Hmm. Interesting responses there.
My main interest was in how to use Bitcoin as a medium of exchange - the criteria for which I saw as being:
- (a) the Bitcoin price stablilises sufficiently for it to act as a safe (i.e., secure and risk-free) medium of exchange.
- (b) Bitcoin transactions can be easily and reliably executed through the existing Payments System.
And I added that:
Looks like neither condition is likely to occur in the near future, judging by this thoughtful post on Bitcoins from the economist Gary North: ..."Bitcoins and the IRS: Walmart's Problem" ...
I could be wrong, of course, but I considered that what he was writing about could convey several implicit and valid points:
- BCs (Bitcoins) are effectively a kind of foreign currency at the POS (Point-Of-Sale) for retail outlets (the QuickBooks article also refers to this).
- Retail POS terminals/systems are usually only geared up to operate in a single standard national currency (in the US).
- BCs are not a stable currency, due to their fluctuating BC-US$ price, which is presumably fluctuating due to intense speculation in a dynamically changing market.
- BCs in any event have the potential (at least currently) for escaping any form of local/federal Retail Sales Tax or VAT (Value-Added Tax) at the POS - the IRS would presumably object to that.
- The need to establish the forex (foreign exchange rate) value of the "foreign" BC currency in the local currency (US$) at the POS and at that instant of sale (which is what the BC engine is presumably doing somewhere at that point), would probably be impossible with current Payment Systems technology, as it would necessitate having access to a real-time national database of worldwide BC-to-US$ prices. This seems like it could be a bit of a stumbling-block.
- In any event, large retailers (such as Walmart, for example) do not currently have the necessary software which, on scanning the barcode of the sale item at the checkout and getting the US$ price, could then look up such a real-time forex database (assuming that it existed and was nationally accessible in real-time in the first place).
I did not quite see why North was so hard on the Jason M. Tyra QuickBooks + BCs
article, unless it was maybe that Tyra seemed to be only recommending how SMEs (Small-To-Medium Enterprises) could account in QuickBooks for using BCs for Sales/Purchases, which approach would not be able to contribute overmuch for expanding the use of BCs and certainly couldn't be scaled up for use in large retailers such as Walmart. This approach would be akin to fussing over how to twist and spin wool into yarn by hand, when you actually need to automate the whole thing by using the Mule and the Spinning Jenny.
As far as I could see, Tyra offered what seemed to be a perfectly reasonable workaround (i.e., creating notional Sales or Purchases invoices) to the inherent constraints of not having the forex for a BC "cash" payment, which could then pass through the books as a legitimate double-entry. Though he does not use that term ("double-entry"), he does warn of the adverse consequences of effectively letting the BC transaction remain as an incomplete single entry transaction in the books.
Two other thoughts occurred to me:
- I couldn't quite see where the $value of the "foreign currency" BC transactions would best be be classified as part of the domestic money supply. This would presumably be relevant and necessary for federal econometric modelling, and for balancing the National Accounts.
- If (say) the BC transactions were not treated as a "cash" transaction, then they would presumably need to be tied to a notional "bank" entity in the national GSS (the federal Gross Settlement System) to offset the balances On Them and On US within (say) a 24-hour period, so as to establish the true/accurate levels of interbank indebtedness necessary for monitoring federally-ordained debt-equity ratios.
Added up, there would seem to be several factors here which could delay/frustrate the adoption of BC as a generally legitimate and useful currency within a nation state or between nation states. The difficulty would seem to be in enabling BCs to somehow flow through and be monitored as part of the existing tightly regulated and controlled Payment System(s), GSS (for interbank settlement) and SWIFT (forex) settlement systems. I would not expect the Establishment to be in any hurry to sort the mess out. I mean, why should they assist the development of a new, competitive foreign currency and supply of money - which threatens to compete with or undermine the federally-mandated
national currency status quo
- and which they don't currently control to boot?
Some people (not me, you understand) might say that it is likely to be - and may well be already being - blocked at every turn, but I couldn't possibly comment.