, buy one token for say $1 on an exchange giving those tokens airdropped a theoretical value and now everyone is liable for taxes on $1BN? Makes no sense. They really are so far behind, but likewise I'm not liable for UK tax thank god.

Would also echo the aversion to ADA as I've said previously.

Scottex99

 

Yeah, I was reading the IRS documents about this a couple of days ago - thing is though I just have no idea how they are even going to attempt to enforce this kind of stuff. 

IRS suggests that you are liable for tax on the asset when it comes under your control (which is ambiguous to start with) but for an auto compounding pool are they suggesting that you calculate the price every few seconds that you are credited with a fraction of a token? Seems really bizarre and basically impossible to do.

Not to mention that I've been airdropped a bunch of tokens that have some value (according to an exchange) but that I can't actually sell because they are scam tokens and will clean your wallet out as soon as you authorise them. So are we saying that we could airdrop everyone 1BN 'HMRC' tokens, buy one token for say $1 on an exchange giving those tokens airdropped a theoretical value and now everyone is liable for taxes on $1BN? Makes no sense. They really are so far behind, but likewise I'm not liable for UK tax thank god.

Would also echo the aversion to ADA as I've said previously.

Oops I accidentally traded one of those scam airdrops and lost access to all those coins in my wallet. That definitely isn't me moving them to those new wallets and I definitely don't control them, that must be the scammer.

But yes I'm not paying tax on those coins anymore as they are now lost!

I dont actually have any answers to potential tax issues but save to say HMRC will be at least 5 years behind the curve on just simple spot holdings along nevermind any DeFI shenanigans

User232002

Aegis said:

[Deleted User] said:

A new CNBC survey shows that 83% of Millennial millionaires now own crypto. Nearly 1/3 of the respondents have put at least 3/4 of their wealth in the assets.

Seems to be that only MSE "veterans" reject Bitcoin/crypto. It's not the case the new generation, who will eventually replace them.

In the meantime, all "veterans", enjoy your 0.25% PA in your savings account.

Happy New Year to all who are not afraid!

As I reject crypto, I guess I must be one of those veterans.  I certainly wouldn't accept 0.25% as a return rate, which is why my ISA has an annual return of 22.4% and my SIPP has 10.9%.  Both comfortably above inflation.

I have pointed out several times that it's not a simple binary choice of crypto or savings accounts, but it keeps being raised as though it is somehow the only alternative to penury.

Is this a brag?

S&P500 2021: 28.8%
NASDAQ 2021: 23.2%

Congratulations you lost out to the market.

Hell, even the FTSE did 12.4% last year and that's been dead for two decades. 

There is some good discussion on allocation in the preceding posts but I think one of the things that is becoming really apparent in traditional finance is that a 0% allocation to crypto is unarguable at this point. You can debate whether the correct allocation should be 0.5%, 1%, 5% or 95%, but probabilistic thinking is necessary.

Aegis said:

Basically I won't invest in anything that doesn't generate a cash flow somehow, which means I won't hold commodities of any sort, including crypto-assets.

Plenty of crypto protocols generating hundreds of millions of $'s in revenue by providing services, often with far lower P/E ratios than traditional companies (because nobody knows about them). Avoiding the space because it doesn't generate cash flow is incorrect analysis.

Shocking_Blue said:

Dear all,

Docusign, Coinbase, CME, Hut8, Canaan, Nvidia, Greensky, FutureFintech. Also looking at Hood.

This would be a dabble (no more than 2% of portfolio in total), but I think it makes sense and is worth the relatively small risk.

Any ideas about possible ETFs, or the above, appreciated, but will post as a new thread if this is off current topic.

Thanks.

Whats your thesis and reason for not holding BTC but holding all of the above? 

I think there are two plus points; (1) That these can be included in many tax efficient wrappers and (2) Some of these will trade like leveraged BTC and move up or down by more than BTC would.

(1) doesn't really interest me due to personal circumstances, but (2) needs a bit of research. For example, if you find a miner that isn't selling their BTC and has several thousand on the balance sheet then if BTC appreciates then obviously you have both a company that is mining an appreciating asset plus an appreciating treasury and that will do very well. You'll have to look in to hash rates and how much each miner currently holds and compare that to their current valuation to assess those factors though.

Don't think Nvidia as a crypto play is worthwhile... The GFX cards won;t be required when ETH gets its stuff together and removes PoW. I think ETH is really the only valid application of GFX cards for crypto mining, but I don't know too much there.

Even though Coinbase would trade as a play ont he whole space and probably correlated to overall market cap and volumes, I think it has some pretty big risks. DEX's are getting better everyday and will continue to take market share. I think Coinbase will end up begging regulators to protect their pie, which might actually succeed but who knows.

silvercue

darren232002 said:

silvercue said:

I avoid everything on ERC20 due to the insane fees.  I will be jumping on board Sundaeswap when it goes Live (soon) on Cardano network..

The opportunities for passive income from Crypto are incredible right now.   The problem is in the UK they have decided to tax stake rewards, yield profits and other "earn" profits as Income and not Capital Gains.  Frustrating.  

Yeah, I was reading the IRS documents about this a couple of days ago - thing is though I just have no idea how they are even going to attempt to enforce this kind of stuff. 

IRS suggests that you are liable for tax on the asset when it comes under your control (which is ambiguous to start with) but for an auto compounding pool are they suggesting that you calculate the price every few seconds that you are credited with a fraction of a token? Seems really bizarre and basically impossible to do.

Not to mention that I've been airdropped a bunch of tokens that have some value (according to an exchange) but that I can't actually sell because they are scam tokens and will clean your wallet out as soon as you authorise them. So are we saying that we could airdrop everyone 1BN 'HMRC' tokens, buy one token for say $1 on an exchange giving those tokens airdropped a theoretical value and now everyone is liable for taxes on $1BN? Makes no sense. They really are so far behind, but likewise I'm not liable for UK tax thank god.

Would also echo the aversion to ADA as I've said previously.

I am OK with paying CGT on Crypto profits.  I am very frustrated at the idea I have to pay income tax on passive income from Crypto, because, despite what side of the Crypto fence you are on, they are risky assets.  So for me to be paying 40% tax on stake and other rewards when the asset value itself could be dropping - meaning I could be paying tax on an overall position of loss, just seems completely wrong to me (forget offsetting for now).

I agree that enforcing this will be very difficult.  For some passive income, let me use my ADA staking rewards as an example (your view on ADA noted and ignored, no offence ) , they will be 100% relying on trust.  As these rewards are completely invisible to HMRC and they have no way of ever seeing them.  I see them directly in my Wallet, but I don't believe HMRC can ever see them and they certainly can't link them to me.   I am not suggesting people don't declare their taxes here, I am just pointing out the difficulties with this approach.

As a different example, if I look at the EARN facility on Crypto.com - they offer 12% on stablecoins.  That is paid in more stablecoin.   I believe that is only taxable as income when I trade it for Cash (though I need to check that).  Now I have been informed through a thread I made on the crytpo.com reddit on taxes that:

 "when you make a sale on the app and it goes into your fiat wallet, the fiat wallet is operated by a real FCA approved bank in the UK called BCB payments limited. This bank is named under your name and will be linked with your personal information i.e national insurance number. This identifies you and if enough money passes through the Fiat wallet i.e bank account then HMRC can send you letters asking you to 1) Declare where the money came from and 2) pay tax on earnings".

This was an unofficial user reply, but seems plausible.  However, all anyone has to do is not sell the stablecoin on the app, move (for free) to the exchange, trade for another crypto and move to a wallet.    That way there is no real audit trail for income tax.

I would love to see simpler taxes, but I guess that is less likley than us all agreeing on the benefits (or not) of Crypto

User232002

Scottex99 said:

Oops I accidentally traded one of those scam airdrops and lost access to all those coins in my wallet. That definitely isn't me moving them to those new wallets and I definitely don't control them, that must be the scammer.

But yes I'm not paying tax on those coins anymore as they are now lost!

I dont actually have any answers to potential tax issues but save to say HMRC will be at least 5 years behind the curve on just simple spot holdings along nevermind any DeFI shenanigans

Haha. Yeah, I think this is why the IRS are going down the route of individuals being liable for tax when they take control of the asset, because it prevents people claiming they were stolen and thus paying no tax. "The tax was due when the assets popped in to your wallet, not when they were stolen, so whilst we are sorry you got scammed you still owe us this tax amount please." Not like this solution is without its own problems though.

You are correct on the 5 years though and I think some level of tolerance will need to be given by HMRC to users. Probably reasonable to expect this and assume you'll be OK if you make a good faith attempt to pay your taxes here. 

silvercue said:

I agree that enforcing this will be very difficult.  For some passive income, let me use my ADA staking rewards as an example (your view on ADA noted and ignored, no offence ) , they will be 100% relying on trust.  As these rewards are completely invisible to HMRC and they have no way of ever seeing them.  I see them directly in my Wallet, but I don't believe HMRC can ever see them and they certainly can't link them to me.   I am not suggesting people don't declare their taxes here, I am just pointing out the difficulties with this approach.

As a different example, if I look at the EARN facility on Crypto.com - they offer 12% on stablecoins.  That is paid in more stablecoin.   I believe that is only taxable as income when I trade it for Cash (though I need to check that).  Now I have been informed through a thread I made on the crytpo.com reddit on taxes that:

 "when you make a sale on the app and it goes into your fiat wallet, the fiat wallet is operated by a real FCA approved bank in the UK called BCB payments limited. This bank is named under your name and will be linked with your personal information i.e national insurance number. This identifies you and if enough money passes through the Fiat wallet i.e bank account then HMRC can send you letters asking you to 1) Declare where the money came from and 2) pay tax on earnings".

This was an unofficial user reply, but seems plausible.  However, all anyone has to do is not sell the stablecoin on the app, move (for free) to the exchange, trade for another crypto and move to a wallet.    That way there is no real audit trail for income tax.

I would love to see simpler taxes, but I guess that is less likley than us all agreeing on the benefits (or not) of Crypto

I don't think its correct to say the rewards are invisible. I assume Cardano is just like ETH where you can explore the Blockchain and see what wallets are doing. A year ago a pretty good trading strategy was to identify the wallets of funds like 3AC or A16Z etc and track their activity on chain and just copy trade them - its the price you pay for having an open and transparent Blockchain. If your wallet funds went from, say, a Coinbase account in your name to an ADA wallet and then some of these funds come back to your CB account and are cashed out, its somewhat reasonable to assume this wallet belongs to you and all transactions made by that wallet are viewable by anyone. Of course, (1) this only becomes a thing when you want to cash out back to fiat, which may or may not be an issue and (2) its going to get a lot harder to track when you route funds from that wallet to another wallet or use some of the privacy protocols to obfuscate some of this activity (if these exist on ADA, which I am unsure of). Some governments and institutions have made mentions of KYC'd on-chain wallets removing anonymity completely - China's CBDC is basically going to be one of these.

I think generally what will happen in the future is that on/off ramps (Coinbase etc) and centralised services (BlockFi / Celsius etc) will become more and more regulated and be forced to share information with HMRC and other tax authorities as the weakest point in the chain. So your onchain activity will be largely free of government interference or oversight, but cashing in or out become the choke points. How the community reacts to that will be interesting. I imagine there will be a huge privacy and decentralisation pushback from developers but its an open question as to whether that's a good thing.

silvercue

@darren232002   What I am suggesting is that when the coins are in a wallet when you sell them for Fiat you can pay CGT on them.  There is no way that HMRC can track the reward element of that crypto.    There are also exchanges with no KYC

Cus

Can you have certain bitcoins ( and fractions thereof) that can be traced permanently? I wonder if one day you will be able to buy British legal tender bitcoins that are CGT free?