But Bitcoin has three major problems. One is if you lose your key you won't be able to access your coins, right? And two, how is tax going work? Third, bitcoin price goes up and down so rapidly. Say the service costs 20BC today but if tomorrow's bitcoin price is $100USD instead of previous $50USD, the consumer will pay more (and vice versa Badiu might lose some money).
"One is if you lose your key you won't be able to access your coins, right?"
Right but that is life. Make back ups when you have something critical like that.
"two, how is tax going work?"
The same way it works with anything else. The government will come in, assert that you own X in taxes on your Bitcoin income, and you will pay it or go to jail. You will probably need to pay with something other than Bitcoin, of course, which adds in transaction fees (but you just pass that cost on to your customers, right?).
"Third, bitcoin price goes up and down so rapidly"
By extension, your prices change daily. You'll probably charge a fixed fee in your local currency (Yuan?) and adjust your Bitcoin prices according to the market value.
1) I think with future authentication technologies, this will get easier (logging in to the wallet based on a fingerprint token?). Perhaps the new FIDO standard will help here: http://www.fidoalliance.org/faqs.html
2) Taxes would work just like how you make money today from other sources, you have to declare them. Plus, wouldn't it be better if people wanted to pay taxes based on the marvelous "services" they get from the government, rather than having part of the money being taken away from them by force, and then the government spending it however it wishes, with little benefit for the tax payer? Seems to me that if the government had to convince people to pay up, instead of forcing them, they'd be a lot more efficient with that money spending, and a lot of waste would be reduced.
3) I think the more used Bitcoin gets, the volatility decreases. Right now if someone buys $1 million worth of Bitcoin, that could still have a pretty significant impact on the Bitcoin market. In the future, if the transactions are worth trillions of dollars, someone trading $1 million of them won't mean much.
1) If you throw your wallet into a well, you won't be able to access that money, either.
2) People have been bartering for centuries and taxation of barter is already well defined by government. Bitcoin transactions get handled the exact same way.
3) You're witnessing the birth of a new currency, price fluctuation can't be avoided. However, bitcoin prices will stabilize over time. Plus, there's services that immediately convert you BTC into fiat currency to avoid this problem.
Here in the UK Bitcoins fall under "Capital Gains". That means no tax is due until you sell them for cash (IANAL but this my understanding). So price fluctuations don't matter, when you chose to sell you pay capital gains.
Only percentages matter, not absolute values. It's hard to find a currency that fluctuates 50% relative to USD, but it's not completely unheard of either.
Comments
But Bitcoin has three major problems. One is if you lose your key you won't be able to access your coins, right? And two, how is tax going work? Third, bitcoin price goes up and down so rapidly. Say the service costs 20BC today but if tomorrow's bitcoin price is $100USD instead of previous $50USD, the consumer will pay more (and vice versa Badiu might lose some money).
Correct me please.
"One is if you lose your key you won't be able to access your coins, right?"
Right but that is life. Make back ups when you have something critical like that.
"two, how is tax going work?"
The same way it works with anything else. The government will come in, assert that you own X in taxes on your Bitcoin income, and you will pay it or go to jail. You will probably need to pay with something other than Bitcoin, of course, which adds in transaction fees (but you just pass that cost on to your customers, right?).
"Third, bitcoin price goes up and down so rapidly"
By extension, your prices change daily. You'll probably charge a fixed fee in your local currency (Yuan?) and adjust your Bitcoin prices according to the market value.
1) I think with future authentication technologies, this will get easier (logging in to the wallet based on a fingerprint token?). Perhaps the new FIDO standard will help here: http://www.fidoalliance.org/faqs.html
2) Taxes would work just like how you make money today from other sources, you have to declare them. Plus, wouldn't it be better if people wanted to pay taxes based on the marvelous "services" they get from the government, rather than having part of the money being taken away from them by force, and then the government spending it however it wishes, with little benefit for the tax payer? Seems to me that if the government had to convince people to pay up, instead of forcing them, they'd be a lot more efficient with that money spending, and a lot of waste would be reduced.
3) I think the more used Bitcoin gets, the volatility decreases. Right now if someone buys $1 million worth of Bitcoin, that could still have a pretty significant impact on the Bitcoin market. In the future, if the transactions are worth trillions of dollars, someone trading $1 million of them won't mean much.
Making taxation optional or voluntary doesn't seem like a viable system. Everyone would just pass the buck to someone else.
1) If you throw your wallet into a well, you won't be able to access that money, either.
2) People have been bartering for centuries and taxation of barter is already well defined by government. Bitcoin transactions get handled the exact same way.
3) You're witnessing the birth of a new currency, price fluctuation can't be avoided. However, bitcoin prices will stabilize over time. Plus, there's services that immediately convert you BTC into fiat currency to avoid this problem.
If you accept bitcoins, you could just sell them all immediately.
Here in the UK Bitcoins fall under "Capital Gains". That means no tax is due until you sell them for cash (IANAL but this my understanding). So price fluctuations don't matter, when you chose to sell you pay capital gains.
How are those last two things necessarily different from any volatile currency?
Because going from $150 to $100, or $100 to $150 is a $50 USD difference? Whereas USD to RMB is a few cents difference.
Only percentages matter, not absolute values. It's hard to find a currency that fluctuates 50% relative to USD, but it's not completely unheard of either.