Cryptocurrency: Fad or Forever?
As a CPA who works closely with tech entrepreneurs, I get asked my opinion on whether or not cryptocurrency is a fad on a regular basis. My answer has always been pretty consistent. In my opinion, there is nothing I can say to prove to you otherwise until one of these three cryptocurrency game changers occurs.
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It becomes so easy my mom could use it.
First of all, Patty May is a brilliant woman (love you mom), so this is not a slight on my mom. But at this point, cryptocurrency is not accessible to the general public. In fact, most people have never interacted with cryptocurrency in any form. Have you ever tried to set up a crypto hardware wallet? Have you looked at all the crypto exchanges and tried to figure out why they are offering the same cryptocurrency at different prices? How do you lose $300 million? Making cryptocurrency user friendly is a complicated problem because it is part consumer education, part trust, part no one is big enough in the space yet, part speculators run rampant in the asset class.
I never said it would be easy, but when mom can use it and thinks of it like opening a bank account, then game changer #1 is upon us.
A nation state issues a cryptocurrency.
At this point, the United State’s IRS does not consider cryptocurrency a true currency. In fact, according to the US government, cryptocurrency is considered property. So the IRS treats bitcoin the same as buying a share of your favorite stock on the stock market – capital gains issues and all. This has created a tax nightmare for companies who are front runners in the space. Nothing hurts a progressive space like dealing with honorous regulations.
But there are a few governments getting on board. Which countries are leading the pack?
Dark horses with nothing to lose (Countries with consistent hyperinflation) – South Sudan, Ukraine, Venezuela – what do they have to lose from betting on cryptocurrency?
This is the closest of the three game changers to becoming reality. Once that domino falls, it is your move IRS.
A Fortune 100 company issues a cryptocurrency.
Before we get into my crazy theories, take a look at the list I’ve put together below and ask yourself how people’s perceptions of cryptocurrency would change with just one of these eight companies began issuing a cryptocurrency.
#2 Berkshire Hathaway
#27 Alphabet aka Google
#78 Goldman Sachs
Ok so Warren Buffett is a crap shoot, but, if he is in, he’d bring everyone onboard with him.The example I go back to is always Amazon. I can actually imagine a world where Jeff Bezos offers a billion dollars (or more) worth of Amazon coin to the masses. At first you could use the currency to buy Amazon products, but imagine a world where you HAVE to use Amazon coin to buy products on Amazon. If you take it a step further, items could could be priced in Amazon coin. I’m sure some economist somewhere is drooling on how to model ways an Amazon coin might affect the US dollar and other traditional currencies.
So you can think it is a fad for now if you’d like, but how far fetched are these game changers, really?
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