[ExI] Mathematical Help with Bitcoin historical curve future projection? (was re: Long Term Bitcoin Catastrophe)

spike spike at rainier66.com
Mon Jun 24 19:37:36 UTC 2013

-----Original Message-----
From: extropy-chat-bounces at lists.extropy.org
[mailto:extropy-chat-bounces at lists.extropy.org] On Behalf Of Mirco Romanato
>>> ...I would suggest you use the word "spike"
>> ...--------MIRCO------> NO MICRO
>>... Why spike?

>...Because a "spike" is a raising of the value falling immediately


OK so it's nothing personal, just a different spike.


(Mirco the original question wasn't entirely serious.  {8-]  )

Ps  What is serious to me is the California government's attitude towards
Bitcoin.  They are acting as though they feel very threatened by the whole
concept.  Note that California has its own income tax and is heavily
dependent on that for its current revenue structure.  California and the US
government will be watching with an electron microscope any technology that
might allow a prole to sidestep that tax structure.  We saw this in the dot
com bubble of the 1990s: plenty of local companies were starting up and
paying its employees in stock options plus some nominal stipend which was
only enough to pay the rent on some micro-apartment and not even enough to
pay for groceries.  The startups themselves would often supply all the free
food on site the proles wanted to devour.  Consequence: there were a number
of young, single, talented, optimistic and idealistic employees who would
eat three squares a day at the office, go home only to sleep, spend the rest
of the time coding their brains out.  If the product succeeded, the stock
options were worth a fortune, otherwise nothing.

Of course most of the internet fly-by-nights in the 1990s failed.  The
governments, both the fed and California, wanted to collect income tax not
on the pittance the companies actually paid but on the theoretical market
value of the stock options when they were issued.  The tax bill in the
latter case often was an order of magnitude higher than the prole had paid,
leading to plenty of young programmers forced into bankruptcy by the tax
man, wanting more money than they actually earned.  In some cases,
principals in these companies would attempt to sell their many stock options
to pay the tax man.  The principals selling their own stock options
indicated that these principals had lost confidence their own product would
succeed in the market, resulting in the stock value to plummet and any
options not already underwater to become worthless.  Of course the tax man,
both of them, still wanted their money based on the market value of the
options when they were issued.

This may sound like an exaggeration, but it isn't.  I have a young friend
who in 1996 was paid 24k and the rest of his 200k salary was paid in
options.  The above scenario played out, his 200k$ in options became
valueless, he ended up with income tax bills totaling over 60k in a year in
which he only earned 24k, most of which went for apartment rental.  He and
all his colleagues practically lived in that office, but all went bust from
being paid in toxic assets.  All left town, none of them stayed, none
returned, I miss them all.  I don't know if that tax law was ever modified.
Perhaps someone here knows.

What happens if these companies pay their employees in bitcoin?
Subsequently the employees claim the only income that really counts is the
amount shown in dollars that goes to the bank.  It will be round two of that
situation where the tax man claims this company-issued scrip is taxable
income.  The tax man gets to choose the value of the bitcoin: whether it is
the value at the time of issuance, or value now.  Likely it will choose
whichever is most advantageous to the tax man.  Then a new generation of
idealistic young workers could be victimized by being paid in toxic assets.


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