> Of fucking course [gold, silver, copper, and greenbacks work pretty well as currencies] - the government taxes exchanges on them at unreasonably high rates (gold has a 28% long term capital gains tax, vs the normal 15-20%.)
Gold, silver, and copper have worked pretty well as currencies for 2700 years under a variety of taxation schemes, of which by far the most common was "no taxation", which I believe is the case here. Exchanges of greenbacks are not taxed at unreasonably high rates anywhere I know of. Moreover, it isn't clear how taxing the exchange of capital gains on certain commodities at an unreasonably high rate would help it function as a currency; perhaps you mean that it stabilizes their value? But the value of the metals we're talking about is primarily determined by the world market.
It is of course correct that some governments will refuse to referee disputes without imposing what you describe as "unreasonably high" taxes. Historically, though, many governments have successfully resolved disputes without imposing confiscatory taxes or demanding far-reaching extrajudicial powers against people outside their jurisdiction, and we have every reason to believe that such governments will continue to exist, even if you don't have the luck of having one yourself.
You can always emigrate, you know. But possibly not if you need your government's permission to take your savings with you.
I agree with you about the risks of fraud and the dismaying ubiquity of pump-and-dump scams, and I agree that if you do not hold your bitcoins yourself they are just as vulnerable as if you left them in a bank—a lesson missed by most current "crypto advocates," who keep their coins in their Binance accounts. I am sorry to hear about your loss to the MtGox theft.
Unless you can find a contractor who will remodel your bathroom for gold (or god help them, bitcoin), or a food vendor who will take gold instead of your local currency (at an equivalent rate) then when you actually need goods and services, you convert to a local currency, which is taxed.
In exchange for that taxation, you can write a contract that says "I will give you X gold for Y dollars" and expect the government to back that contract. It will provide legal avenues for you to use the services they have available to recoup funds in the event of fraud (up to and including physical force and imprisonment, which almost all governments keep a tight monopoly on). They tax you because providing those services incurs a cost, and they need a way to continue offering them. Historically, you could make exchanges in those assets, but there was often zero governmental protection for doing so (sometimes things considered morally harmful were punished by the government, such as theft, but they certainly wouldn't agree to do things like enforce contract disputes for free - at best you get a legal wager [see: https://en.wikipedia.org/wiki/Compurgation] where you both pay up front to be heard. At other times courts were reserved to disputes above a certain value, or lower classes were prohibited from making a legally valid contract in the first place, precisely because enforcement was expensive)
If bitcoin makes that taxation impossible (or even unreasonably difficult), and it's possible to freely trade without recourse (no freezing, no transaction reversal, no monetary control at all) two options are present:
1) Stop resolving disputes for bitcoin (ex: China).
2) Add taxation, while adding back forms of control to make the costs reasonable and predictable, to match taxes.
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Long point short - Sure, 2700 years ago you could trade shiny metal for things without taxes, but it was "at your own risk", under a governmental structure that had more leeway for you enforcing it yourself (no prohibition or monopoly on violence and imprisonment). Those are not the conditions we find ourselves in today.
> Unless you can find a contractor who will remodel your bathroom for gold (or god help them, bitcoin), or a food vendor who will take gold instead of your local currency (at an equivalent rate) then when you actually need goods and services, you convert to a local currency, which is taxed.
I'm not sure if you've spent any time hanging around in the world of illegal immigrants, but in my family's circles, there _are_ contractors that are loose family friends of ours who _do_ take gold in order to perform services. Often the gold is repurposed into jewellery or otherwise sold to other immigrant-owned businesses. Eventually someone in the immigrant network can wash the gold clean. Members of our extended family fled civil war by holding jewellery on their person , and there are stories of others who melted their jewellery down and travelled with it, and used these to fund their lives in Western nations they emigrated to. Now that my family's country has politically stabilized this is a lot rarer and as such I don't know, at least in our extended network, anyone who still washes gold clean.
Sure - and this is where there is marginal use for value stores like this, but two thoughts
1. You are dealing with "family friends" who have a clear social connection (and reputation!), helping to mitigate the risk that they simply run off - not the case for sending digital coins to a person you've never met.
2. You are in a situation where you're choosing to avoid government enforcement because of legality issues (in this case, immigration status). This is also why bitcoin worked for dark markets - No one cared that the government wasn't going to enforce your bitcoin transaction, because that lack of enforcement was already a given based on the goods being traded (illegal/black market items)
In both of these cases - basically any asset can fill that role. Shiny metal, food, expensive clothing, jewelry, guns, drugs etc. Bitcoin is appealing for basically one reason alone - it weighs nothing (and as a side effect, can be digitally transferred). Since usually the limiting factor in barter is literally how much weight in goods you can drag away.
The problem, and this is genuinely where I become annoyed, is that the speculation the above poster is so happy about actually degrades the usefulness of bitcoin in this space. No one wants to hold an asset that might lose 25% of its value over night, and no one wants to spend a currency that might gain 25% of its value over night either. This run of "get rich quick" fools and "pump and dump" fan boys have been a plague on the usefulness of digital coins since people realized bitcoin shot up in price any time the media mentioned it, way back in 2012. Then they harp on and on about how digital coins are the next finance, without understanding the current system, because their incentives aren't aligned with actually using the thing as a currency, they're entirely aligned with getting more suckers on board in their speculation scam.
So yes - if you're in the (very small) minority of folks who either won't or can't use governmental recourse anyways - there was at one point in time some usefulness for bitcoin. But unless you're planning on buying drugs or guns online, my current advice is to stick with gold.
Gold, silver, and copper have worked pretty well as currencies for 2700 years under a variety of taxation schemes, of which by far the most common was "no taxation", which I believe is the case here. Exchanges of greenbacks are not taxed at unreasonably high rates anywhere I know of. Moreover, it isn't clear how taxing the exchange of capital gains on certain commodities at an unreasonably high rate would help it function as a currency; perhaps you mean that it stabilizes their value? But the value of the metals we're talking about is primarily determined by the world market.
It is of course correct that some governments will refuse to referee disputes without imposing what you describe as "unreasonably high" taxes. Historically, though, many governments have successfully resolved disputes without imposing confiscatory taxes or demanding far-reaching extrajudicial powers against people outside their jurisdiction, and we have every reason to believe that such governments will continue to exist, even if you don't have the luck of having one yourself.
You can always emigrate, you know. But possibly not if you need your government's permission to take your savings with you.
I agree with you about the risks of fraud and the dismaying ubiquity of pump-and-dump scams, and I agree that if you do not hold your bitcoins yourself they are just as vulnerable as if you left them in a bank—a lesson missed by most current "crypto advocates," who keep their coins in their Binance accounts. I am sorry to hear about your loss to the MtGox theft.