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.
Read Algebraix CSO Robin Bloor take down two more crypto myths here.