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Bitcoin and cryptocurrency tax questions and answers
We like things we can see and touch. It has an agreement that will ultimately keep it in the euro zone for now. But even so, the country must keep capital controls and ATM withdrawal restrictions in place in order to ensure basic liquidity. For Greeks, the threat is real. They want their cash in hand. They understand it can be confiscated, to some degree, if the money-changers become desperate which they have.
At first sign of anything resembling even a potential collapse or run on U. Thankfully, there are options for those who think hard about protecting their money ahead of time. Many commentators are quick to point out that markets will be faced with the same scenario on Greece in months or years down the road. A free-floating currency can act as a release valve to take pressure off an economy.
Despite glaring productivity differences across euro-zone member countries, they are all forced to operate under the same exchange rate. Greece could resort to some type of scrip or parallel currency that would pave the way for reintroduction of its drachma.
Without getting into the details, IOUs or scrip would be used to cover pensions or facilitate business activity until a new national currency was issued at a much deflated level. No one can say the calamity unfolding in Greece is a positive development.
The hard facts are generating a much-needed discussion on complementary currencies. You can see what other readers have to say about it here. But figure that the general public considers their implementation about as improbable as Ron Paul being elected President. Once known as the Swiss Economic Circle, the WIR Bank is now the complementary currency system that facilities business transactions across many industries. The WIR franc is entirely electronic credit and secured by its members pledging assets.
This asset-backed credit is used in concert with Swiss francs and reduces the amount of cash buyers must bring to the table. Guess what the guy who helped introduce the euro recently said about using a single currency?
Lietaer believes the WIR franc is a good model to implement around the world, except he would make it convertible. The benefit of converting it to common currency, he says, is the ability for the government to accept it in payment of taxes. If I asked you if you had confidence in the full faith and credit of the U.
But what if I asked you about your confidence in the full faith and credit of the U. If Greece had to exit the euro and reinstitute the drachma, do you think Greeks would be clamoring to do business in drachmas? A complementary currency could offer an alternative that bypasses the lack of confidence in the public sector.
Among those concerns are banking crashes, sovereign-debt crises and monetary instabilities. Depending on the structure, a complementary currency can conquer those concerns head-on. But crypto currencies are making their way onto the scene, laying the groundwork and furthering the conversation.
Bitcoin is a peer-to-peer open source payment network. The network is entirely digital and Bitcoins are purchased with conventional currency. Smaller transactions can be made using fractions of a Bitcoin.
Of course, since the value of a Bitcoin is determined by supply and demand, there is an element of speculation involved. For instance, one could use their dollars to purchase Bitcoins, and then sit on those Bitcoins in anticipation of Bitcoin appreciation relative to their dollars. Gold held in a BitGold account can be redeemed in the form of 10g cubes or 1kg bars and delivered at any time.
Obviously, the value of gold fluctuates, so the value of a BitGold account will fluctuate in kind. But if things start to get dicey in the U. For owning large amounts of bullion, it might make more sense to buy gold directly through a dealer rather than paying the in-and-out BitGold fees. And if things start to get really dicey, you can cash out and have that gold sent straight to your doorstep. We like things that are tangible, concrete. But there may be a silver lining … The hard facts are generating a much-needed discussion on complementary currencies.
The truth shall set you free. But what options do they have? Think thunk factor again. Importantly, Bitcoin operates without any central authority or banks. Do right, JR Crooks.