Crypto Crypto News 2021

hi, thanks for the encouraging news. Do you have to pay tax for the 100K you cashed out? How to work out the tax payable for bitcoin? I have invested in Bitcoin, but bit nervous as it goes up and down and also worried that I may have to pay all the profits to tax man if I cash out too soon? thanks

 

@Onyx_OCAU and @chylld , that's great to hear.
I'm trying to understand how this works with regards to the AUD or currencies in general. Reserve bank gives the banks a mandate too create money out of thin air (mortgage creation...).

What i don't get is that say that 100K you cashed out , the equivalent of that bitcoin, who mandated the creation of that? Where does it's value come from? The market?

 

Bitcoin or any other crypto currency is treated as an asset from a tax perspective, so the regular capital gain/loss rules apply. So if I paid AU$20k for Bitcoin, it went up, I sold it for $100k, that's an $80k capital gain and the tax would be calculated on that. 12 month CGT discount is also applicable.

To exchange my bitcoin (or other crypto) for AUD, I transferred it to an Australian crypto exchange (BTC Markets in my case), and sold it on an active market. I basically traded my crypto for someone else's AUD (I was selling, they were buying)

 

When you buy bitcoin, you get a 32 letter hexadecimal string that's unique to you that says you own that portion of the blockchain. Think of it kind of like property on the moon. It is known and agreed upon by all stakeholders that a certain patch of land on the moon then belongs to you - but nobody including yourself could actually go there and touch it or otherwise make use of it - because humankind hasn't quite mastered commercially viable space travel yet... so trading bitcoin is analogous to buying and selling pieces of land on the moon with other moon property people. And because there is a finite amount of land on the moon, this in theory limits the total available supply and hence props up the price.

 

But can't other types of cryptocurrency be created, thus reducing the demand for Bitcoin?

 

I don’t ever trade but what I’ve often thought about

Of course, but that’s similar to not investing in Amazon or Apple it’s very hard to compete with something which is established with a proven track record and network effects. Bitcoins creation can’t be replicated now. It’s creation was fair in that anyone was welcome to mine on their computer to mint bitcoin. It had little to no value for the first few years allowing it further freely distribute. It now has a proven track record and has continued to strength for the past 12 years and is now the most secure network in the world. All this makes it hard to have anything ever take its place

 

Yeah - they're called "**** coins"

Over 4,000 coins have been created but Bitcoin still has the first mover advantage, the "brand recognition", and it's universally accepted by all in crypto as being worth something. Every other coin has a portion of the community that thinks its worth nothing. Also there's a huge number of people that have never touched crypto yet - and when they finally do touch crypto, it's 99% of the time going to be Bitcoin first because they've heard of it and it's the easiest to buy.

You'd think bitcoins dominance of market cap would've decreased as more coins get created, and it did at first. However since 2017 it's grown from 35% to 60% of all money in crypto. It peaked up to 74% over Christmas.

Look into the "network effect", it's how facebook took off and nobody could compete with them. Once a peer to peer network grows in users past a certain point, it becomes unstoppable because others have to use the same network to connect with existing participants. While some of us refuse to join facebook and try to share google photos instead, we are the minority. Other coins (Litecoin, Dogecoin, Bitcoin Trash) try to share their superior features but are mostly ignored except for their small zealous community.

Understanding the Network Effect

 

Well there's some credibility being the first but remember looksmart, altavista and Yahoo. All top of the heap till google showed up and trumped them all. Never say never.

 

The concept of being "the first" assumes that they are all competing in the same space. I'd argue they are not; Bitcoin is primarily seen as a store of value, whilst most other coins are aiming to provide utility.

 

Bitcoin is primarily seen as a store of value by it's proponents after it failed at providing utility

 

Yeah those others that were first were trumped very early on, Google has been the leader for years.
Microsoft beat Apple very early on (for personal computer operating systems/software).
Ethereum is better than Bitcoin in alot of ways, and is complimentary because it does different things; But it arrived too late to trump Bitcoin. I'm sure things are going to change alot over the coming years, the tech is moving very fast now.

 

I see what you did there - nice touch!

 

Announcing General Availability of Ethereum on Amazon Managed Blockchain

 

They normally hold off selling until a boom, they have to have market gains to actually make money (except for ETH miners that make loads of fees ).

Interesting they stopped selling when the price is still good, maybe they've sold enough to finance the next 12 months of mining... or maybe they're waiting for $75k+ bitcoin price. Or both

 

EIP-1559 approved for Ethereum and planned for the London hard fork in July.
Game changer with the fee burn

 

https://twitter.com/coincornerdanny/status/1369587940444303360?s=21

Not exactly news but some perspective

 

When is people’s 100k AUD prediction?
I’m fairly confident it will hit it by end of April but likely sooner.

 

Looking forward to July.

In the meantime, I've been using Solana blockchain (an Eth competitor backed by the FTX founder Sam Bankman-Fried).
There's a swap/liquidity platform on Solana called Raydium - Raydium
The fees are tiny and its extremely fast, so I've been enjoying putting liquidity in and harvesting daily. Just $20k lets me harvest over $100 per day at the moment. If you want to give it a try, it uses the Solana wallet called sollet.io, you need SOL to pay fees, and RAY to farm. Can get RAY and SOL tokens on FTX exchange.

Because of the speed and integration with FTX, the whole harvest & sell to USD process takes me only about 5-10 minutes a day. Surprised this is still so under the radar it's way more functional than Cardano or any of the other "eth killers" are right now.

Most things that Sam backs tend to turn to gold, and I've just seen a proposal on SUSHI to migrate onto Solana as another onramp with incentives. Even so, I'm selling my earnings rather than re-investing because theres inflation of supply for RAY token over the next 5years it will eventually grow to 555m tokens. SOL token looks alot better to hold than RAY, although RAY is needed to earn for now.