Five More Crypto Myths Taken Down
By: Robin Bloor
Tags: Taxes, Politics, Blockchain, Cryptocurrency, Bitcoin

Crypto Pessimists Congregate

Myth 1: The government is coming for your crypto.

Excuse me please, but no government has the power to shut down a cryptocurrency; blockchains are international and decentralized. Add in the fact that wealthy investors (the good, the bad and the ugly) use store some of there stash in Bitcoin or Ether — and such people have political influence — and it’s game over, almost.

A government can make crypto illegal. And that’s what some economically-unsophisticated countries have done. When they do, it drives the currency underground and shops are not be able to accept it.

Here’s a list of the economically-unsophisticated: Algeria, Bolivia, Ecuador, Bangladesh, Macedonia, Nepal. That’s just 6 out of 195, which is not bad for crypto. (Perhaps I should include Vietnam and Indonesia; both allow crypto speculation, but banned payments using crypto.)

Banning crypto will backfire spectacularly, stifling a whole sunrise industry until the sorry government finally realizes you can’t stop a technology tide.

As for the US, America is not going to ban crypto. No chance. Wall St is deeply in love again. And it’s the first time since it flashed its eyes at derivatives.

Myth 2: With crypto, you will pay no taxes

Not exactly. Of course politicians fantasize about banning crypto, even though they realize it’s a numbskull scheme. They fear crypto will deliver a simple means of skipping all taxes and the public purse will suddenly be empty. (Who then would pay their wages?)

The good news is that their fears may be well-founded. Crypto will probably provide ways to anonymize your money. The bad news is that our beloved politicians will quickly shift the burden of taxation to things that can be taxed, like everything you buy and stuff you cannot hide (land, property, yacht, etc.).

This tax switch will be disruptive, but it is inevitable whether you approve or not.

At the moment, the tax situation surrounding crypto varies. In most countries (including the US) crypto is treated as a commodity on which you pay capital gains tax if you speculate successfully. Blockchains are a public record, so where there’s a record of you putting money in, there is a record of your ownership. The tax man can know, and you risk his wrath if you try to hide your profits.

Myth 3: Can’t buy me much, yeah, everybody tells me so

Some crypto-skeptics still believe crypto will never amount to much, although there are fewer than there were — culled perhaps, by the astronomic rise in crypto last year and Wall St obvious passion for its new financial mistress. Ripple in particular silenced many crypto-atheists when it announced that upwards of a hundred banks were using the Ripple network.

The crypto-skepticism transferred itself to the tokens that are not in the payments business. There are hundreds if not thousands of these. Some focus on computer infrastructure (the cryptocloud), some on the ad market, some on gaming, some on gambling, some on retail, some on the supply chain and many on the health sector. Btw, my health sector favorite is Dentacoin. It makes me laugh just thinking about this crypto tooth-fairy.

I’ve always hated dentists, why would I ever buy their crypto?

The reason none of this seething mass of crypto tokens has made the news yet is that it’s too early. It will happen. Give it a year or two, and there will be dozens, or hundreds — maybe even bajillions.

Myth 4: Cryptos are a fad that will fade

This myth is exploded by what’s written above and already lies in pieces. However, let me amplify it a little. I work for a crypto company (Algebraix). We began writing code in July 2017. We now have an application in Beta, and the Permission token (ticker: ASK) will be operational when the beta test is complete. The marketing campaign to recruit users will probably begin about a year after we started coding. The current roadmap runs for several years from then.

Now take a look at the history of, say, Facebook. In the first year after the software launched (2004) it acquired 1 million users. In the second year 5.5 million. It was not until the end of 2008 that it had 100 million and pretty much everyone knew its name. And Facebook is an example of very rapid growth.

The day has only just dawned. The flowers have yet to open.

Myth 5: Crypto Is Bad for the Environment

There is nothing worse in the eyes of a millennial than being utterly ungreen. Climate skeptics they are not, especially those who consult the evidence.

Thus a tremor ran through the crypto community when the news broke that Bitcoin mining squanders the electricity of 90 million refrigerators every day, or about as much as Ireland. It is excessive, even if you note that Bitcoin has a market cap of $160 bn — because that’s only half the GNP of Ireland and significantly less than Ireland’s money supply ($257 bn).

So shame on you Bitcoin.

We could protest: “Not so fast, Buster. If Bitcoin mining didn’t make a profit, no-one would do it.”

And that is also true. However, it doesn’t alter the fact that Bitcoin mining chews up a huge amounts of electricity — necessitating the burning of vast amounts of fossil fuel — pushing unconscionable tons of carbon dioxide into the atmosphere — needlessly heating up the planet — melting the ice on Greenland and Antarctica, and raising the sea level to the point where Venice is unsavable. And I quite like Venice.

The truth is that the energy consumption of fiat currency is just as egregious and that the energy consumption of gold mining is more than twice as much and don’t talk to me about the cost of all those cloud data centers.

But that’s not the whole story. The whole crypto world knows that Bitcoin mining is expensive. So many other coins have found cheaper ways to organize their blockchains — ways that are hundreds of times cheaper than Bitcoin mining. (I’ll write an article on this one day soon).

Ultimately, either those other cryptos will dominate, or Bitcoin will become less of an electricity glutton.

Robin Bloor Ph D. is the Technology Evangelist for Permission.io, author of The “Common Sense” of Crypto Currency, cofounder of The Bloor Group and webmaster of TheDataRightsofMan.com.