Betting on Bitcoin: cryptocurrencies’ future

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It was disclosed this week that Tesla had invested $1.5bn in Bitcoin and that it was initiating plans to start accepting the digital currency as payment for its electric vehicles, causing its value to swell to a new high of $44,100 on Monday. This comes after Elon Musk had reportedly been promoting both Bitcoin and Dogecoin on Twitter in recent days. Many have seen this move as a big boost to Bitcoin and cryptocurrencies as whole.

This move could have been made due to tax concerns

Tesla’s audit committee approved of the investment, believing it was a way to “further diversify and maximise” returns on their cash. However, this has not come without major criticism due to its increasing volatility. Nevertheless, this move could have been made due to tax concerns, as an expensed loss if there was to be one from Bitcoin’s volatility. This could be Betting on Bitcoin: cryptocurrencies’ future classed as only an impairment loss under USA tax law which could lead to visibly favourable results in Tesla’s quarterly reports, thus leading to further potential investment.

Meanwhile, Tesla has not been the only company to invest in the digital currency and instead follows a long trend of many other investors. Many of the investors involved had gradually began to seek interest following its last peak in 2017, which reached a high of $19,783.06. In late October, PayPal had announced that it was allowing its customers to buy, hold and sell cryptocurrency, effectively democratising its use even further for retail users.

Within recent years the platforms Coinbase, Robinhood and Trading212 have become commonplace platforms to buy and sell cryptocurrencies with a simple click of a button on any handheld device.

Chamath Palihapitiya, the outspoken CEO of Silicon Valley fund Social Capital, recently stated that Bitcoin could soar to $200,000. Palihapitiya, who has been investing in the cryptocurrency since 2013, explained that bitcoin is surging because more investors are realizing that national leaders are “untrustworthy”, and that they need to add a hedge to their portfolios.

Major investors and users were not only limited to companies: certain states have already begun to consider how they could accommodate cryptocurrency usage. In December 2020, the Swedish Government started exploring the feasibility of having the country move to a cryptocurrency. It was not stated whether Bitcoin would be directly involved in this new development.

News for cryptocurrencies has not been completely positive and over the last few years has posed many concerns, particularly in regard to criminal activity. For example, according to the Financial Times, authorities in the USA during October last year charged the founders of BitMEX, a major cryptocurrency exchange, with wilfully failing to prevent money laundering and operating an unregistered trading platform. These chargeswere one of many moves in a years-long effort by the American government to crack down on the cryptocurrency market that was once largely unregulated but which has now moved more under the eyes of regulators.

Fraud has become a problem for the cryptocurrency market

Fraud has become a problem for the cryptocurrency market, according to the computer analytics group, The Tie, “87% of exchanges reported trading volume was potentially suspicious, and that 75% of exchanges had some form of suspicious activity occurring on them”.

Overall, Elon Musk’s decision to involve company finances into the cryptocurrency shows that cryptocurrencies are even more likely to stay for the long run, whether that includes Bitcoin is another matter.

The increased utility of the currency whether under boom or bust for its price level has created more difficulties for regulators and governments in cracking down on the criminal activity associated with it and looks like it will continue to be an ever-expanding challenge.

Image by antanacoins via Creative Commons

2 thoughts on “Betting on Bitcoin: cryptocurrencies’ future

  • That is awesome!! I have never seen any of those before, but they look fun to play! I’ll definitely have to call you up when I’m in your neck of the woods.

    Reply
  • Govtts,besides PRC,face an existential threat from Bitcoin and Cryptos ! It is not that it rivals the USD – that is nonsense.The threat to PRC has evaporated,as COVID has busted banks and economies all over the world, and PRC is relative much better.Therefore,there is NO INCENTIVE for Chinese to BUY BTC,besides speculation – for which the door to Macau is open – as the casino profits – then come back to PRC !

    The REAL BTC threat is that it BYPASSES THE banking system ! It is not that the banks will collapse and people will withdraw their money from the banks – and take a red eye to BTC ! That also,is not likely in the short term.

    The threat is that trade and commerce will BYPASS THE BANKING SYSTEM !

    If A sells to B in POS store or online or by a wire transfer – the money goes to his bank – irrespective of FX chosen.Cash can be hoarded,of course, but up to a limit

    Once the money hits the banks – then the trail is set ! EVEN IF THE PAYER IS NOT TRACEABLE – the recipient is screwed .Besides FATF – he comes in the Direct and Indirect tax net ! It is this tax net which feeds the corrupt government and politicians.

    So in a trade through BTC or other CrC (Crypto Coin),the Govtt loses the entire revenue on that supply chain and value chain – FOREVER – and that will catalyse more and more of such trades.In fact it will start a BTC supply chain – with its tech platforms – wherein manufacturing upto a limit – will NOT PAY ANY TAXES TO the government.

    The advantage to the buyer of the goods is that ,he get the items free of VAT or taxes – so it is 10-20 % cheaper,and he has anonymity of payment (if not of purchase)

    AND THEN,THIS WILL BANKRUPT THE STATE AND THE BANKS (AS ALL THIS LIQUIDITY WILL EXIT THE BANKS AND WILL ALSO DESTROY BANK SOLVENCY AND THE MONETARY POLICY OF THE FED -AS INTEREST RATES AND CREDIT POLICY,WILL NO LONGER BE A LEVER FOR ANY ECONOMIC DECISIONS AND OUTCOMES !

    That is the EXISTENTIAL THREAT TO THE WORLD AND ESPECIALLY TO THE “USA”.

    Take the case for India – the Bad assets are USD 400 Billion USD and COVID has aided the banks in hiding more !

    It is CERTAIN THAT THE GOI WILL DEMONETISE BANK DEPOSITS ACROSS THE BOARD TO OFFSET THE LOAN LOSSES !

    Y WILL PEOPLE PUT MONEY IN BANKS ? The same is the story in most parts of the world.

    BTC supply comes from LOW COST POWER NATIONS
    BTC demand comes from INEVITABLE DEMAND WHICH IS EXPECTED from BUSTED NATIONS LIKE INDIA – AND SPECUALTORS IN THE US/EU PUNTING ON IT
    BTC THREAT COMES FROM THE USA and EU – the existential threat ! BTC is not a threat to PRC !

    AND THAT IS WHAT MAKES IT A PERFECT INVESTMENT BET ! dindooohindoo

    COULD IT BE THAT THE US AND EU ARE USING BTC TO TRAP INVESTORS,INFLATE THE BALLOON AND THEN BLOW IT UP ? THAT WILL WIPE OUT THE SPECULATIVE LIQUIDITY IN THE ECONOMIES – AND THE WEST CAN DO A FALSE FLAG – LINK THE MONEY TO CRYPTOS – AND THEN USE THAT TO BLOW IT UP !

    Reply

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