I’m really positive about crypto/bitcoin, but I feel like as long as every transaction is taxed like capital gains, it won’t be used widely as currency. Sure, regular money has taxes too (like sales tax), but the percentages for most purchases are much smaller.
Am I right to think that the main hurdle to widespread crypto adoption is how it’s taxed? (Not saying infrastructure/community isn’t important too).
If not, what’s a more hopeful way of looking at this?
(Why aren’t presidential candidates being asked who they’ll pick for SEC chair?)
It sounds strange, but encouraging people to hold onto their investments actually helps create stability… which would be useful if we want crypto to be used for regular transactions, not just as a way to make money. This is why staking has been seen as a good solution.
Interesting question! I don’t have the answer, but I’ve been wondering the same thing. Since crypto gets taxed differently depending on how long you hold it (short-term taxes are higher), does this push people to hold onto it longer than they want to? Does this tax setup actually change how people invest in crypto? What do you think?
@Unclewaffl3s
Yeah, I agree that the short vs long-term capital gains rules encourage holding onto crypto longer, which is probably a good thing for newer coins with riskier projects. But for bigger coins with large market caps, it can really slow down wider adoption. If it’s taxed like property and not currency, how can it ever be called a currency? The people in charge already know this.
SophyGenesis said:
That’s why we have defi and vpn. No KYC, no problems.
Yeah, but most people won’t go down that path. They want the ‘security’ that big banks provide. People think Bitcoin is too complicated for them, so it’ll never go mainstream. It’s just for speculators, kind of like the ‘bucket shops’ on early Wall Street.
EchoEnigma said:
It’s only a problem if you’re making a profit. You only get taxed on the gains.
My point is that this doesn’t happen with regular currency in most transactions. In the U.S., foreign currency gains or losses are taxed like regular income, not capital gains.
@michaeldamans
Capital gains taxes are lower than income taxes. Why would you want the income tax route? If it counts as income, you might lose eligibility for benefits if you rely on low income.
EchoEnigma said: @michaeldamans
Capital gains taxes are lower than income taxes. Why would you want the income tax route? If it counts as income, you might lose eligibility for benefits if you rely on low income.
I think we’re seeing crypto differently, which is fine. I’m not saying treating it like capital won’t make you more money. But if you want everyone to use crypto as a currency, having to track every gain or loss for every transaction is a huge hassle. For foreign currency, gains under $200 aren’t taxed, which makes it easier to use for small purchases.
@michaeldamans
$200 isn’t even enough for a decent meal out these days. It’s not enough to make things smooth. If you want crypto to work like regular money, its value can’t jump around too much while you’re trying to close a deal, which can take months.
If the value doesn’t change much, there won’t be much to report on taxes because you’ll be spending it at about the same value you got it for. That would make crypto really easy to use as money, while keeping a good tax structure.
I use crypto to pay for stuff all the time, and with stablecoins, reporting gains is simple. The ledger makes it super easy to report everything without needing to keep separate records.
Capital gains taxes suck. You get taxed on the money you make, then taxed again on the money you make from investing that, and then taxed again when you reinvest and make even more. Then, when you lose money, you realize you shouldn’t have paid the tax in the first place. You might get relief, but you’ve got no money to invest now, so it’s pointless… the tax system always wins.
By the way, if you’re interested in some web3 research and want to earn some money, check out Despark.io. They’re offering up to $135 in USDC for a Zoom call.
Honestly, I think there are a few things stopping crypto from being widely used. For most people, it’s just too confusing right now. Buying is one thing, but keeping it safe takes some know-how that most people don’t want to bother with. One wrong letter in an address and your coins are gone forever. There’s no regulation, so who knows what’s legit. Prices are too unstable to use regularly. And there’s nowhere mainstream that accepts it. Why would anyone give up cash or a credit card for crypto?
@Adley
Are you kidding? How about the fact that the U.S. government is broke, and they’re just going to keep printing money, which will drive inflation even more. BTC is the only way out.
Grayer said: @Adley
Are you kidding? How about the fact that the U.S. government is broke, and they’re just going to keep printing money, which will drive inflation even more. BTC is the only way out.
Inflation is just part of life. It goes up and down, but it’s always there. And yeah, I’m serious about why I think crypto isn’t more widely used. It’s just my opinion. You’re right that if the U.S. dollar fails, it will be felt everywhere, but that’s also why it won’t fail. It can’t, or the whole world’s economy could collapse. Crypto could be used alongside regular money, but it’ll never replace it.