Sorry for the total sidetrack but I laughed out loud at this title.
Maybe its just my New England sensibilities (read: frugality) talking, but I sometimes refer to Silicon Valley as "the land where money is make-believe". I'm referring to the (perceived) bubble of course, but also my (perceived) view of the conspicuous consumption that seems much more pronounced over there than around here, perhaps as a result of VC money.
I swear walking around some places I didn't see a car that was made between the years 1960 to 2005. They all looked either vintage or brand new.
Not that it's a bad thing, I'm sure people have a great time and get things done, etc, but my mind translates the title as "In a bid for credibility, largest make-believe currency exchange moves to the land where money is make-believe".
I mean is there a place in the U.S. where the cultural perception is that people take large sums of money less seriously?
It's worth remembering that if cost of living and wages are both high, but cars cost the same as everywhere else, then a car is relatively less expensive in SV than elsewhere.
(Knowing nothing about cars, I don't know how big a factor that would be.)
I think the parent's point stands: the dollar (or any currency for that matter) is artificial. The government merely "declares" it has value, hence making it "make-believe". In the hypothetical scenario where it ends up suffering from hyperinflation, it would lose all its make-believe value, just the way the Zimbabwean dollar died.
All currencies, digital or not, big or small, continuously lose and gain "make-believe" value in largely unpredictible ways (see forex markets). Some are stable (EUR). Some are volatile (BTC). Some die (German Papiermark, Zimbabwean dollar). Some live longer (GBP, JPY). Some lost value in the immediate past (USD). Some gained value in the immediate past (BTC).
Of course not. I couldn't use USD to pay my taxes either, because I'm Canadian. I could earn money in any currency I choose, including BTC, and exchange them for any other currency I choose, including USD or CAD.
Why does the currency any given person pays their taxes in matter?
Not sure if this is true in Canada, but in the US at least, employers are required to pay you in USD (at least up to the minimum wage). And, if someone offers to pay you in CND for your work in Canada, you can't refuse them, even if you'd rather be paid in BTC.
Sure, you can exchange USD, CND and BTC as much as you wish, but the point is that, within Canada, you can be certain that you can always pay and be paid in CND -- which can't be said for any other currency.
My business can accept any currency I want it to. It's true that if I had employees I would have to pay them in local currency. I'm not sure how any of this is relevant to BTC's "relevance" as a currency--it doesn't need the support of a nation-state for it to be a valuable medium of exchange.
indirectly you could, if the IRS partnered with BitPay you could pay in BTC and BitPay would send the IRS USD to their bank account. You would still pay in BTC but they get paid in USD.
This is a specious argument. Yes, most, if not all national currencies are "fiat currencies" with no inherent value. Then again, having a hard currency backed in gold only gives it value if you believe in the inherent value of a shiny yellow, conductive, malleable metallic element.
What gives the USD value is that the law of the land mandates that it is "legal tender for all debts public and private", meaning that all governments and businesses (and individuals, when it comes to receiving salaries, see 29 CFR 531.34) can not refuse to be paid in dollars. [NOTE: This means dollars, not dollar bills -- you can refuse to accept cash money]. Thus, if you try to pay me in Bitcoins in return for mowing your lawn, I can laugh in your face, but I can't refuse your dollars and demand that you pay me in Bitcoin.
Therein lies the value of the dollar, or of any national currency -- I can always ensure that I can operate within my local economy without incurring exchange rate risk or exchange arbitrage, because I can be 100% certain that I can buy the things that I want in dollars, and receive payment for my work in dollars as well.
As long as it remains illegal to pay salaries in Bitcoin, most consumer transactions will involve an exchange, which will add overhead.
Firstly, USD, being the world reserve currency, has value because of its current ubiquity in international trade, NOT because of its legal tender status in America.
FYI: "Legal tender is currency that cannot legally be refused in payment of debt. Private businesses may adopt their own policies on whether or not to accept cash as long it doesn't violate state law."
So when you say this: "all governments and businesses can not refuse to be paid in dollars"
You've misinterpretted the law.
And when you say this: "Thus, if you try to pay me in Bitcoins in return for mowing your lawn, I can laugh in your face, but I can't refuse your dollars and demand that you pay me in Bitcoin."
head asplode!
This is just utterly mind boggling. In what world does a service provider HAVE to accept whatever payment terms the customer demands of him, even if the customer demands something the service provider never agreed to in the first place? If I'm a business, and I tell you I'll provide X service for you, but only if you agree to pay me in BTC, and then you turn around after I'm done and say "HAHA J/K LOL here's some USD", I have every right to tell YOU to fuck right off.
"as long as it remains illegal to pay salaries in Bitcoin"
Talk about painful levels of ignorance. I would love to see you try to substantiate this utter falsehood.
"because I can be 100% certain that I can buy the things that I want in dollars"
in addition, he might be able to buy the things he wants in dollars but they may cost more dollars than he has. i.e. inflation is a bigger factor for $ than it is for BTC.
"as long as it remains illegal to pay salaries in Bitcoin"
Talk about painful levels of ignorance. I would love to see you try to substantiate this utter falsehood.
Sure, glad to elaborate.
US Code 29 CFR 531.34 lays out the requirement for minimum wage, and spefically calls out that minimum wage must be "payable in cash or negotiable instrument payable at par". Cash is pretty clear -- it means dollar notes and coins. The definition of a negotiable instrument is that it must be exchangeable for a fixed amount of money, specifically money that is the fiat currency. (http://business.olivet.edu/classes/bsns3511f/pdf/bltch19.pdf)
I think my "utter falsehood" is relatively well-supported by the law and administrative precedent of the US government, at least as it pertains to payment of the minimum wage.
Taking your first point second:
Firstly, USD, being the world reserve currency, has value because of its current ubiquity in international trade, NOT because of its legal tender status in America.
FYI: "Legal tender is currency that cannot legally be refused in payment of debt. Private businesses may adopt their own policies on whether or not to accept cash as long it doesn't violate state law."
So when you say this: "all governments and businesses can not refuse to be paid in dollars"
You've misinterpretted the law.
And when you say this: "Thus, if you try to pay me in Bitcoins in return for mowing your lawn, I can laugh in your face, but I can't refuse your dollars and demand that you pay me in Bitcoin."
head asplode!
I apologize, I overreached.
You are completely right, two entities can pre-negotiate a contract for any kind of exchange of payment and good/services in advance.
However, barring any such advance negotiations, you can't refuse my payment in dollars for a debt incurred by delivery of a good or service, and I can't force you to take any other form of payment.
This doesn't pertain to a retail purchase, since there is no debt until the item is delivered -- if you want me to pay you in BTC, or jellybeans, or rubles for that candy bar, that's fine.
But, if you mow my lawn for $25 and I don't specify how I'm going to pay you, then you are within your rights to demand that I pay you in dollars, and not $25 worth of BTC.
We're super excited about this move; as some HN'ers know, I've put a few years into figuring out how to work with Gox. I'll dig up my old post and link to it here.
Somehow moving to a location further from the reach of the US government would give me more confidence.
Kim dotcom's case shows the US willing to even break it's own laws to stop things it doesn't like. I suspect Bitcoin isn't a target currently but why bet that the situation won't change. The US arguably will a significant incentive do things to protect its currency if Bitcoin truly becomes an alternative currency.
Only matter is you are from the US. Moving this closer to the US only works for regulating it within US borders, as a peer-2-peer currency there is very little the US could do to affect it globally. In addition this may actually strengthen the currency, as big players get involved and tie up money in BTC then they are more likely to want (and be able) to get the US Govt on side when discussing BTC. This affects the global exchange rate and strengthens the currency outside of the US as people become less worried by ridiculous laws designed to hinder or stop bitcoin's progress.
Maybe its just my New England sensibilities (read: frugality) talking, but I sometimes refer to Silicon Valley as "the land where money is make-believe". I'm referring to the (perceived) bubble of course, but also my (perceived) view of the conspicuous consumption that seems much more pronounced over there than around here, perhaps as a result of VC money.
I swear walking around some places I didn't see a car that was made between the years 1960 to 2005. They all looked either vintage or brand new.
Not that it's a bad thing, I'm sure people have a great time and get things done, etc, but my mind translates the title as "In a bid for credibility, largest make-believe currency exchange moves to the land where money is make-believe".
I mean is there a place in the U.S. where the cultural perception is that people take large sums of money less seriously?
(Maybe D.C.)