US tax policy blocks crypto payments from taking off

Today, in the US, crypto coins are seen as property by the IRS. Therefore, according to policy, if you want today to pay for your coffee with 0.00075 Bitcoins worth about $5 dollars, you also must pay tax on these 0.00075 Bitcoin you just spent.

Tax details

What tax? Here is a rough way on what this tax is. You have to calculate at what USD/BTC price you purchased these 0.00075 Bitcoins, lets say $250 per Bitcoin. You have to look at what USD price you sold these bitcoins, lets say today at $6600. Then you have to look up your tax rate, lets say 30%. Therefore in addition of paying for your coffee with 0.000075 BTC you also have to write a check to the IRS for 0.00075*(6600–250)*0.30=$1.42

Read more

Solving volatility to drive mass crypto-payments adoption – Central Bank of Crypto and Crypto Dollar

In my eyes volatility is what is preventing crypto currencies from being more used for payments in online commerce.

I believe that crypto currencies are much better adapted than credit cards for online payments (faster, cheaper, non-reversible, simpler, etc). And yet crypto currencies are hardly used at all:

Preferred methods for online payments
Preferred method for online payments ( from here, chart made in 2016)

BTC is 300x more volatile than EUR

I strongly believe that lack of adoption is due to the crypto’s volatility. Merchants have costs in fiat currency (USD for example). Having a BTC price for their product that changes by 30% a week is not manageable and provides poor customer experience. Imagine if you wanted to buy a car and the price was today 10 BTC and tomorrow 13 BTC and day after 7 BTC while the normal consumers haggles over $200 for the price of the a $40,000 car and needs hours/days to make the payment. This is not manageable.

Read more