
Tulips, Myths, and Cryptocurrencies - darwhy
https://stratechery.com/2017/tulips-myths-and-cryptocurrencies/
======
xiaoma
The comparison with the internet of 20 years ago is a good one.

Much like the internet did then, crytpo-currencies now draw an assortment of
technologists, anarchists, bankers and futurists. There's also a wildly
optimistic bull case to be made and it's very difficult to determine a
reasonable valuation.

In contrast, tulips weren't a new technology, they had no power to change the
world's business or social graph and a radically new tools couldn't be build
on top of them.

~~~
lmm
I'd compare to Second Life. Huge hype, huge investment, but no-one can quite
connect it with doing something useful. And that's what I expect to happen to
cryptocurrency: no big bust, just a gradual fading from view as it turns out
there's no there there.

~~~
CyberDildonics
Second life wasn't a new technology, it was just a video game by a single
company. It wasn't decentralized, it wasn't even made for anything other than
entertainment.

If you think cryptocurrencies have no utility at this point, you have your
head in the sand. To use money electronically right now, you need a bank, you
can't do it yourself.

~~~
root_axis
If I have zero bitcoin at the moment, how do I go about attaining some without
a bank account?

~~~
xiaoma
Invest in the appropriate hardware and mine it.

Another alternative would be to trade goods or altcoins for fractional BTC.

~~~
elsonrodriguez
Is mining still a viable path to obtaining bitcoin?

~~~
MR4D
That's the $64,000 question. Seems Fidelity is interested in the answer, too.

[https://www.reuters.com/article/us-fidelity-bitcoin-
idUSKBN1...](https://www.reuters.com/article/us-fidelity-bitcoin-
idUSKBN18J20P)

------
darkFunction
It's worth noting that many new blockchain implementations are not intending
to merely facilitate the transfer of monetary value but aim to decentralise
resources, which is a less "fictional" goal. Look at Sia / StorJ / Maidsafe,
for secure decentralised storage (Storage on Sia is currently something like
20x cheaper than Amazon S3 and offers the potential for storage providers to
compete on price per TB alone, without having to provide a front-end or
marketing). Then there are distributed computing applications such as Golem
and iExec.

All of these are in the early development (even concept) stages but investors
are seeing the obvious huge upsides _if_ the teams can pull it off, and to me
these are the most exciting technologies which counter the aged arguments
about crypto's worth as an exchange of value with solid real-world use cases
which can be compared in real terms to current centralised solutions.

~~~
FrozenVoid
>decentralize Bitcoin has central banks you just call them exchanges and
wallet providers. Most cryptocurrencies depend on specific websites and
central developer teams(who may decided to fork the currency blockchain at
their whim).

~~~
darkFunction
Many but not all. Sia for instance will continue to exist independent of the
company, it is fully decentralised. I believe your statement is true of StorJ
as they rely on centralised services but I can't comment on the others.

Bitcoin would continue to exist without the exchanges and wallets, they are
peripheral to the core technology. Blockchains can't be 'forked at a whim'
without majority consensus, that's the whole point. ETH is the obvious example
where the devs forked with support from the community and it led to the
ETH/ETC divide.

~~~
FrozenVoid
What you would do if developers turn corrupt and force a new version with
unwelcome changes? Most people see developers as some kind of robots, but
cryprocurrencies are often fraud schemes where developers control the market.

~~~
darkFunction
How exactly would developers 'force a new version' without consensus?

~~~
FrozenVoid
Well consensus can be manufactured or ignore smaller players. e.g bitcoin
seqwit hard fork was decided by large-scale mining companies. If a small
cryptocoin you have most of the hashing power in some side company, you can
fake it as majority of miners consensus.

------
will_brown
>In fact, it turns out gold — at least the idea that it is of intrinsically
more worth than another mineral — is another myth.

i always found this to be a ridiculous statement. you won't do well coining
non metalic minerals/elements, and many others are subject to corrosion. gold
on earth is finite and it is not man made. gold is the third most metalic
electrical conductor. gold is also has the oligodynamic effect of inhibiting
bacterial growth.

>One of the big recent risers, Ethereum, is exactly that: Ethereum is based on
a blockchain, like Bitcoin, which means it has an attached currency (Ether)
that incentivizes miners to verify transactions. However, the protocol
includes smart contract functionality, which means that two untrusted parties
can engage in a contract without a 3rd-party enforcement entity.

all this effort to not pay lawyers to draft/read/interperet contracts due to
"legalese" only to write contracts in programing languages no one can read and
understand....see the doa contract which was misread by the founders, by the
third party reviewer, and every single person who bought in (except the party
that stole $150m via smart contract).

~~~
RexetBlell
Reading any programming language in general is difficult for majority of the
people. That does not mean that computers are useless. There were bugs in the
early implementations of web browsers, that does not mean that the Internet is
useless. There was a bug in the Mars orbiter software (I think it was in 99)
where it crashed due to some miscalculation after spending hundreds of
millions on development. Does this mean that using software for space
exploration is a bad idea?

I'll give you an example contract that I think could be useful: an escrow
service. Let's say you want to pay someone for their work, but only if they do
it. You deposit the payment into a contract with 3 keys. The contract can send
money only to two places. Either back to you, or to the worker. Each key has a
vote where to send the money. Once any 2 of the 3 keys have voted the money is
sent. You give 1 key to yourself, 1 key to the worker and 1 key to the third
party. If you are satisfied with the work, you and the worker both vote to
send the money to the worker and the money gets sent without bothering the 3rd
party. The third party only gets involved and decides how to vote ONLY if
there is a disagreement, which should be infrequent. In a world without
cryptocurrencies it's much harder to implement this. The third party would
have to be much more involved. It would hold the funds for a while and then
have to transfer the money. You also have to be concerned what if the 3rd
party runs away with the money. This contract can be written once, and even
formally verified. Anyone can than create an instance of it for their needs
and specify the addresses of the 3 key holders. Basically you upload a "class"
to the blockchain and anyone can create an instance of that class for
themselves.

~~~
lmm
> Reading any programming language in general is difficult for majority of the
> people. That does not mean that computers are useless. There were bugs in
> the early implementations of web browsers, that does not mean that the
> Internet is useless. There was a bug in the Mars orbiter software (I think
> it was in 99) where it crashed due to some miscalculation after spending
> hundreds of millions on development. Does this mean that using software for
> space exploration is a bad idea?

But the whole point of a contract as a program was that it was supposed to be
easier to debug, and that wasn't true. Whereas the point of using software for
space probe navigation is that it can navigate almost as well as a human while
requiring less air.

> I'll give you an example contract that I think could be useful: an escrow
> service. Let's say you want to pay someone for their work, but only if they
> do it. You deposit the payment into a contract with 3 keys. The contract can
> send money only to two places. Either back to you, or to the worker. Each
> key has a vote where to send the money. Once any 2 of the 3 keys have voted
> the money is sent. You give 1 key to yourself, 1 key to the worker and 1 key
> to the third party. If you are satisfied with the work, you and the worker
> both vote to send the money to the worker and the money gets sent without
> bothering the 3rd party. The third party only gets involved and decides how
> to vote ONLY if there is a disagreement, which should be infrequent. In a
> world without cryptocurrencies it's much harder to implement this. The third
> party would have to be much more involved. It would hold the funds for a
> while and then have to transfer the money. You also have to be concerned
> what if the 3rd party runs away with the money. This contract can be written
> once, and even formally verified. Anyone can than create an instance of it
> for their needs and specify the addresses of the 3 key holders. Basically
> you upload a "class" to the blockchain and anyone can create an instance of
> that class for themselves.

Standardised escrow contracts and escrow services already exist, and charge
fairly small fees. There are published template contracts and anyone with the
legal skills can use such a contract themselves, and anyone without legal
skills can pay any reasonably qualified lawyer to use them. Turning this into
code that anyone with programming skills can use and anyone without can pay a
qualified programmer to use doesn't seem to make much difference. The problem
of not having a trustworthy third party sounds difficult but it isn't really,
at least in countries with a functioning legal system etc.

(The hard part of running an escrow service is determining whether the thing
that was supposed to be paid for has actually happened - whether the grain was
of acceptable quality, whether the house was as described, etc. - and the
blockchain doesn't help with that part at all)

~~~
Shorel
> But the whole point of a contract as a program was that it was supposed to
> be easier to debug, and that wasn't true. Whereas the point of using
> software for space probe navigation is that it can navigate almost as well
> as a human while requiring less air.

No, another point of a contract as a program is that once it is ready, and
considered bug free by many, it can be reused potentially unlimited times,
with all the productivity increase that it implies. It can free people from
having to pay the expensive lawyers.

~~~
lmm
I'm sure there are standard published escrow contracts where you can write in
your own names and details. It seems like it would be much the same process
with a published "contract program".

~~~
Shorel
Yeah, but that benefits only the lawyers, not the end users.

~~~
lmm
How is using a program yourself any easier than using a contract yourself?

------
justAsking2017
Wow, people still stuck on this tulip bulb thing ...

How about a little analogy? In the mid fifties a trucker conceived the idea of
having his trucks' cargo loaded directly onto a ship, thus inventing the
container ship, which essentially revolutionized the shipping industry. Nobody
moves cargo the old way anymore, unless they are completely insane.

Moving value using distributed consensus systems based on pure mathematics is
a similar revolution. However, it is likely to be at least an order of
magnitude more significant.

It might be a good time to invest.

~~~
lmm
Value already resides almost entirely in distributed consensus systems such as
Visa, the international banking system, etc. That revolution has already
happened.

A zero-trust distributed database is kind of cool. A distributed database that
can do 6 transactions/second with a commit time of about 30 minutes and an
enormous energy consumption is not very cool. The only people for whom bitcoin
is valuable are people for whom the former outweighs the latter, i.e. people
for whom trust is extremely costly and zero-trust extremely valuable.
Basically, criminals. There's a decent population of those, but it's still a
small fraction of society and shrinking every day; drug legalization and the
collapse of capital controls in the few places that still have them will
destroy most of bitcoin's value.

~~~
mrb
Lots of flawed arguments and logic in your post.

The "commit time" (time until a transaction is considered irreversible) is 60
days for Visa, but 10-60 minutes for Bitcoin. The "notification time" (time
until a transaction is announced to recipient) is < 1 second for both systems.
The "processed time" (time until a received transaction is spendable) is next-
business-day for Visa, and 10 minutes for Bitcoin.

Bitcoin miners consume less energy than the annual electricity consumption of
decorative Christmas lights in the US, which process 0 transactions and do
nothing other than looking shiny: [http://blog.zorinaq.com/bitcoin-
electricity-consumption/](http://blog.zorinaq.com/bitcoin-electricity-
consumption/)

The people for whom Bitcoin is valuable include notably (1) senders/recipients
who needs to send/receive money quickly (10-60 minutes) to/from anybody around
the world, and (2) recipients who want to eradicate fraudulent and eventually
reversed payments. Definitely more than "just criminals."

Just because Bitcoin may not be useful to _you_ in _your_ life does not mean
others will not need the utility it provides.

~~~
michaelt
Then why is it when I use Visa in a shop I can leave with my item within
seconds of presenting my contactless card to a reader; whereas with bitcoin
sellers want to wait for at least one confirm - which takes 5-15 minutes even
if I pony up a 360 satoshis/byte (~$1.90 per transaction) fee to get into the
next block?

~~~
mrb
Because thanks to the extreme cautiousness of Bitcoin developers who have
abundantly communicated the (small) risk of accepting zero-confirmation
transactions to the public, people have generally heeded the advice of waiting
for at least 1 confirmation.

But in reality, if it is OK for a shop to _tolerate_ the risk of credit card
chargeback fraud (which is real and is exploited every day) then it is OK to
also _tolerate_ the risk of accepting a zero-confirmation Bitcoin tx. Notice
the language I use. "Tolerate" doesn't mean "annulate", but "accepting some
degree of risk that can be controlled."

Of course the downside of this cautiousness around zero-confirmation
transactions causes people to think Bitcoin transactions are slow, when it's
not true. They are as fast as, if not faster, than CC transactions.

------
TimJYoung
I know very little about blockchain technology other than the high points, but
this statement really intrigued me:

"The defining characteristic of anything digital is its zero marginal
cost…Bitcoin and the breakthrough it represents, broadly speaking, changes all
that. For the first time something can be both digital and unique, without any
real world representation."

My question is this: is _this_ the solution to our ongoing problem of not
being able to properly reward the creation of digital goods because they can
be infinitely reproduced ? I know that this could be considered bad news by a
lot of people that _use_ such digital goods for free, but this type of
technology can't help but be a net positive benefit for everyone, if true.
Especially since we're seeing a future in which more and more people will
experience the ill effects of automation on their jobs and careers.

~~~
primodemus
[https://venturebeat.com/2017/01/07/blockchain-could-
complete...](https://venturebeat.com/2017/01/07/blockchain-could-completely-
transform-the-music-industry/)

~~~
harryh
Everything in #3 in that link is silly. In now way can the blockchain be used
to prevent music piracy.

------
davidgerard
> This is the total market capitalization of all cryptocurrencies

This is where he lost me. "Market cap" is a meaningless number for cryptos, as
it's not realisable at all. It also gets people thinking of cryptos like
companies, where you could actually realise something like it.

His entire thesis is "you can't _prove_ this isn't just a bubble of timing!"
and it's not a strong argument. Every bubble ever has had people claiming this
one is _unique_.

~~~
pishpash
How is that different from any other market cap measurement?

~~~
_coldfire
Most companies don't issues millions of new shares everyday

~~~
RexetBlell
Not all cryptocurrencies issue new tokens every day. For example, Ripple had a
fixed amount from the start and no new ones will ever be issued.

------
NoGravitas
The basic argument of this article seems to be that the real benefit of
cryptocurrencies, other than their speculative value, is that they provide a
way of enforcing artificial scarcity in the digital realm, where scarcity does
not come naturally.

As someone dedicated to eliminating scarcity in the material world, (a la
Bookchin's /Post-Scarcity Anarchism/, compare Doctorow's /Walkaway/), this
argument does not sit well with me.

------
jondubois
I think that Bitcoin and other alt-coins do have some intrinsic value as a
means of facilitating trade between people but I think that they (Bitcoins in
particular) are currently overvalued.

If you think about tulips today, they are not expensive anymore but they do
cost something and they still have some utility value as an ornament.

The value of anything (regardless of whether it is rare or not) tends to be
proportional to the cost of producing the thing.

It doesn't cost much to produce a new cryptocurrency and because
cryptocurrencies can be easily traded/converted between each other, they are
essentially all the same. The tulips might come in many varieties, but they
are all just tulips and their financial value is derived from a common utility
attribute (which is ornamentation). Because of this, one should not value
Bitcoin because of its perceived scarcity - Ultimately, it all comes down to
utility value.

Scarcity is not a utility.

~~~
tomw1808
It also doesn't cost much to "produce" a stock (like in printing it on a
paper). It's the underlaying asset that is valuable, not "the stock". Same
with all the new currencies/tokens: They are bound to the underlaying value of
the company that will do something with it...

------
tobltobs
> ... and it is increasingly trivial to convert [Bitcoin] to the currency of
> your choice.

I think the author lives in a bubble. For 99% of all humans this is not true.

~~~
mlindner
At this point it's not too much harder than opening a bank account.

~~~
tobltobs
Outside of the first world bubble opening a bank account isn't trivial.

~~~
prawn
Even in the first world, I wouldn't call it trivial.

------
mrb
Author is right about the gold comparison. Only 10% of the gold produced
worldwide is actually used only for its intrinsic value (physical properties
in industrial uses). 90% is used "just because it has value" (ie. stored in a
vault or used as jewelry[1]). So its intrinsic value is completely
insufficient to justify and support its market price which is in fact driven
by speculation, not by industrial demand.

[1] Many other shiny, corrosion-resistant, and cheaper materials exist and
would make more sense to use for jewelry. But when gold is used over these
other materials, it is almost always for the only reason that it is more
valuable.

~~~
dsacco
That's slightly incorrect. Gold has intrinsic value beyond industrial uses.
Intrinsic value doesn't require utility (but it often includes it), it only
requires a use beyond a consensus exchange rate and speculation. Many people
enjoy using gold in jewelry for its own sake, not because they want to
speculate on it. That enjoyment functions as organic demand, which increases
the price.

As long as a thing has consumer demand that doesn't derive from speculation or
decay quickly with time, it can have intrinsic value. Phrased another way,
"jewelry" and "dentistry" are both legitimate uses of gold, because they both
create organic consumer demand (and from what I can tell most people don't use
gold in jewelry for speculative reasons).

The author's usage of the word "intrinsic" is confusing to me, because its
fuzzy and imprecise. He's not really using the term in the traditional
financial sense, as you would in e.g. fundamental valuation, or options
pricing (theta decay, etc).

~~~
mrb
" _Many people enjoy using gold in jewelry for its own sake, not because they
want to speculate on it_ "

I disagree. But it's not because they want to speculate. People enjoy solid
gold jewelry over gold plated jewelry for the only reason that the first is
"more valuable" and is associated to a "higher status." They also prefer real
gold over gold imitations for the same reason.

Here is a thought experiment: if gold prices fell to $0.001 per gram tomorrow,
would people continue using it in jewelry? No. I _guarantee_ you demand for
gold would _dramatically_ fall in jewelry.

About 50% of the gold produced ends up in jewelry. Most of it ends up in solid
gold / gold filled jewelry items (the rest in gold plated items.) And my claim
is that demand for these solid gold / gold filled jewelry items would fall.

------
mcguire
" _And, in the grand scheme of things, it is mostly true today that
cryptocurrencies don’t have meaningful “industrial [or] consumer use except as
a medium of exchange.” What he is the most right about, though, is that
cryptocurrencies have no intrinsic value._ "

One point: bitcoin is inherently deflationary. Anyone who uses it as a medium
of exchange, specifically, who buys something, is economically irrational.

~~~
davidivadavid
That "point" has been debunked in every bitcoin thread I've ever read. Because
a currency is deflationary doesn't mean that it's irrational to trade it. You
can't eat bitcoins.

~~~
mcguire
That is true. However, the nature of bitcoin is that you will be able to buy
more food with it next year than you can today. If you have _any_ other
assets, you would be better off trading those than your bitcoin hoard.

------
boznz
The current Crypto-currencies (why not just say bitcoin!) benefit early
adopters, people in unstable economies, speculators and criminals. I suspect
the biggest by far at the moment is Speculators.

I dont see any reason for the average Joe to buy them and like anything with
speculation involved dont put all your savings into it unless your happy to
get burnt.

------
hedgew
What will happen once Bitcoin is replaced by a clearly superior technology?

It is quite likely that cryptocurrencies and related tech will revolutionize
many aspects of our lives. But that is also exactly why Bitcoin will decline.
Its current value comes from speculation rather than utility. When actual
business is done on the blockchain, the value created by that will surpass
value from speculation so much that no consideration will be given to bitcoin
and its technological baggage. Business will simply use a newer crypto because
it is more economical. We'll use something that's faster, easier, cheaper, and
less energy consuming.

When superior competitors exist, Bitcoin will simply have no inherent value.
It will be like a government invalidating a currency, except it won't happen
as fast.

~~~
CyberDildonics
> What will happen once Bitcoin is replaced by a clearly superior technology?

Maybe the same thing that happened when JPEG, mp3, email, C, and http were
replaced with superior technologies. I actually think the future will be a
combination of crypto-currencies for quite a while, but there are plenty of
examples of certain formats and protocols being good enough to keep their
dominance after having a superior network effect.

Bitcoin's major hurdle right now is that Blockstream, the current bitcoin
github maintainers, and the moderators of /r/bitcoin working very hard to
suffocate bitcoin through lies and propaganda. There are hundreds of cases of
them lying and misleading people, while /r/bitcoin is heavily censored.

Even here on hacker news they are aggressive in controlling the narrative, but
go to /r/btc and ask how many people have been banned or have their comments
deleted from /r/bitcoin. Or go to /r/bitcoin and say something positive about
bitcoin unlimited or bitcoin classic. /r/bitcoin's moderation logs aren't even
public.

~~~
saalweachter
Everyone thinks they're Einstein, Gallileo, Copernicus, C. But sometimes
you're Bozo, bmp, APL, talk, APL, gopher, aiff.

~~~
CyberDildonics
I'm not clear what argument you're making or what new information you're
putting forward.

~~~
saalweachter
You claimed that if another block chain/crypto currency rose to prominence,
Bitcoin would still have value because older technologies like C and http
still have value, implying that all old technologies still have value.

I'm just pointing out that there are boatloads of old technologies which _don
't_ still have value, like APL, ALGOL and gopher.

Oh man, remember HyperCard?

------
dmichulke
So what market cap should be the top? We had 80 bn yesterday ...

~~~
resoluti0n
I think we're still at a the very early stage of the crypto-currencies.
Something like at the point when just a few geeks were surfing the Internet in
1994 with a 486 PC running Windows 3.11 and a 14.4 bps modem. So there's still
a lot of room for the market cap to grow IMHO.

~~~
h1d
Win 3.1 was already after average families figured its usefulness with usable
GUI for moms. Blockchain is earlier than that. It's still trying to figure out
how useful it can be.

------
Ologn
Bitcoins are different than tulips or homes with subprime mortgages or dot com
companies in 1999 in that they are completely useless. They have no value
whatsoever. Usually bubbles are built on something real. Even Ponzi's
international reply coupons had some underlying value. Bitcoins are completely
worthless.

There's a lot of ferment for them, but then there were Casey Serin's making
big money in 2007 on subprime loans, or Pets.com superbowl commercials, or
Dutch tulip bulbs. It always feels heady during the times people are
publishing books with titles like "Dow 36000". It's almost always right before
the crash.

As Bitcoins are worthless, people go casting about for something else which
they consider worthless. They come up with the dollar bill, and say the
Bitcoin is just like the dollar bill, but electronic and untied to government.

This is pretty silly for a whole host of reasons. It would take too long to go
into fully, and pointless to those who've already drunk the kool-aid. The USA
has the world's largest GNI by some measures, it holds thousands of tons gold
in Fort Knox and other places. In 1971 the dollar was an abstraction of its
gold reserves, since then its been an abstraction of that abstraction,
something akin to class B non-voting shares of a large stock. If it were
possible for states to run the printing presses and create value, you'd wonder
why that innovation was discovered in the past century. Any how, the Bitcoin
scam claimed a magic wand could create value, so unsurprisingly other scams
arose - Ethereum, Ripple, NEM etc. all currently have billion dollar market
caps.

It's illustrative of how these cons work. I mean I don't know how much more
blatantly it can be spelled out to you its a scam - Bitcoin was not created by
a Ponzi, but by some criminal who has kept their identity completely secret.
If this doesn't wake you up to the con, I don't know what will. Except its
inevitable crash to becoming worthless, just like "Flooz" and "Beanz" did 17
years ago. And those were electronic currencies created by VC backed firms.

~~~
benchaney
I spend a fair amount of time telling people not to overhype
Bitcoin/blockchains (I even did so in another place in this thread), but even
to me this is stupid. Some highlights:

> The USA has the world's largest GNI by some measures, it holds thousands of
> tons gold in Fort Knox and other places. In 1971 the dollar was an
> abstraction of its gold reserves, since then its been an abstraction of that
> abstraction.

Bitcoin is an abstraction of an abstraction of that abstraction. Care to
explain why 2 levels is fine but 3 levels is obviously worthless?

> Any how, the Bitcoin scam claimed a magic wand could create value, so
> unsurprisingly other scams arose - Ethereum, Ripple, NEM etc. all currently
> have billion dollar market caps.

Bitcoin has value for the same reason that anything has value. Because people
value it. No magic wands needed.

> Bitcoin was not created by a Ponzi, but by some criminal who has kept their
> identity completely secret. If this doesn't wake you up to the con, I don't
> know what will.

This is the icing on the cake of stupidity. You call him a criminal. What law
has he broken?

~~~
chvid
Comparing bitcoin or similar to USD misses one big thing:

You have to (if you live in USA) pay taxes in USD; if do not you will be met
with the force of the state.

This creates a default demand for USD and there is nothing comparable to that
for bitcoin.

~~~
andrewla
I keep hearing this argument and it continues to make no sense to me. With the
exception of fixed levies (like property taxes) all other taxes are
proportional to income valued in USD. Multiplication is commutative, though --
if I earn 100 BTC, and say my tax rate is 30%, then I own 30 BTC in taxes, at
the prevailing exchange rate -- the demand for dollars is an illusion here;
regardless of the value of dollars relative to BTC, I owe 30 BTC worth of
dollars; if dollars are worth a lot, then I owe few of them, if they are worth
little, then I owe a lot of them. There is no function forcing value into USD.

~~~
nhaehnle
There's a question here that affects your story somewhat because governments
do require you to calculate value in their currency (USD in your example).

Let's say you earn 100 BTC at the start of the tax year, and your tax rate is
30%, but BTC drops from 1000$ to 100$ over the course of the year. How much in
taxes do you owe at the end of the year? 30000$ or 3000$?

I don't actually know the answer for certain, but my guess is you owe 30000$
-- and if you didn't sell your BTC _early_ , you're screwed. You could perhaps
offset some of your taxes by claiming an investment loss, but that usually
only works to offset capital gains taxes, not income taxes.

On the other hand, what if BTC rises from 1000$ to 10000$? I expect you'd
still owe 30000$ in income taxes, plus capital gains taxes if/when you sell
your BTC.

------
S410520
Much butthurt, such wow :D

Anyone failing to see this magnificent invention for what it is will just hurt
him or herself.

If you are going to give anyone else power over your money you are going to
have a bad time, simple as that. History pretty much proves this beyond any
doubt.

~~~
rspeer
HN isn't Reddit, dude.

