The Senate recently approved a $ 1 trillion infrastructure bill that has gone to the House of Representatives. It is hoped that in consideration, legislators will amend a clause that sets new tax reporting requirements for the cryptocurrency industry.
In particular, the law will require cryptocurrency “brokers” to disclose the names and addresses of their clients. By a vague description of a crypto broker, the authors of the bill mean not only the brokers themselves, but also cryptominers, software developers and many others. These types of companies do not track who owns Bitcoin, Ether, or other cryptocurrencies they may have mined. In fact, this would be impossible.
This law is a prime example of what happens when lawmakers try to regulate what they do not fully understand.
After the senator from Texas came forward with the defense of the amendment, which involves the exclusion of all provisions related to cryptocurrencies from the bill, Ted Cruz shared his opinion with the Reddit audience.
Not all senators truly understand how cryptocurrency works, and yet lawmakers are ready to wipe this new, fast-growing industry off the face of the earth. This will destroy billions of dollars and move countless jobs overseas.
Not all of Cruise’s words and methods are approved, but here he is 100% right. Perhaps his words will be able to convince members of the House to amend the wording of the bill or completely exclude them.
However, most of the leaders in the crypto industry are likely to accept some level of regulation if it is reasonable and well-structured.
Bitcoin and Gold are both money
Of course, it’s not just lawmakers who don’t fully understand Bitcoin. Many people regularly wonder how cryptocurrency differs from gold. Below are six reasons why bitcoin and gold can be considered money. But if gold is traded on the background of fear, then bitcoin is traded on the basis of greed.
Ideally, money should withstand basic wear and tear, which is one of the main reasons why many currencies have historically been made from metal, shells, and other durable materials. Why is gold among the 118 elements the best candidate for use as money? It is chemically inert, that is, it does not rust or tarnish. It can be bent, broken and melted, but almost impossible to destroy.
Since people began mining for gold 5000-7000 years ago, about 200,000 tons have been extracted from the earth’s interior, and almost all of them still exist in one form or another.
Bitcoin can also be called a solid asset that can stand the test of time. BTC only exists in the digital space, in a highly encrypted, decentralized peer-to-peer network.
For money to be a convenient medium of exchange, it must be portable. This is why land, despite its value and longevity, cannot be considered money.
Of course, not every form of gold is portable. For example, a gold bar weighs about 27.5 pounds, so it is impractical to carry it around when shopping. However, gold coins can be carried in a pocket or purse. Not so long ago, US banknotes, which fit easily into a wallet, were fully backed by this precious metal.
Bitcoin is extremely portable because it has no physical form. If you have a smartphone with internet access, you can carry any number of bitcoins with you.
Money must have a different denomination; otherwise, you throw them away if you cannot pay a certain amount. Due to its softness and ductility, gold easily divides into smaller constituents, including 1/2, 1/4, 1/10, and even 1/20 ounce.
At the time of writing, one bitcoin is valued at approximately $ 46,000. Fortunately for those who cannot shell out that amount at once, BTC can be bought in fractional parts. What’s more, a growing number of companies that accept bitcoin as a form of payment are able to issue change.
Gold provides a reliable level of uniformity. Regardless of the mint you bought a one ounce gold coin from, it should have roughly the same value in markets around the world.
Perhaps in the future, traders will be interested in paying a premium for bitcoins that were mined using only clean energy, or for newly mined bitcoins that were not used to launder money or finance illegal activities.
But at the moment, one bitcoin is equal to one bitcoin.
Gold is attractive as money because its supply is limited. In fact, we could well have reached the peak of precious metal mining. Meanwhile, central banks continue to print banknotes at an incredible rate, fueling inflation that is currently above average.
As with gold, bitcoin has a limited supply of only 21 million coins. Moreover, after every 210,000 blocks are mined, the bitcoin reward is halved.
Assets can hardly be called money unless everyone agrees that they have value. Using this criterion, gold is undoubtedly money. Almost every central bank in the world holds gold in its reserves, and some countries use these reserves to pay off their debts.
Of course, not all central banks are willing to accept Bitcoin, and as of today, only one country, El Salvador, uses it as legal tender. Interestingly, this is one more country than those using gold as legal tender. Also, bitcoin can be sent anywhere in the world and it will still have value.