pull down to refresh
It is funny but I like direct confrontation "unbacked paper money". And by the way, China experimented with this a bit earlier.
Regarding the message. Maybe the next leap must be privacy. More broadly marketed. Apparently such provides as Spark make LN usage more transparent to operators as opposed to dedicated self custodial wallets.
Depending on the app, last usage and internet speed it may be nearly instant. You can't defy laws of physics, sorry. All "instant" variants means that the tech must be custodial or nearly custodial.
The guy became rich and changed his behavior which is totally fine.
However, he also confirms that fiat system works great for the richest.
Bitcoin is both a payment protocol and a commodity (the commodity is valuable because of the protocol). Only that both are inseparable, so the government chooses to stagnate the protocol by gagging the commodity.
It is a fight the government will lose, because the Bitcoin protocol is the sauce, and it cannot be gagged. It is also a massively better financial system than what the government instituted, and Humans have shown to always choose a superior system over time.
At best, the government enshrines the Bitcoin commodity as the basis of its Fiat financial system, thereby tapping into the efficiencies of Bitcoin's superior protocol, or at worst, they lose out entirely after a very prolonged struggle (perhaps decades or even centuries).
Sounds like bulshit now, but this is where we are eventually headed. And no, it doesn't suggest that the government takes over Bitcoin or something; instead, it just does exactly what Bitcoin was designed to do: check inflation and currency debasement, and offer freedom and an alternative independent money to anyone at any time.
The Lightning network facilitates this, while the on-chain network enforces the standard and rules.
There are no bailout cos there is never a way to mint more than what exists (Thanks to proof-of-reserves systems). Any fraud fails instantly or fails in a short time. On the other hand, anyone can exit at anytime back to using Bitcoin and remain sovereign by simply exchanging value with Bitcoin via on-chain.
The volatility problem of Bitcoin to Fiat valuation makes this more realistic.
Find and read publications from Eric Yakes and the Epoch team, and you may grasp this more.
Bitcoin is useful to humans who are useful to the government that runs the Fiat system. This is some sort of correlation that will continue to exist with these two systems. However, if Bitcoin is integrated into the Fiat system, it checks the excesses of the Fiat system, while leaving an option of exit if the excesses remain unchecked.
There may be no better way to explain this. Just check out these resources:
- https://github.com/standardsats/fiat-channels-rfc
- https://standardsats.github.io/
- Find an Eric Yakes publication and read. It would clarify
This is the exact contradiction. A medium of exchange doesn't need to be announced or have some sign hung on the doorpost before it can be used for the exchange of value by two agreeing parties.
However, I understand what you are talking about.
Capital gains tax is applied to Bitcoin because the government views it as aproperty or commodity, not as money.
Bitcoin is both property and money. A property can be used as a medium of exchange, but how divisible and fungible such property is then determines the scale of the value it can be exchanged for.
Bitcoin is divisible enough and fungible enough that it can be used for exchange in very small-scale value transfer, like day-to-day payments, but since it is not a legal tender, the government considers it property. This is intentional to ensure that the government-enforced legal tender does not get beaten out in the competion because if they allow it, then Fiat would certainly lose. After all, by all measures, bitcoin is a better form of money.
CGT is just a gag, and not necessarily a ban. I'm not a tax expert, but I know that if you accept Bitcoin payment and liquidate it immediately, you will not incur a capital gains tax. The goal is to prevent Bitcoin from being a currency.
Income tax applies to both Bitcoin and fiat incomes.
What solution should we be looking for exactly?
The solution of making Bitcoin a legal tender or removing the taxation imposed on it as property?
What we can do is "Make Bitcoin the base asset on which Fiat runs." When Bitcoin is used in that sense, it cannot be taxed, but at the same time, it is not a legal tender and does not conflict with the government's legal tender. It just becomes an underlying asset moving fiat-denominated value across time and space.
This is already possible with the Lightning Network via Hosted/Fiat channels:
Here: https://github.com/standardsats/fiat-channels-rfc
Here also: https://standardsats.github.io/
You're likely contradicting "MoE" and "Legal tender," and a lot of other Bitcoiners do the same thing.
Bitcoin, as it is, is a medium of exchange. A medium of exchange is anything that can be used to exchange value in place of direct barter. A medium of exchange must be able to hold value across time, be divisible, non-perishable, fungible, and generally salable at any time, and Bitcoin serves that purpose comfortably. (The only challenge here is that Bitcoin's "value" in Fiat fluctuates, and Fiat is the predominant form of money before Bitcoin. But "value" in its real sense is what humans assign to a thing, and hence is rarely ever stable or the same. This is one of the reasons why the Fiat money issued by the government is a hoax and scam cos it is not based on real value for what it is worth as assigned by the users, but instead, an imposed Value by the controlling few.)
People in autocracies are not necessarily blocked from using Bitcoin as a medium of exchange. They are often prohibited from associating it with traditional Fiat financial rails in the said autocracies.
And because humans are inseparable from their government (which controls Fiat financial rails), they tend to abhor it completely when such restrictions happen to ensure they don't get ostracized from the predominant Fiat rails. But there has never been any autocracy that has successfully stopped anyone from exchanging Bitcoin for value.
The imposition of tax on Bitcoin is simply a move to reduce its use as a medium of exchange, and this is often when you use it via KYCed rails, but ultimately, nobody arrests you for using Bitcoin as a medium of exchange, especially when done p2p just as much as anyone could exchange gold for value or services, or other products, and wouldn't get arrested.
The only challenge with Bitcoin as a medium of exchange, especially in small-scale value exchange such as day-to-day trade, is Volatility. That is what those autocratic governments bank on to impose restrictions, ensuring that people who eventually use Bitcoin as a medium of exchange will have a hard time liquidating it to Fiat.
Then Western liberal countries wouldn't want to be seen as autocratic, hence they go the route of imposing taxation (often in excessive ratio).
That's Bitcoin Only.
Maxi still assumes there is a competition where bitcoin is the strongest candidate and not the only option. This is closer to fiat actually, see French revolution as for case study.
How do we fight for the right to spend Sats? You mean, the government making it a legal tender?
If that is what you are suggesting, how did it fare in Elsavaldor? Any money imposed on people is as good as Fiat. Nobody deserves to go to prison for refusing to accept Bitcoin.
Bitcoin must be useful enough for people to willingly accept it as a medium of exchange. Is it already useful enough based on its monetary qualities? Yes!!
However, the fact that its value against the predominant global form of trade money (fiat) is still largely volatile, even with a government decree of legal tender, it may still not be preferred.
We need to find a way to integrate Bitcoin as the base asset used as money. Mimic them, and kick them out.
You wouldn't expect the American media to discuss and amplify a technology that could likely and significantly jeopardize the dollar's hegemony, would you?
On the other hand, we have consistently overlooked a crucial factor that impacts the use of Bitcoin as a medium of exchange, particularly for day-to-day transactions. Bitcoin's adoption by merchants will continue to be slow until we recognize this problem and embrace a solution to it.
Just as Gold cannot be used as money because you can't scrape out a little portion of Gold to weigh and pay, Bitcoin has a temporary economic challenge, which is "its fluctuating Fiat valuation. It is temporary because it is a problem that can be solved and will be solved over time.
You wouldn't see many merchants display "Bitcoin is accepted here" signs because these merchants, unlike Steak n Shake, may not have the large customer base that could ensure that all their Bitcoin sales could be a percentage of their profits, removing the need to constantly liquidate their Bitcoin sales to Fiat.
Literally every business in the world is still Fiat-run, and must balance its books in Fiat, pay suppliers in Fiat, pay employees in Fiat, and stay in business. If you check very well, a majority of businesses that currently accept Bitcoin for payments are proper Bitcoiners. For Bitcoin to thrive as a medium of exchange, people who are not necessarily Bitcoiners should be willing and able to accept it as payment.
Now, accepting Bitcoin for payment is wonderful for large businesses (like Steak n Shake in the US and Pick n Pay in SA) because the percentage of Bitcoin sales they make would likely fall within their daily profit margin. These large businesses can comfortably keep these Bitcoins and still be able to run smoothly. (This is based on the assumption that they actually keep these Bitcoins.)
However, smaller businesses in your street may not have this capacity, so they would need to constantly exchange the Bitcoins they collected in sales to Fiat to either re-stock, pay bills, or do other things. This ultimately results in extra fees.
Now, giant POS providers like "Square", which offer Bitcoin payment options to their merchants, currently do not charge fees for exchanging Bitcoin to Fiat, but eventually they would (as they already mentioned), because it is not sustainable.
So, if a merchant requires paying extra fees to liquidate the Bitcoins they accepted as payment to balance their books in fiat and run their businesses, then will they not be better off just accepting Fiat (where they will still pay fees anyway)?
So, the issue that slows Bitcoin's acceptance by merchants is an economic one, and not necessarily unpopularity or technological issues. It is the fact that the world still runs on Fiat, and you can't change that overnight.
However, we can find a way to integrate Bitcoin as the base money that the Fiat world runs on, and from there we can easily switch fully to pricing everything in Bitcoin.
Now, how is this possible?
"FIAT CHANNELS" - This is a Lightning implementation that enables the creation of Bitcoin derivatives on the Lightning Network. With this technology, and a hedging mechanism, we can create any Fiat currency IOU's, where Bitcoin is the underlying asset being transferred to and fro. It uses a Host/client mechanism where the Host is any entity running a Lightning node with the Fiat channels plugin, and the client is any wallet client (custodial or non-custodial) that has enabled this technology, e.g., Valet (https://github.com/standardsats/valet)
You don't have to trust us; this protocol is completely open-sourced. Anyone can review it, contribute to it, and tweak it as they like.
GITHUB - https://github.com/standardsats/fiat-channels-rfc
CONCEPT - https://standardsats.github.io/
Fiat channels enable merchants to accept Bitcoin payments on Lightning without worrying about volatility. This ensures that they can run their businesses, balance their books, and pay bills without any need to convert from Bitcoin to Fiat, and hence no extra fees.
Interestingly, in Valet (our wallet software) application, where we already have this technology demonstrated, users can at any time exit from Fiat channels back to self-custodial Lightning usage by draining their balances back to their normal Lightning channel. This ensures that merchants can always move their profits to self-custody after balancing the books.
There are other implementations of this idea through differrent approach by other people, such as "The Money socket" by JD (https://socket.money/leatherpaper).
The conclusion is that we need to first integrate Bitcoin as the base money while fronting Fiat as the actual value. With time, when Sats hit parity with even a Cent or the dollar, following a wide understanding of Bitcoin and constant use as base money, then we can easily ditch the dollar and price squarely in Bitcoin.
Unfortunately, the mainstream Bitcoin community has given little attention to this protocol that could completely change the game.
And yes, there's also something of this nature implemented by Galoy, and currently available in the Blink wallet.
This is the future, and the earlier we look at it, the better.
We could grow the Bitcoin economy and have more businesses run on the Bitcoin standard if we could somehow get them to constantly carry out business transactions on the Lightning Network rails without any need to convert to Fiat?
This is exactly what the Fiat channels protocol proposes. Complete independence from interacting with Fiat rails or stablecoins. There's no one point of failure, and it is censorship resistant, since anyone can run a Host (no reliance on any particular company to offer Host services). Hence, businesses with enough financial capacity can actually self-host.
Easy community Bitcoin banking that ensures that people who have a fixed cost can still comfortably transact and live on the Bitcoin standard without worries about Volatility. Keeping the majority of their earnings in a self-custody Bitcoin stack, while living their normal lives, spending hedged-Bitcoin Fiat IOUs.
Sats keep exchanging hands while the surface value is Fiat. Anyone tired can instantly sweep back to normal Lightning rails and become fully self-custodial again without needing permision.
With a proposed "proof of reserve and hedging capital" protocol, public Hosts that may want to offer the services as community banks can, at all times, be independently scrutinized to ensure absolute commitment.
For Bitcoin to replace Fiat, it'd have to first integrate with Fiat, then gradually replace it. What do I mean?
The Fiat system has been entrenched in the nerves that run the world, which is "trade, manufacturing, labour," etc, and this has been so for decades, if not centuries.
To oust such a financial system that has been deeply intertwined with human life, especially given the fact that there are powerful people who will go all out to defend this system because of the benefits they get from it, then the only way for Bitcoin to replace Fiat as money and not just be a savings machine is to integrate Bitcoin into the fiat system.
Check out Fiat channels, and you may understand what I mean.
Here: https://standardsats.github.io/ and here; https://github.com/standardsats/fiat-channels-rfc
Standard Sats has begun from fiat channels and pricing fiat in sats. What is lesser known is out aim to build markets for derivatives that would help to make this vision of procing everything in sats to the level of real commodity delivering. But this is too long and too risky way to go.