Wow. Read half this thread and had to make an account to reply. Love the deep philosophy tied to economics and crypto.
Imo, I don't care about crypto being crypto, or about paying taxes. In fact, I prefer to pay taxes like income, and for the government to be able to track it, that way banks can more easily incorporate digital asset holdings which will increase the power of bitcoin and therefore the innovation bitcoin provides.
That being said, I suppose it means I agree that you have to go "through the state first."
Abolishing the state? I don't have that visionary capacity, however, certainly taking a step towards a utopia where there are less middle men, lowers the wealth gap therefore. Furthermore, technology is ultimately what will one day lead us to renewable energy sources, genomics which can help us understand anxiety and depression better, and oh yeah. Space travel :) So using the state to prop up bitcoin sounds like the much more efficient idea. The term "crypto" in itself is a slap in the face, therefore, imo. We want to take a step towards limiting the states power, but not so much of a step to arise heavy social movements against bitcoin via state supported propaganda.
That being said, I loved the example of saying that I am not liable for knowing who held my cash before I did when going to a bank ATM. The bank, however, is required to verify incoming funds are not tied to illegal activities. That being said, the bank only has to verify the identify of the person sending funds to them directly, not investigate where the funds came prior. They then work with the IRS, simply to report any sums coming in over a certain dollar amount, and perhaps any funds that fail some sort of security verification tied to hacking.
I read that identify verification of bitcoin users can be time consuming, so I have tried to find out which software would allow banks to easily track an identity. It could, come to pass that exchanges that do not disclose identities of funds when transferring funds, will not be able to interact with banks in the future, and/or, they will not be allowed to operate in the US at all.
I would be more than fine with that. I am all for the protection of privacy in many areas, but I still believe in paying taxes, and so I don't expect privacy on the movements of my assets when they are tied to income. Now if I send 1M to someone. To me, it becomes the liability of the person receiving that amount and/or their exchange or bank to report it, not me, as I'm not the one making income. Now if I report it as a loss to avoid taxes, then yes, I would expect less privacy in that case.
Now, when I buy from an exchange and bits come from everywhere, that makes the exchange liable not me, and yes they should have an accessible list of identities for any subpoenas looking for crime, however, without a crime, they should only have to actually report large amounts transferring from person to person, or report income made from selling an asset. That list would make it easy, if the IRS was investigating someone, to compare that number to a person's reported income. It should not be that difficult really, but trying to avoid it? That seems like a good way for exchanges to get investigated or barred from activity.
Even still, some exchanges will comply, and investors can simply shift to them, or they can go to non US exchanges, but if they ever bring that money back into the US, then it would be reported over a certain dollar amount by that receiving exchange etc.. etc...
So I don't really see a complex issue really, unless no exchange is operating in a way that would comply with normal income reporting tax code. I'd like to know which exchange is or is not.
As far as feudalism and market makers who benefit more than "the common people." Ultimately that comes down to the ability to prosper, thrive, find freedom, life liberty and the pursuit of happiness. Having more control and more money, like jeff bezos, isn't going to yield enough happiness to say that is a worthy end goal, because it still falls short on several accounts: Spiral Dynamic Theory, Maslow's Heirarchy, and perhaps Map of Consciousness theory. A person benefiting more than the social environment around them, creates alienation and creates existential angst.
Therefore, what bitcoin is to me... is the promise of expanded innovation. If the whole world can communicate better through fair global trade through blockchain, and advanced circuitry leads us one day to clean, renewable energy, the entire base line of global culture will rise, and everyone ends up benefiting equally.
Having more money than someone else, ultimately is a minimal factor in comparison to the whole ecosystem improving, and that is what I believe bitcoin is bringing.
So yeah. Crypto due to untrust of state. I get it, and I agree, but sometimes innovation is more about learning how we can all work together, and that ultimately is what decentralization is supposed to do.
We just have to pay our taxes in the mean time, bc learning to decentralize, does not mean we will have the millions of advancements needed to tie in to that decentralization to effectively roll out a new culture. It may take 100 years...
Like when we went into Iraq. Great idea to take out a dictator, but how to do reconstruction and build a new culture? Woops. NO IDEA.
An initial great idea needs a long time to develop to truly understand its applications, and it seems much more beneficial to get the state behind bitcoin than to buck the system.
But if for example I have to pay a higher short term gains rate than I do other income? Then I would not be happy.
Oh, and the market makers, the nodes, have incentive to operate, so capitalism is built into the code. Decentralization combined with capitalism, seemed to be the right call for our current state in evolution per spiral dynamic theory.