Looking back on the last 3 to 4 months makes it clear that there is a lot going on in the cryptocurrency space right now. If trading on platforms like Bitcoin and Litecoin were exclusively about using digital tokens to play slots, we wouldn't have much to talk about. But there is a lot more going on with crypto than just Bitcoin gambling.
Like any other monetary system, cryptocurrency has its ups and downs. Within the same online news source, you can find articles proclaiming that Bitcoin is the future of world economics and opposite stories predicting its eventual demise. It is a strange experience for anyone heavily involved in cryptocurrencies.
So, where are we? What is the current state of cryptocurrency in all of its forms? A series of four new stories found on the Bitcoin.com website give us a glimpse and a fairly good idea of what's happening in the crypto arena.
1. Venezuelans loving their crypto
We have mentioned several times in the past how Venezuela has become the first country to adopt an official state-backed digital currency. There have been some questions about the legitimacy of that cryptocurrency on the world stage, but that has not stopped local Venezuelans from getting in on the action. According to Bitcoin.com, Venezuelan traders have set a new trading record on Localbitcoins.com.
Data shows that during the week ending February 2, 2019, Venezuelans traded the equivalent of 17.3 billion bolivar in BTC. More impressive is the fact that they did so on the heels of new regulations just announced by the Venezuelan government. As we wrote in an earlier post, government regulators recently published a consent decree consisting of 63 articles that lay out exactly how cryptocurrency assets, trading, and mining will occur in Venezuela.
Whether or not Venezuela's state-backed coin ever takes off, the heavy trading in that country clearly demonstrates that citizens want access to cryptocurrencies. They are buying and selling bitcoins among themselves through local exchanges. They are using those coins as a payment system, and they are not allowing regulatory worries to dampen their enthusiasm.
Will the enthusiasm persist once the rules set out in the new consent decree start being enforced? Only time will tell. Until then, however, Venezuelans will likely continue to show BTC a lot of love.
2. Tax software now includes crypto
In the U.S., early February through mid-April is tax season. A lot of Americans prepare and pay their taxes using software on their computers or mobile devices. One of the most popular software packages they use is called TurboTax. Well, guess what? The makers of TurboTax have let it be known that the software now includes support for cryptocurrency assets.
Cryptocurrencies are considered securities in the U.S. That means they are similar to stocks, bonds, etc. for tax purposes. Any money earned as a direct result of trading in cryptocurrencies is taxed as capital gains and must be reported on the taxpayer's individual federal tax return.
Up until now, investors choosing to use TurboTax would have to manually enter cryptocurrency data into the software and try to correctly fill out a number of schedules pertaining to it. That is no longer the case. They can now directly import the data into the software through partnership with Coins Tax, a company that helps traders figure out their taxes relating to crypto assets.
What does this mean to taxpayers? It means an easier and more streamlined way to account for their crypto assets at tax time. It means fewer errors, more accurate tax forms, and better reporting of capital gains. It also means that those taxpayers electing to do their taxes online have one less stream of paperwork to keep track of.
Making it all work does require traders to use both Bitcoin Taxes and one of the exchanges they support. The idea is to transfer data from supported exchanges to Bitcoin Taxes, workout tax calculations there, and then import that data into TurboTax.
3. Brazilian movie theater now accepts crypto
Down in Brazil, Cine Multi has become the first cinema in that country to begin accepting cryptocurrency at their ticket windows. The company has partnered with Bancryp to begin accepting crypto payments at one of their theaters in Santa Catarina's capital of Florianopolis. As a side note, Bancryp is an organization that specializes in providing point-of-sale (POS) terminals to retailers looking to accept cryptocurrencies.
Bancryp's services already reach millions of crypto users in Brazil, according to Bitcoin.com. Allowing them to pay for movie tickets with their favorite digital coins just adds yet another piece to the puzzle. It adds legitimacy to the use of cryptocurrency as a payment system and a means of facilitating economic exchange between buyers and sellers.
4. Indian government fearful of cryptocurrency
The fourth and final news story seems to have a negative tone to it, but it is actually quite positive. As reported by Bitcoin.com's Kevin Helms, the Indian government is reportedly fearful of cryptocurrencies and their alleged ability to undermine the country's fiat. They are so worried that a government committee has been formed to create a regulatory framework they hope will prevent crypto from undermining the rupee.
At issue is whether or not Indian citizens should be allowed to use digital currencies to make payments for daily essentials. According to the committee, there is genuine concern among government leaders that widespread use of cryptocurrencies will destabilize the rupee and possibly undermine it altogether.
The committee is in the final stages of issuing an official report to parliament, a report that lays out their finding and recommendations. Things between the committee and members of parliament have apparently not been going as well as had been anticipated,
"The overall impact on the financial ecosystem that it is likely to have is still unclear and it has been a challenge to convince them on this particular point," said committee chair and Secretary of the Department of Economic Affairs Subhash Chandra Garg.
India's Ministry of Finance has said there is no timetable in place for establishing regulations based on the committee's findings. The ministry has told parliament that it is best to proceed with caution.
Cryptocurrency is no threat to us (but central banks don't agree)
It is worth noting that the global Financial Stability Board (FSB) issued a report late in 2018 showing that cryptocurrencies are no threat to either fiat currencies or national economies. According to the FSB, "crypto assets do not pose a material risk to global financial stability at this time." The FSB still recommends monitoring the global economic landscape in relation to crypto, though.
In short, there is no evidence suggesting that widespread use of cryptocurrencies destabilizes either fiat currencies or national and regional economies. If anything, they are a boost to economic activity. They give access to products and services that are sometimes out of reach due to limited fiat payment systems.
The idea that something like bitcoins could undermine fiat currency is reasonable if you assume that digital coins come from nowhere. But they don't. The only two ways to get digital coins into circulation is through mining and purchase. And because mining requires actual transactions taking place to support it, you are ultimately left with purchasing coins. Purchases are made with fiat currency.
What it all means
With the four news stories now behind us, let us talk about what it all means in relation to the current state of cryptocurrency. From the standpoint of government, cryptocurrencies have enough strength within the global economic arena that regulators are beginning to sit up and take notice. Venezuela's recent consent decree was not something that was developed overnight. Regulators had been working on it for some time.
Likewise, regulators in India now recognize that cryptocurrencies could very well become the default payment system at some point in the future. Their counterparts in other countries are quickly reaching the same conclusion. From one end of the earth to the other, it is becoming apparent that cryptocurrencies are here to stay.
From the perspective of merchants and their customers, cryptocurrencies represent yet another way to make payments conveniently. Merchants like Cine Multi wouldn't even think about accepting bitcoins if they didn't believe there was a market for doing so. The fact that they are now selling movie tickets in exchange for digital tokens clearly shows they believe in both the strength and value of those tokens.
Lastly, the idea of tax preparation software including cryptocurrency support proves that digital currencies are still desirable among investors. As long as investors keep putting money into crypto platforms, they will be supporting those platforms along with further development of blockchain. That is a sign of better things to come in the future.
It turns out there is a lot more to cryptocurrency then Bitcoin gambling. When we talk about using bitcoins to play MegaMoolah.com, we are referencing what is the equivalent of a tiny drop in the vast ocean that is decentralized, digital monetary systems.