The joy of bitcoin confusion
Hong Kong’s humorist on the esoteric and deceiving nature of today’s burgeoning cryptocurrencies
Monetary authorities worldwide are confused about those bitcoin thingies. If you ask whether you can advertise such things as currency investments, they say: “NO! Of course not! Cryptocurrencies are not money!” If you ask whether you have to pay tax on them, they say: “YES! Of course you do! Cryptocurrencies are money!”
People are confused, too. A recent survey of cryptocurrency owners in the United States revealed that 46 percent had this mindset: “I will not pay tax, because the government doesn’t know our names.” The odd thing is that several days earlier, the government had revealed its position, which was: “Yes, they will pay tax, because we know their names.”
The result is mass confusion, or to put it another way, a delightful bonanza for any accountant who can say with a straight face: “Yes, I understand the whole cryptocurrency phenomenon as well as anyone,” a phrase which makes you sound like one of the experts, but technically means you haven’t the foggiest idea what’s happening.
The fact that no one understands things is a good thing from the sales point of view, as this columnist has discussed in various newspaper columns. (Things you can sell to unsuspecting friends as bitcoins: 1) game arcade tokens; 2) foreign coins; 3) toy medals; 4) chocolate money.)
But one of my more serious colleagues IS starting his own cryptocurrency, so I know the system. First, you download the main coin mining software from a website called Github, then tweak the program (with C++) to make it unique.
Second, you think up a wacky theme. For example, one person made a cryptocoin called “Offerings to Cthulhu,” named after an alien from a 1928 sci-fi story. You’d think that was too silly to work, but it is going strong after several years.
Finally, when people start buying your currency, you sell them all and run away laughing. If the last part of this process reminds you of anything, it should. It is the same technique used by criminal gangs (investment banks) for pushing evil scams (equity sales).
In January this year, the U.S. dollar value of bitcoins was going up and down so fast that you had to discuss it with a live price tracker in your hand. Conversations went something like this:
ME: “I’ll buy your car for one bitcoin.” HIM: “No way! This car’s worth more than… HK$9,845.” ME: “No, it isn’t. I think… HK$11,245 is a good price.” HIM: “Okay, it’s a deal.” ME: “Transferring one Bitcoin to you now.” HIM: “Wait. This is only worth… HK$7,231.” ME: “Byee.”
Bitcoin analysts say the number of new coin issues is accelerating, so we’ll each have our own currency in “the mid-to-long-term future,” meaning a week next Tuesday. Shopping will be challenging. SHOPPER: “Do you accept Flurgles?” SHOPKEEPER: “Yes, but your change will be in Oogliewooglies.”
If you launch a coin, what would you call it? All the cool names have already been taken, including Mysterium, Einsteinium and BitBean. Others are odd, like the Melon, or desperately unimaginative, like the Namecoin.
I reckon it’s time to stand out and get attention by using an ironically humorous name for your new bitcoin. Four suggestions:
1) SweetLittleNothings; 2) Don’tBuyThese; 3) Moneypits; and 4) IdiotTokens.
Or perhaps I will sneakily reveal my scepticism by making a currency using names of people: 12 Bernies make a Madoff, and 20 Madoffs make a Ponzi.
But as I said earlier, tax experts are in a really good position now. If someone comes up to you and asks if you can handle his cryptocurrency tax issues for him, remember your line: “I understand the whole cryptocurrency phenomenon as well as anyone.”
And it’s crucial to slip these words into your contract: “The client will pay in advance in REAL MONEY. I’m not stupid.”
Nury Vittachi is a bestselling author, columnist, lecturer and TV host. He wrote three storybooks for the Institute, May Moon and the Secrets of the CPAs, May Moon Rescues the World Economy and May Moon’s Book of Choices