Cryptocurrencies

El_Goretto

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@Jamu You are right, price manipulation is happening right now.

You have a few whales that can take the price wherever they want/need.

There is this coin, for instance, called Zclassic (ZCL). It will fork soon (as in a new branch on the development tree will be created with a couple different features such as faster transactions and more privacy) creating a new coin called Bitcoin Private (BTCP). This is a bit of a special case because this fork is a double fork because at the same time Bitcoin itself will be forked into BTCP. So 2 coins will fork into 1 new coin.

It doesn't mean that ZCL and BTC will automatically disappear. In the case of BTC, it won't vanish at all and both coins will co-exist (like in previous forks like Bitcoin Cash and Bitcoin Gold). In fact, it's much more likely that BTCP will die off shortly after birth. In the case of ZCL, everything points to it becoming worthless as soon as the fork occurs. 1 BTC is worth around $11,000 whereas 1 ZCL is worth about $140 and that value is only due to the anticipation of the fork. Let me explain why.

When BTCP spawns at the time of the fork, whoever is holding BTC will get an equal amount of BTCP (while keeping the BTC too), and whoever is holding ZCL will get an equal amount of BTCP too. So if you have 1 BTC and 10 ZCL at the time of the fork, after the fork you will have 1 BTC, 10 ZCL and 11 BTCP. Makes sense?

It is the consensus that after the fork, the price of ZCL will drop because the coin will be essentially abandoned. The ZCL developers are the ones who are creating BTCP and they have said that ZCL will cease development.

Now what's been happening is that people have been anticipating the BTCP fork for this month (but there have been no set date yet) and in anticipation people have been buying ZCL for the sole purpose of getting the BTCP. Because BTCP is a double fork supported in part by BTC which is huge, they think that BTCP will hold a higher value than ZCL. And because ZCL is so cheap, it makes sense to stock up as much of those as possible.

Yesterday there was a press conference where the developers have announced the date of the fork: 28 feb 2018. What happened just before the conference? Huge dumps of ZCL coins driving the price down. It doesn't really make sense because even after the fork date announcement, the price hasn't recovered. Some people believe that large stakeholders (whales) are dumping their coins to drive the price down so that they can buy them at a lower price.

It was a long explanation but know that there are literally hundreds coins like this with the same kind of drama.

It involves manipulation by all sorts of actors including traders, exchanges, miners, developers, etc. It is quite literally the wild west.

Back to why a mum & pop mining operation in the basement might still be worthwhile. Take my case, I don't have enough processing power to hope to make any difference or get any sort of meaningful reward. That's why I join a mining pool so I can pool my processing power with others and get a chunk of the pie.

You should also look up "Spoofy", who is an individual or group of individuals with very deep pockets that's been manipulating bitcoin prices for a while.
 

Bikerbule

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@Jamu

It has been the perfect time to get in on mining over the last few years simply because of the rapid growth. A few things could happen which I believe many home miners are not aware of.

As more people start mining the difficulty of mining increases.
It works likes this: lets say x number of mining systems in a pool mine a coin at 100%
Then lots of other people also take up mining so the mining pool increases in size and is more powerful (bigger hashing power), but it also means that the pool is now mining at 130% and each miner is doing less of a share of the mining. The crypto difficulty then increases by 30% to counteract the extra hashing power of the pool. So it is now more difficult for each persons system to mine and they are getting less share. They need to increase performance or continue with a smaller share.

This hasn't been a problem up to now because the rate at which the value of coins has increased has outpaced difficulty increases, so people are able to use the profit to increase their systems power (bigger, faster, more GPUs) or just take the profit because it has already paid for the system and continue mining but for a smaller share. The smaller share has up to now still been very profitable because of the rapid increase in value of the coin.

The problem starts to hit when cryptos reach the point of stabilization. When they become more stable and less volatile difficulty increases will still happen but the profits will not be increasing anymore. Home miners smaller share will start being unprofitable because the coin is not increasing in value.
This means every small miner hits a point where the cost of running systems becomes more than profit.. Smaller home miners won't be able to play anymore and it will all move up a tier to larger miners that have warehouses full of GPUs in locations of extremely cheap electricity. (Many early miners have reinvested their money into massive warehouse systems in places like Mongolia where they can do deals for cheap electricity with the government)

When that happens it will leave home miners with a few choices, the majority will sell off their computer hardware secondhand to try and get money back, but they will flood the market with thousands of used GPUs which will reduce the price for everyone. When the market is flooded it also means new hardware sales take a hit and prices must drop, which in turn means the big manufacturers AMD and Nvidia (and memory, chip, electronic components) also take a huge hit wiping large amounts off their share prices. This has happened in the past to AMD and nearly destroyed their RTG group. It also causes stagnation across the tech industry which could take a few years to recover.

There is another option for home miners that have large enough systems. People are already interested in renting computer power, for example: a small movie studio needs to rent computer power to workout rendering effects for a movie. They can't afford the hundreds of thousands needed to purchase systems, so they bid for power on a pool to get the job done. The same can be done for any application that requires huge amounts of math calculating. More and more marketplaces will pop up where people can rent the pooled power across the world. Miners can join the marketplace and hook up their system to earn a portion of the contract. As long as the profit outweighs the running costs there will be a benefit.

Sorry for the long post and I typed it fast so excuse the mistakes :p
It's going to be a very interesting few years where it comes to blockchain. This is just the beginning, governments and financial institutions will be using blockchain tech for all sorts of things so it affects everyone. And pooled hardware math is also in its infancy.
 
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Jamu

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Agree with your bullish conclusion about future use of blockchain technology, but I can't really see a future for crypto currencies to the extent they remain outside government regulation, given the ease with which criminal transactions, money laundering and tax avoidance can be done. Once governments ban transactions in crypto currencies, and this has already begun, then its value will exist only for people wishing to trade items on the dark web. Those who think it is otherwise some sort of 'store of value' are deluding themselves.
 

Bikerbule

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Agree with your bullish conclusion about future use of blockchain technology, but I can't really see a future for crypto currencies to the extent they remain outside government regulation, given the ease with which criminal transactions, money laundering and tax avoidance can be done. Once governments ban transactions in crypto currencies, and this has already begun, then its value will exist only for people wishing to trade items on the dark web. Those who think it is otherwise some sort of 'store of value' are deluding themselves.

Some governments will (and have been talking about for a few years now) make their own cryptos, which won't actually be the same as the original crypto idea. Basically they will be digital versions of current currency which will be easy to use through your favorite bank, but still have some of the benefits of blockchain. Other governments want to make their own cryptos to avoid sanctions, they can simply trade anonymously with other countries, which happens now with current cryptos. Venezuela for example is talking about creating a crypto backed by their oil deposits to get around sanctions and boost their economy.

As they stand at the moment cryptocurrencies are just too difficult for everyday joe public to use. It is too confusing and doesn't seem secure like keeping your money in a bank which everyone is used to. So when a nicely packaged, government backed, media supported digital currency arrives, joe public will just start using that.
 
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Bad_azz

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Governments try to ban them... not so sure they will be successful.
 

Davita

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Taking the cryptocurrencies out of the conversation of Blockchain there is a great future in that technology.
I keep reading of the way Dubai is implementing Blockchain into its every daily-life and will be the first city to be completely integrated by 2020. They will also introduce their own crypto...emcash to pay for services and product.

https://www.forbes.com/sites/suparn...t-blockchain-powered-government/#6875de47454b

Cannot see Indonesia adopting this anytime soon...they only recently got rid of the manned toll booths on the highway systems.
 

Bad_azz

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the more things get automated, the higher the unemployment rate... so if Indonesia is a little bit smart it will sit back & watch others make errors, then decide where it wants to go with technology.
 

Davita

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the more things get automated, the higher the unemployment rate... so if Indonesia is a little bit smart it will sit back & watch others make errors, then decide where it wants to go with technology.

The first Industrial Revolution created massive needs for manpower...it is argued also produced massive inequality as the poor spent most of their lives doing menial, repetitive tasks while those in power reaped most benefits.

We are entering the 4th Industrial Revolution.....https://www.forbes.com/sites/insigh...he-fourth-industrial-revolution/#5eb9d9d77abd

Maybe a good idea to reflect on who will benefit most this time around.

Those now out of work toll-collectors could become crypto-miners and make fortunes...:wof:
 

Bikerbule

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The industrial revolution also meant people having more leisure time (or creation of leisure time 7 day weeks turning to 5) and more money to spend. This meant people would spend money on entertainment/sports etc and others could make money off of those. The argument that machines take away jobs needs to take into account that when people are free they find other ways to spend time and make money.
 

Jamu

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In my earlier post #363 I forgot to mention taxes. The IRS in the US is taking the position that each time a taxpayer uses crypto currency for a transaction, they are considered to have 'sold' an asset and therefore are liable for capital gains tax on the difference between the price they bought the crypto at (the basis), and its the value at the time they 'sold' it (see article below). In the current market where cryptos have soared in price, this can create massive tax liabilities for those who cash in, or use their crypto currency to buy something. I would expect Indonesia to eventually treat crypto transactions the same, and note that Indonesia taxes capital gains at high ordinary income rates. Miners would likely be deemed to have a tax basis of zero on mined coins as it will be nearly impossible to calculate the cost of mining, so all upside would be subject to tax. In short, those who think crypto currency allows them to live in an unregulated, stateless world where there are no taxes will, at some point, be in for a rude shock.

https://www.marketwatch.com/story/b...ssion-with-his-accountant-fk-taxes-2018-01-31
 

harryopal

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Biker Bule
"....The argument that machines take away jobs needs to take into account that when people are free they find other ways to spend time and make money."

That is if people have money to spend. Worldwide their are millions of educated young people for whom there are no jobs and as they don't have money to spend are venting their frustations in civil disturbances. In an ideal world the introduction of a labor saving technology would spread the benefits to ensure that those displaced would not be left in the cold. The reality has always been that people who have wealth and power sweep up the economic benefit of displacing labor with more efficient means of production and are driven to create even more wealth... for themselves and bugger the rest. Every now and then there are those with such enormous wealth it occurs to them that they could do great things by helping the less fortunate. But it seems the majority of the wealthy elites seem to think if you aren't smart enough to have a job you are just one of the idle, useless members of society who are hopeless and are probably are better off in gaol anyway when they resort to crime to survive.
 

Davita

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Re Post # 370
1. If a Capital Gain is made on a Bitcoin sale and the investor is a resident of a country where Capital Gains are taxed.... would the tax authorities ever be able to trace?

2. I guess it depends on how & where one sold it hypothetically speaking, I would not advise tax dodging or illicit activities. So I would have to advise that one declared the gain & paid tax on it...
:D
But- not everyone abides by the tax laws & that is why a lot of institutions - banks/govts are not thrilled by the cryptocurrencies- they don't make gains from them.

1. I brought up this point in post No. 5 of this long thread.
2. B_A answered.

Most countries tax filing is a voluntary declaration so it may be that governments are concerned as their revenue, which pays for social services etc., is diluted and that's why they may ban crypto-currency use for transactions within said countries....makes sense to me.
 
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Jamu

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Re Post # 370
1. I brought up this point in post No. 5 of this long thread.
2. B_A answered.

Most countries tax filing is a voluntary declaration so it may be that governments are concerned as their revenue, which pays for social services etc., is diluted and that's why they may ban crypto-currency use for transactions within said countries....makes sense to me.
Ummm, actually tax filing is not 'voluntary' in most countries, it is mandatory, including in Indonesia. Whether someone complies or not and actually files is up to them, but if they are tax resident and have income from whatever source then they are obliged to file and self-declare, and may be subject to an audit. Also, if people are going to fiddle their taxes or otherwise ignore their legal obligations that's another thing entirely. The reality is that nearly all countries are beefing up their tax collection mechanisms, and given its poor historic record of tax collection, Indonesia is making this a priority. So, I would suggest that putting one's head in the sand or trying to be clever and hide from the tax man is not so smart, given that fines and imprisonment, followed by deportation, are a potential outcome. And, with the transition to a fully digital world and increased information sharing between countries, getting caught at some point is becoming more and more likely.
 

Davita

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RE: Post #373
I said "most countries tax filing is a voluntary declaration' not that filing taxes is voluntary. You have misread my post.
This means the filing comprises voluntary declarations/statements. Unless audited....those voluntary declarations are relied on for tax remittance.
 

snpark

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Theres tax avoidance and tax evasion, you can avoid it but you cannot evade it

Actually not just the capital gains, if you are "working" as a miner (or a minor miner if you are only 12) and you are "earning" bitcoin or other, then you are receiving income / payment for something you have done - leads it open to what and how much income tax you "should" declare?

Plus do you need a KITAS if you are doing it here? It is "work" isn't it? Receiving a payment for something you are doing in Indonesia?
 

Jamu

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RE: Post #373
I said "most countries tax filing is a voluntary declaration' not that filing taxes is voluntary. You have misread my post.
This means the filing comprises voluntary declarations/statements. Unless audited....those voluntary declarations are relied on for tax remittance.
I think you meant self-declaration. Voluntary means 'done of free will' which it sort of is, as in 'I am either lying or telling the truth in my declaration, as I see fit and of my own free will', but then again all statements of whatever kind are 'voluntary' under that use of the term unless they are coerced (e.g, at gun point). You are correct to imply though that the accuracy of the declaration is up to the honesty of the filer.
 

Davita

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I think you meant self-declaration. Voluntary means 'done of free will' which it sort of is, as in 'I am either lying or telling the truth in my declaration, as I see fit and of my own free will', but then again all statements of whatever kind are 'voluntary' under that use of the term unless they are coerced (e.g, at gun point). You are correct to imply though that the accuracy of the declaration is up to the honesty of the filer.

That's B/S semantics...you misread my post...end of story.
 

Bad_azz

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Interesting stuff, dafluff.
I am way out of touch with the CCs just now, it takes me all my time to remember to open the computer to keep up with my family.
So what's been going on? I see it took a dip in the market over the past weeks... is it on the up again?
 

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