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Topic Summary

Posted by: Cool
« on: July 23, 2021, 01:10:24 PM »

How can I be one
Posted by: E-Collins
« on: July 02, 2021, 11:37:36 AM »

In the past several months, Bitcoin had a true climb just to crash again: its price twice as high in just three months – only to lose another about a third later. Nonetheless, for payment service providers and investors, digital money now appears acceptable. Right?

Bitcoin came to an all-time high of $41,000 on January 8, 2021, when quoted at $12,000 in October 2020. But it slid back to a healthy $26,000 only a few days later. The reputation of cryptocurrencies is growing internationally, however. Investment bank analysts JP Morgen even believe that a rate of up to $ 146,000 can be achieved.


Chief Economist of Landesbank Baden-Württemberg (LBBW) Uwe Burkert advises private investors against early entry: The bitcoin rate is extremely unpredictable and unsustainable, he argues in an interview with Sparkasse.de it might continue to decrease at any point.

There's a lot of mysticism about this bitcoin thing. There are several examples from youngsters that acquired 2000 Bitcoins for fun in 2010 for 200 dollars savings, thus today they drive Ferrari and laugh at bankers. Anybody who had the courage to admit, ten years ago, that the value of something (money, gold, bitcoin) is a matter of social conventions, and also understood what, in retrospect, would seem so foreseeable, that Internet signifies a new form of society — that this strange digital money would be increasing in value.

It's a pity, of course, that I wasn't that smart and cheered on my 0.9 Bitcoins back then. Now it's fat years. Or? I read about a young man that borrowed above 100,000 dollars to put all in the second most costly cryptocurrency, ETH.

He believes that the age of blockchains, or decentralized computer networks, just began and will make him a millionaire shortly with above $100,000. As ice-cold as it is foolish, this game seems foolish to me, but I suppose he could still be correct.

In the last few days a poem by Yeats has continued to pass through my thoughts, The Second Coming, written in passing during the epidemic time of Spanish grip: "The faux does not hear his falconer, he turns and turns in ever broader circles; the globe falls apart, the center no longer holds." In the 20th century, the poet anticipated the disintegration of bound narratives. It was apocalyptic to him, and for the next hundred years, he was right.

But until our 21st century, he couldn't see. The confusion of Yeats as the loss of the center gradually transforms the Internet and the blockchains into a decentralization that needs to be timid to the remaining institution but also promising huge democratization, the dissolving of the divide between center and periphery. Hegemonic forces have disappeared Shudder, sans leaders of the planet.

Blockchains are rhizome networks in which every participating computer has an insight of all procedures theoretically. Lies, manipulation, and the buildup of power are difficult to implement in this glass framework. There are new planets dawning. At Yeats, it said: "The best is filled with doubts; the worst is filled with the strength of desire" - and when I look at the blockchains I have the sensation that, after a hundred years of pain, this relationship is eventually over. Unheard of: the birth of new realities.

In general, blockchains have great potential for a brighter future



Despite the unpredicted movements, Up and Downs about Cryptocurrency/bitcoin, the future might be brighter than you think because many have seen the real potential of digital currency. What are my reasons for saying this? More and more private and public entities are getting on board daily.

PayPal wants to accept Bitcoin for payments after Amazon. Do cryptocurrencies have a future as a payment method in general?

At this moment, it's hard to say. In fact, their tremendous volatility contradicts this. However, the crypto trend seems to evolve in this way.

Facebook would also like to introduce Diem, its own digital currency. It was still known as the Libra Coin until a few months ago. Diem should be the first worldwide money and can be shipped via WhatsApp. That can't be overlooked.

The European Central Bank and other central banks wish to regulate cryptocurrency markets and, in some cases, also develop their own digital currencies to curb wild expansion. Is that really realistic?

Central banks' activities reveal that very few nations want their monetary monopoly removed. That applies at least to industrialized countries. On the other hand, there are sufficient emerging or developing countries that are unable to retain control over digital currency manufacturing.

Between digital and virtual coins



Bitcoin (short BTC) was established in 2009. It is (falsely) synonymous with other digital currencies, such as Ethereum, Ripple, Litecoin, or Peercoin, in recent years. Bitcoin is an English term. It is dubbed "digital coin" in German. Digital currencies exist solely virtually, unlike euros, dollars, and pounds. A few crucial points help to better grasp them:

  • Bitcoins and co. are virtual currency decentralized.
  • They are meant to be an alternative to the monetary system of today.
  • Consequently, no central bank circulates this "currency." Instead, private individuals or private institutions are created.
  • The payment system they are founded on is likewise processed almost exclusively.
  • Bitcoins pay no interest whatsoever. Their value hinges largely on demand for a fixed amount of money of 21 million.
  • The source code for Bitcoin is public. Thus everyone can theoretically develop their own virtual currency based on this idea.
  • New digital currency units can be manufactured with a very high electrical and computing effort on private PCs. This is called Bitcoin mining.
  • In addition to mining, users can earn Bitcoin by paying for a product or service.
  • Or you can trade actual cash for Bitcoin on one of cryptocurrency's online trading platforms.
  • When making transfers or trading, users may remain anonymous.
  • This fact encourages illicit use in the way of money laundering, according to several critics.

The Blockchain: the digital database is overwhelmed



Bitcoin is not merely digital money with a worldwide decentralized payment system. It is also the most famous blockchain application in the world.

It also includes, like all other blockchains, a decentralized database run by various parties. You also talk about a computerized database and order book. All prior transactions are documented in chained blocks and new transactions in fresh blocks are added.

With each new block, each block of the blockchain network updates the chain. This means that each network participant has the same information and requirements for participating in the system and adding new information.

But the Bitcoin blockchain suffers from technical difficulties. Due to its size and complexity, it has been deemed overloaded for some years.

It is also (like Bitcoin and the other digital currencies themselves) a favorite destination for hackers over and again. It suffers from both private investors and trade venues.

Real taxes Virtual currencies



Taxes are a quickly neglected feature of digital money making: bitcoins and other cryptocurrencies represent an economic benefit. This is why the tax rules apply to actual currencies as well. This indicates that they are free of VAT. However, its owners might have to pay income tax.

The purchase price and time are crucial for taxation. You should therefore take a record when buying the currency and at what price. This information may be requested anytime by the tax office.


Cryptocurrencies are taxable when they are sold within one year of purchase. Here applies a paragraph (§ 23 EStG) which also applies to property. And: Each euro profit is taxable if an exemption maximum of EUR 600 is achieved.

On the other side, sales are tax-exempt if they have passed at least one year since acquisition. Or if the total profit is less than EUR 600 from these trades. Your own records are so vital to be able to verify that to the tax authorities. The receipts should therefore be maintained.

Since there can be a divergence from these rules, a specialist, preferably a tax adviser, should be consulted.

Cryptocurrencies entry is still very controversial



Although the trade of digital currencies has gone considerably since early 2021, vigilance is needed, particularly for private investors. Gilbert Fridgen, who studies blockchain technology, and Bitcoin at Bayreuth University, suggests that you start only with little quantities.

"Private investors must always assume entire loss when investing in Bitcoin," stressed the professor. Similarly, the German financial regulator Bafin sees it.

Professor Peter Bofinger, one of the five former economic wise men of the German Advisory Council, also has his concerns: He recognizes that Bitcoin and other cryptocurrencies have found a market. At the same time, he notes "whether a private currency system can genuinely establish a stable monetary system."

"The New Clothes of the Emperor"?



The professor also attacks the "no intrinsic worth" of digital currency. As long as nobody notices, they might "raise the price significantly" – as has happened to date." But according to Bofinger, like the fairy tale 'The Emperor's New Clothes,' "just a little opportunity is necessary to disclose the whole thing."

He concedes that "no commitment of central banks' redemption, including for state currency." "But they have the crucial edge over private currencies," Bofinger stresses. "They must not be rejected by vendors as 'legal tender.' And you can use it at any moment to pay your taxes."

Facebook and central banks want cryptocurrencies



The subject of digital currency nevertheless attracts more and more circles: In mid-2019, Facebook said that it would develop its own currency in conjunction with other financial and digital organizations.

Facebook is confronted with criticism from numerous governments, regulatory authorities, and financial supervisors worldwide. But in April 2020, the company requested a license from Swiss Financial Regulator Finma for the new payment mechanism. Now it's about a 2021 introduction.

In addition, the Chinese government stated at the end of May 2020 that it will soon be the first country in the world to issue the currency of a digital central bank. You work on your own digital currency, the CBDC (Central Bank Digital Currency). The e-Yuan is now being tested in numerous places and can be used on an internet platform as a payment method.

In early 2020, the European Central Bank (ECB) announced its intention to introduce money for digital central banks. This announcement is usually seen in response to the plans of Facebook.

The ECB teamed up with the central banks of Sweden, Canada, the United Kingdom, and the Swiss to prevent the risk of such private rivalry for their currencies, and set up a working group with the Bank for International Settlements. It aims to explore the criteria for digital central bank money and its optimal architecture.

There is still no date for the launch of digital state currency. The e-euro is not anticipated until 2025. But clearly, nobody questions the future of virtual currencies as an integral aspect of payment and the financial system.

Advantages and disadvantages of cryptocurrencies/Bitcoin



There are main advantages of Bitcoin or cryptocurrency as you may call it and they are as follows:
  • Limited numbers contribute to a significant boost in value
  • Anonymity
  • Decentralized currency
  • In the past very high profits within a short period of time
  • Decentralized structure means independence from the financial market crisis

Disadvantages of cryptocurrencies/Bitcoin



Anything that has an advantage has disadvantages and bitcoin is not different in that respect.
  • Very risky item of speculation
  • Not an actual currency
  • No tender legal
  • Low acceptance so far
  • Digital coins private generation
  • Software requires improvement
  • Trust is a challenging relationship.
  • High degree of turbulence
  • Financial supervision is not in place.
  • Threat of hacking attack

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