Comparing the BTC Apple to the L$ Orange (Comment of the Week)

Reader Joey1058 has a fair point about my comparing the oranges of Linden Dollars to the apples of Bitcoin:

The US designated crypto as a commodity. So asking to use BTC as a currency is like asking to use gold and silver as an everyday currency again. The L$ is an inworld currency, and has been planned that way from the outset. Broadly speaking, Second Life holds it's own sovereignty, so exchanging Lindens for USD is like exchanging GBP for USD.

Both BTC and L$ require an exchange to convert to USD. Once converted, they get taxed. The difference in exchanges is that LindeX/Tilia do a full transaction disclosure to the Feds. Crypto exchanges do not. Which is why the Feds are attempting to regulate crypto. If you are not reporting your crypto cash-outs to the Feds, you are in violation of whatever rules the IRS deems to slap you with.

This is roughly right. Though overall, I'd still say L$ and BTC is a comparison of tangerines and oranges, i.e. citrus fruit with more overlap than apples:

While the US government may consider Bitcoin a commodity, it is still being touted as a currency for buying goods and services by many. It's also used as a currency on a very niche level. (Including for black market goods like banned drugs and illegal services like extortion.) 

Indeed, the government of a Latin America country of 6.5 million people just did that very thing, pushing its people to use Bitcoin to buy everyday items like groceries (including, I assume, actual apples and oranges), with highly limited results. 

It was actually early attempts last decade to use Bitcoin as a currency -- like this lonely San Francisco chocolate seller-- when I noticed that something seemed seriously off about that proposition.

Image via: Why Linden Dollars Succeed As Currency Where Bitcoin Cannot: Stable Exchange Rate.

Comments

[Luther Weymann]

When America has made digital currency the default currency and withdraws the hard cash and coin, we have lost everything ever meant for this country. Everything in your life will now be subject to approval by whatever government is elected or has taken over the country. And then comes the EMT blast or the solar event that turned off the internet for decades. That is the end of currency, and now trading your possessions or other human lives as enslaved people and food has the most value. Humans live in a dream world where nothing bad will ever happen. Worthless paper and metal coins offer no respite when the electricity goes out. But worldwide digital currency as the only currency is the worst financial idea because it can only end in horror.