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RE: Are we in a Cryptocurrency Bubble?
If inflation shall be build into Crypto, I don't know. Fact is that crypto is on its own island. Fact is this island doesn't have solid connections/bridges with the 'normal' world. For me it is clear, strong, solid and wide bridges shall be build with the 'normal' world to allow for crypto to grow exponentially and to give it a real value. To give crypto real value and stability, it shall be integrated with the 'normal' world commercial businesses.
Earlier today I wrote a post about this topic https://steemit.com/steemit/@edje/question-who-owns-the-steem-blockchain-and-steemit-service-and-api-s-the-steemit-steem-business-opportunity
This is exactly the problem and you highlight it. Crypto is an island with no easy way in or out. If we want to change this, push for a reduction of taxes or exemption of taxes and then watch how fast people cash out into fiat. As it is right now though, there is no certainty in crypto and no easy way out of it even if it is a bubble.
Even if you have Bitcoin, if you spend it what are the tax implications for buying a pizza?
In NL at the moment no tax implications when using BTC or other altcoin.
Consider yourselves very fortunate that you aren't a US citizen then. Our tax structure is one of the most complicated and regressive in my opinion.
Ours in NL is also not that simple, but any complex tax system gives opportunities to establish a new business. I always look it from that point, the opportunities :)
This would be fine but the US IRS hasn't been very clear on what they want.
When US IRS is clear about it, would this not give the opportunity to automate this in the financial processing? An opportunity for an online accounting software for crypto currencies?
That is what we all want to happen and why it's so horrible that they aren't clear!
Cryptos need to start including commercial business using their coin. Specific type of businesses shall be targeted (through direct sales; not through mass market marketing) and the required technology and everything they require for them to onboard, shall be arranged. That is a way out IMHO.
The issue again is regulation. Even if commercial businesses accept or use the coin the regulations involved make it hard for holders of the coin to spend it particularly when the price has gone up. So the higher the price goes up, the less people want to spend because of taxes, and the corporations don't want to hold coins due to legal or regulatory risks, so how do you fix it so this changes?
Not all countries regulated virtual currencies yet, so run the operation from countries without regulations. Like in NL, no regulations around BTC and altcoins. In Germany some regulations around BTC, but not to difficult. I can even imagine the part that will work with the brands to be onboarded will be support in technical integration, process integration and may even get a service to handle the regulators and taxes for them wrt the altcoins. I truly believe propositions can be made that will attract the first innovative brands to eg Steemit. So far, none of the altcoins is creating these propositions. I would love to create and execute them, and now I'm in the process of finding out who is responsible for what and with whom I shall deal to bring eg Steemit to the next level through propositions and activities to bring brands (from small to large) to Steemit.
Spending coins could be spending it on promotion channels in Steemit. Spending could be re-distribution to the audience/followers through win games. Today Steemit is blogging service, so a marketing channel, hence 100% cost in terms of financials. On Steemit a brand can earn coins post/comments, and can burn them by promotion and/or give aways. Coins can also be used to pay a fee to be allowed to use Steemit as a channel, or at least to pay for the specific technology, features, interfaces, integration that will be different from segment to segment.
I don't think that is correct. There have to be bridges otherwise money can't flow in to it. The money come from the real world via albeit via bitcoin. These kind of arguments miss the point of what I'm saying.
Sure there are some bridges available but these are conplex and more or less only used by the 'gamblers' in the investment world. These brdiges are not providing any stability to the Crypto-world. Look at what is happening last month with the crypto values. Only jumping, 10 to 100% in short time. The bridges I talk about will give crypto stability! This to be achieved by onboarding and integrating commercial businesses from the normal world. They will demand stability, and Crypto-world will have to start creating solutions to give that stability. That bridge will be sooo much more solid then the small and complex bridges we have today into Crypto-world.
I agree but none of that has anything to do with bubbles though.
I think we are talking about different things - such bridges will ensure long term stability in crypto but they aren't going to do anything about people investing recklessly in vapourware projects.
I know because I have been one of those people in the past.
I'm not sure; Crypto-world is a complex world with little solid information and due dilligence. When Crypto-world become bigger, much bigger, more independent investiagtors and researchers will provide better guidenance in what is risky and what not. Same as in the normal world's financial sector. Crypto-world is simply to small to be relevant for such independent parties to spend time and resources to try and create risk analyses on any existing coin as well as new coins and initiatives.
Again I think you are misunderstanding me - please do some reading on historical market bubbles.
Market bubbles are everywhere. Crypto could be one of them. When not adding value such as in real services around the coins, they will at some point burst. Those who manage to create real services arround it will have a chance to survive. If those coins are currently overvalued, that is the question. I agree that when no real services are added, Crypto-land is in a bubble, since most coins do not havr any value ie services that make use of the coin.
Yes I agree and that is the point I am making - I think we were misunderstanding each other before.
Those projects that have a sound basis will likely survive but it may lead to tough times and some may not make it.
Even some good web companies were destroyed during the post dotcom bubble era because of the overall contraction in the market that was a direct reaction to it.
Agree! Crypto will have to consolidate. Nobody in the world will want to end up with 10s to 100s of different payment coins; contract coins; loyalty coins and what not. It is either consolidation by integration or bankrupty/implossion of many coins out in the market. Those who make it, who survive are those with bridges build to the normal world since the normal world will still be dominant for a considerable time :)
It has everything to do with this bubble. If there is no stability of the underlying token, and no places to get low risk interest, and no easy way to spend the token in the outside world, well what else is left?
If you have ETH one of the few things you can do for it to earn more is ICOs. You don't have the ability to buy real estate in the real world with it, or buy real shares in real companies with it. You can't really do much anything except what people are doing with the ICOs.
Cryptos are not investing time and money to get their currencies into the real world.
You don't get taxed when you flow fiat into crypto. The taxes come when crypto tries to convert back to fiat. You can buy Bitcoins from Coinbase no problem, but if you then sell Bitcoin for pizza but your Bitcoin went up in price, don't you now have to pay some sort of capital gain?
The complications involved with just spending cryptocurrencies is enough to discourage it.
In NL we do not have capital gain taxes for instance. I don't know the rules in each country, but I'm sure the rules are clear for each country. As per other comments I made to this post, when creating propositions for commercial businesses, tax advise or even service shall be part of the proposition.
Commercial business will need to be onboarded not through general marketing activities, by through person-2-person sales activities. That is why bringing the business segments onboard will cost good money due to the nature of the sales method. Obviously, a solid proposition needs to be created first :)