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ede3d957 | 4 months ago (raw) | root | parent | reply | flag +1 
 Bitcoin only partially fixes this.

And I see two problems that get often dismissed.

Bitcoin is a hedge against inflation only if it's completely or mostly out of the hands of custodians (which already is not the case). As custodians (government licensed companies) can increase supply through fractional reserving the underlying asset. This comes in many different flavours and it's already a thing.

The other thing is that KYC in combination with Bitcoin transparency is a perfect tool to increase tax coercion. So we will see likely less effects through inflation tax, but more taxation through direct taxation including potential wealth tax/unrealised capital gains.

Monero is much more powerful when it comes to direct taxation. Bitcoiners who think Bitcoin alone will fix most of our problems are ignoring the details and often outright dismiss the adversarial environment all of this takes place.

Bitcoin is a great store of value if no KYC.

Monero could arguably have less effective inflation than BTC because it's not listed at custodians. And supply stays < BTC until 2040  anyways.

Which leaves Monero with a small risk of an undetected inflation bug that everybody should hedge with a Bitcoin position.

#Monero #Bitcoin
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Leo Fernevak | 4 months ago (raw) | root | parent | reply | flag 
 If I understand you correctly, you are saying that exchanges and potentially ETF providers can increase the supply of paper bitcoin and sell such printed tokens to customers. 

I see a couple of problems with this. First, this would become apparent when the company is audited. If they don't own as much bitcoin in reserve as they claim then they would be engaging in fraud. For this to go unnoticed we would need governments collaborating deeply with exchanges.

Secondly, fake paper bitcoin would only be a problem for those that use government-aligned custodians. It seems like it would be self-defeating for governments to undermine the government-aligned custodians where they can easily tax the paper bitcoin. 

Since sovereign owners can verify their bitcoin they are not impacted by frauds. You could argue that the exchange rate could be impacted temporarily. This is possible, yet would allow bitcoiners to stack more bitcoin at a cheaper price for a longer period.


2. Yes, bitcoin on exchanges will be impacted by all kinds of taxes. Yet, if governments overplay the taxes then nobody will want to use government custodians, so there's that consideration as well.

Bitcoin in self custody is hard to tax, in spite of KYC regulations. Bitcoin is global and not jurisdictional. If a government seek to tax your bitcoin in a manner you disagree with, you can cross the border and spend your capital (bitcoin) in a better jurisdiction.

This is how game theory plays out: jurisdictions have to compete for capital and skill by offering good conditions of living, low taxes, et cetera. 

I wrote a longer piece on game theory and why tainted coins will not work over time: 

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