Here you go. This chart breaks down the differences between Pyramid schemes, Ponzi schemes, and open public cryptocurrencies such as Bitcoin. By "open public" I mean that there is no central authority or organization. Bitcoin is a decentralized open source project run by community participation (anyone can run a node or miner, and millions of people do).
The second half is important too: that the expected profits are from the efforts of the promoter. In other words if a company is doing work of some kind, and they are selling a token on the basis that it will go up in value due to the work that they are doing, then it is a security.
Except it doesn't depend on any particular means of communication. You can print out Bitcoin on paper and physically trade it. You can embed it in an image and trade that. You can physically scan QR codes on each others phones to transmit it. Bitcoin and other cryptos can be transferred via sat phone. The Internet and exchanges are just conveniences.
There are also numerous projects to work around Internet censorship in the crypto space. Such as the Substratum Network (https://substratum.net) and Mysterium Network (https://mysterium.network).
A lot of people on this thread are conflating Bitcoin and other cryptocurrencies for what the SEC is talking about in this statement: tokens that are acting as securities. They do not mean Bitcoin and similar tokens (ETH, LTC, ADA, NEO, etc). If you've been following the SEC's other statements, testimonies, and senate committee hearings, you would know that they do not have a problem with digital currencies per se. That is outside of their mandate (those fall under the CFTC's purview). What the SEC is concerned with is companies that issue digital tokens which act as securities. That is to say, the reason people buy the tokens is the expectation that the work of the company that issued the tokens will cause the value of the tokens to increase, and that is the motivation for people to buy them.
This differs from Bitcoin, which is not issued by any company and has no central organization that does any work or promotion of the token.
The response from American cryptocurrency exchange Bitfinex expresses the distinction between securities and other types of tokens:
“As a U.S.-based digital currency exchange, Bittrex is committed to incubating new blockchain technology projects and offering innovative, compliant digital tokens to our customers. Bittrex uses a robust digital token review process to ensure the tokens listed on the exchange are compliant with U.S. law and are not considered securities. Bittrex is committed to helping advance the United States’ global leadership in this emerging industry, and we look forward to continuing our proactive dialogue with the SEC and other regulators on how to build a secure, fully-regulated environment for blockchain that encourages innovation and economic growth.”
I will trust my accountant; he is after all, on the hook for how it is reported.
Thanks for posting the links! Taxtips.ca is not an official source, and note they use a ton of "may" be this and "might" be that. I will ignore that page, since they clearly do not know and are not the CRA.
The Canada.ca link is consistent with what my accountant said -- when you use crypto to purchase goods or services, it is treated as income (just like bartering), taxable in equivalent CAD value at the time of the transaction. Trading crypto for other crypto is _not_ a goods or service, since crypto is treated as an intangible asset or commodity.
The third link is also consistent with this view:
"Buying and selling digital currency like a commodity
When you file your taxes you must report any gains or losses from selling or buying digital currencies.
Digital currencies are considered a commodity and are subject to the barter rules of the Income Tax Act. Not reporting income from such transactions is illegal."
In order to be considered a "gain" or a "loss", according to my accountant, the commodity must be realized into fiat money. "Selling or buying" means selling into fiat or buying with fiat. "Bartering" means trading for goods or services -- crypto is not considered to be goods or services.
The USA is taxing every trade. In Canada (according to my accountant, at least), cryptocurrency gains are only taxable when "realized" by selling into fiat (capital gains), or spending on goods and services (income). Until that point, they are considered intangible assets and not subject to tax. A USA/non-USA (or taxable trades vs only fiat trades) switch feature would be nice, to account for the different approach to taxation.
Yes theres that, but BTC being overvalued doesn't explain the entire market dip that we are seeing now. However, it is consistent with Bitcoin's historical pattern:
2. South Korea cut off access to banks by cryptocurrency exchanges in December, and access to exchanges by foreign traders. As a result the prices in the country spiked, and the largest price aggregator CoinMarketCap removed Korean exchanges from the index because they were skewing the averages. This caused ~$150B to appear to have suddenly vanished, gapping prices down. This is when the sell-off began in earnest. Then recently the South Korean Minister of Justice said he wants to shut down exchanges, but then the PM says that would require a vote in the National Assembly on new legislation. They are consulting with Japan (who are positive on crypto) and China (who are not) to create a new regulatory framework. http://www.koreaherald.com/view.php?ud=20180116000817
4. France's central bank has been whining about cryptocurrency for some time and finally convinced the Minister of Finance to make a public statement and authorize a draft of new regulations. https://www.express.co.uk/finance/city/905169/bitcoin-France...
5. A speculative theory: the Bitcoin futures contracts are about to expire, and some investors will have bet on lower BTC prices. There could be large market players deliberately pushing prices down to meet those futures bets. Or just market makers wanting to get in at a lower price point.
> but imagine I buy an apple from Whole Foods and pay with Bitcoin. Now I know what account they use
An application like this would use a new address for every transaction, and never use it again. There are desktop software wallets that do this, in the interests of privacy.
> So, if it can’t be used as a currency to buy anything, and when you “invest” in it you’re not having any ownership in a company, what is it truly worth? What is a fake coin in your electronic wallet truly worth?
What is SeekingAlpha.com truly worth? What is a fake newspaper on your electronic screen truly worth? What is the software you used to write the article worth?
The value of digital assets lies in their usefulness, and how many people use them. The usefulness of the software "Bitcoin" is that it allows people to store a record of value -- like the numbers in your bank account -- in a reliable, secure, trust-worthy, fungible way that is practically immune to corruption, control, and seizure, and can be transferred to anyone else anywhere in the world almost instantly, for practically free.
But that's just Bitcoin, the very first of its kind. The thriving technology ecosystem that Bitcoin birthed is boiling over with potential.
The Civil project looks more feasible, as it actually pays investigative journalists for their work, while at the same time providing feedback/scoring for accuracy.
"Comparing Bitcoin’s energy consumption to other payment systems
To put the energy consumed by the Bitcoin network into perspective we can compare it to another payment system like VISA for example. Even though the available information on VISA’s energy consumption is limited, we can establish that the data centers that process VISA’s transactions consume energy equal to that of 50,000 U.S. households. We also know VISA processed 82.3 billion transactions in 2016. With the help of these numbers, it is possible to compare both networks and show that Bitcoin is extremely more energy intensive per transaction than VISA."
1. I have read that with every VISA transaction, transactions move between no less than 5 separate institutions. What is the net energy used in all of that deliberate inefficiency? All buildings, vehicles, and energy use of people who work for VISA must also be taken into account. And for all other credit cards and payment systems.
2. Bitcoin isn't really a "payment system", so comparing it to VISA is apples to oranges. It is more of a store of value, like a bank. So it would more properly be compared to the net electricity consumption of all banks, including all buildings, armoured trucks and all vehicles used to ship people to and from banks around the world.
