Q: "So what happens when there is a massive fluctuation in price"
A: Nothing, as all bitcoins would be instantly converted into US Dollars removing all currency volatility risk. I directly made sure that was in the bill to address that concern.
Best,
Rep. Schleien
Prime Sponsor of New Hampshire House Bill 522
What can 'instantly' possibly mean in this context?
"Before the transaction with the State is legally considered complete and the taxpayers liability settled" would seem to be the relevant thing.
The taxpayer might lose in this case, but the State would not (and, the risk the taxpayer faces is pretty much the same risk as they would face holding money they need to pay taxes in bitcoins whether or not there was a standard payment processor for bitcoin-to-pay-taxes for the state.)
Using a payment processor like BitPay would allow this. Essentially you click to pay in bitcoin, you redirect to the BitPay site, you pay them bitcoin and they transfer the USD value to the recipient (in this case the state).
So an individual could pay $10k in bitcoin and the state would receive $10k in USD. BitPay currently offer their service for free that would meet these requirements.
So who is giving BitPay cash for the coins instantly? Are there literally buys just chomping at the bit, even when the market is in a downward trend, to buy coins from BitPay, for cash, instantly after they put them up for sale? At some point the piper has to be paid, and if it isn't a large financial institution, I'm still not seeing how this plays out. There has to be someone to soak up the massive loss in value...
As far as I can tell, BitPay has less than $100 million in investment, I don't see how that even comes close to covering the risk.
Bitpay uses exchanges such as Bitstamp to sell the coins immediately. There are plenty of buy orders there to cover these purchases. Note that this doesn't mean every tax bill is due to be paid by bitcoin but individuals could if they wanted to.
Perhaps you are unfamiliar with bitcoin, I'm not sure. For every seller on a exchange there is a buyer. Yes if there happened to be a flash crash this may be an issue but generally this hasn't been a problem. As an example, bitpay will lock in the dollar value for a 10 minute period, as long as you pay in that window they guarantee the retailer the USD value and the buyer the BTC price. To achieve this they would keep some funds in btc all the time, then when a sale like this comes in they sell the equivalent amount (or a part of it) to hedge against future fluctuations.
I think you are thinking that the states entire tax revenue would come via this method, currently I doubt there are enough BTC in that state to achieve that outcome. But anyway this proposal is feasible as it currently stands.
Comments
Q: "So what happens when there is a massive fluctuation in price"
A: Nothing, as all bitcoins would be instantly converted into US Dollars removing all currency volatility risk. I directly made sure that was in the bill to address that concern.
Best, Rep. Schleien Prime Sponsor of New Hampshire House Bill 522
What can 'instantly' possibly mean in this context? The same day? minute? millisecond? Triggered by how big of a change?
"Before the transaction with the State is legally considered complete and the taxpayers liability settled" would seem to be the relevant thing.
The taxpayer might lose in this case, but the State would not (and, the risk the taxpayer faces is pretty much the same risk as they would face holding money they need to pay taxes in bitcoins whether or not there was a standard payment processor for bitcoin-to-pay-taxes for the state.)
Using a payment processor like BitPay would allow this. Essentially you click to pay in bitcoin, you redirect to the BitPay site, you pay them bitcoin and they transfer the USD value to the recipient (in this case the state).
So an individual could pay $10k in bitcoin and the state would receive $10k in USD. BitPay currently offer their service for free that would meet these requirements.
https://bitpay.com/pricing
so to answer your question instantly means instantly.
So who is giving BitPay cash for the coins instantly? Are there literally buys just chomping at the bit, even when the market is in a downward trend, to buy coins from BitPay, for cash, instantly after they put them up for sale? At some point the piper has to be paid, and if it isn't a large financial institution, I'm still not seeing how this plays out. There has to be someone to soak up the massive loss in value...
As far as I can tell, BitPay has less than $100 million in investment, I don't see how that even comes close to covering the risk.
Bitpay uses exchanges such as Bitstamp to sell the coins immediately. There are plenty of buy orders there to cover these purchases. Note that this doesn't mean every tax bill is due to be paid by bitcoin but individuals could if they wanted to.
Perhaps you are unfamiliar with bitcoin, I'm not sure. For every seller on a exchange there is a buyer. Yes if there happened to be a flash crash this may be an issue but generally this hasn't been a problem. As an example, bitpay will lock in the dollar value for a 10 minute period, as long as you pay in that window they guarantee the retailer the USD value and the buyer the BTC price. To achieve this they would keep some funds in btc all the time, then when a sale like this comes in they sell the equivalent amount (or a part of it) to hedge against future fluctuations.
I think you are thinking that the states entire tax revenue would come via this method, currently I doubt there are enough BTC in that state to achieve that outcome. But anyway this proposal is feasible as it currently stands.
Ah. I misconstrued the comment to mean the conversion would happen upon some massive fluctuation. Thanks for the clarification.
I've been in contact with BitPay directly. They would be in my view certainly suitable for this kind of thing.
And yes instantly means instantly.
Eric Schleien Prime Sponsor
Just seem this, good work on getting involved.