We have spoken about the risks and rewards of investing in Bitcoin.
When will all this happen?
When the Rich People find out about it. By itself, it will take another at least 15 years, largely because those who make up the 1% are already doing very well under the existing status quo, and thereby are not too motivated to educate themselves on anything new. To them, Bitcoin could be just another fad.
For full disclosure, we must describe another scenario that is not too far fetched.
Rich People pay close attention to what the governments are doing because they try to minimize their taxes.
Most governments both at the national/federal level and below are in debt.
These governments can easily reduce their debt with little risk: partner with a 3rd party Bitcoin Service Provider (BSP) and start accepting Bitcoin for tax payments, alongside the regular currency. They would not need any new infrastructure; just open an account with a BSP, and the BSP would tell them exactly what to do. No risk so far, because the BSP would be the one collecting the Bitcoin on their behalf and giving them the cash via ACH the next day. Now if these governments have bought some Bitcoin first, right before they do this, they will watch it appreciate and reduce their debt.
What about the risks? The primary risk to owning Bitcoin is that governments do not accept it. Once a government does, the government itself removes that risk. By cashing it out soon, it escapes all the other risks. And gets to charge a small cashout fee on top of that.
No challenge to status quo: By accepting Bitcoin in addition to the regular currency and cashing it out immediately, the authority does not challenge the status quo. It merely facilitates the taxpayers.
Bitcoin is better than credit cards: Taxes have been around for centuries, but credit cards only for some 40 years. Some taxing authorities now accept payments via credit cards for small amounts (DMV, certain Business filings). Bitcoin is much faster to process, irretractable, and the tax collectors can charge a service fee on top of it for cashing it out.
Only the first government to do so can help pay off debt: The first taxing authority that starts accepting Bitcoin in addition to the regular currency will start educating the Rich People. From that point on, the price will rise to more appropriate levels. If the taxing authority has invested a little bit in Bitcoin, the appreciation will help pay off debt (if they have any). The appreciation will be the reward for spreading the knowledge. Other taxing authorities can jump on the bandwagon, but the appreciation will have already started.
When will all this happen?
When the Rich People find out about it. By itself, it will take another at least 15 years, largely because those who make up the 1% are already doing very well under the existing status quo, and thereby are not too motivated to educate themselves on anything new. To them, Bitcoin could be just another fad.
For full disclosure, we must describe another scenario that is not too far fetched.
Rich People pay close attention to what the governments are doing because they try to minimize their taxes.
Most governments both at the national/federal level and below are in debt.
These governments can easily reduce their debt with little risk: partner with a 3rd party Bitcoin Service Provider (BSP) and start accepting Bitcoin for tax payments, alongside the regular currency. They would not need any new infrastructure; just open an account with a BSP, and the BSP would tell them exactly what to do. No risk so far, because the BSP would be the one collecting the Bitcoin on their behalf and giving them the cash via ACH the next day. Now if these governments have bought some Bitcoin first, right before they do this, they will watch it appreciate and reduce their debt.
What about the risks? The primary risk to owning Bitcoin is that governments do not accept it. Once a government does, the government itself removes that risk. By cashing it out soon, it escapes all the other risks. And gets to charge a small cashout fee on top of that.
No challenge to status quo: By accepting Bitcoin in addition to the regular currency and cashing it out immediately, the authority does not challenge the status quo. It merely facilitates the taxpayers.
Bitcoin is better than credit cards: Taxes have been around for centuries, but credit cards only for some 40 years. Some taxing authorities now accept payments via credit cards for small amounts (DMV, certain Business filings). Bitcoin is much faster to process, irretractable, and the tax collectors can charge a service fee on top of it for cashing it out.
Only the first government to do so can help pay off debt: The first taxing authority that starts accepting Bitcoin in addition to the regular currency will start educating the Rich People. From that point on, the price will rise to more appropriate levels. If the taxing authority has invested a little bit in Bitcoin, the appreciation will help pay off debt (if they have any). The appreciation will be the reward for spreading the knowledge. Other taxing authorities can jump on the bandwagon, but the appreciation will have already started.
Why Bitcoin? Why not another cryptocurrency?
A taxing authority could use another cryptocurrency, but (a) Bitcoin is already internationally used and nobody controls it. A new currency that the government owns and controls would not be any more valuable than their current one, and thus create no extra demand and related appreciation. (b) For other cryptocurrencies, there would be many infrastructure hurdles to adoption, which have been overcome today.
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