It doesn't seem like anyone believes cryptos are supposed to be currencies any more. All the talk around them is around them being a new, exciting, and potentially very lucrative investment class. If you go to Coinbase's front page, you see that you can buy and sell them, like you can with Robinhood. It's not trying to be a PayPal. The currency-ness does serve an important purpose. It helps bring in investment for the nebulous future where using them as currencies will have advantages.
Not all crypto assets are crypto currencies. Many DeFi tokens (ex. UNI, SUSHI, AAVE) govern projects with real cash flows and are poised to become more like equities on the blockchain
I use Bitcoin as payment for products and services all the time. I dont talk about it though, why would I? It is boring. I dont talk about how I use paypal or bank accounts to pay for stuff either.
There are certain segments eg. travel where bitcoin/crypto has worked well for years.
When I talk with friends about BTC, it is about price because that is the interesting part. The fact that I used it to pay for something is just not interesting.
Well.. yes and no. A lot of people unfortunately never really understood the real concept of a cryptocurrency as a payment mechanism and instead believe they are for getting rich quick.
That's the business Coinbase is in.
Now, if you are using cryptocurrency for payments you don't need Coinbase.
PayPal, since you mention it, knows that cryptocurrency is going to make it's business model obsolete as soon as it is widely deployed. That is why they pretend to allow you to keep and use Bitcoin on their platform.
It used to be that enthusiasts could claim "currency of the future", but a lot of time has passed and that future simply hasn't come. In fact, Bitcoin's top utility is already far behind us.
Dropping "currency of the future" does come with the challenge of coming up with a new supposed benefit, which is where "store of value" comes in. Problem is: there is no inherent value in bitcoin.
Yeah it's a value store. The only way it's not is if a nation state creates it and ties it to their currency. It's going to continue to go up and down forever.
> USDC, DAI, USDT are all used more than ever, orders of magnitude more
Even these cryptos aren't being used as currencies per se. They're popular, sure, but they're popular because A) they allow traders to move funds between crypto 'investments' without converting to fiat (i.e. without triggering cap gains), and B) They allow investors to "avoid market volatility" (but in a manner far riskier than fiat, given that even DAI or USDT could go to zero tomorrow).
...but they're still not currencies. Nobody is buying a hamburger with DAI.
If the trader is being honest, converting cryptocurrencies to stablecoins is a taxable event triggering capital gains. The IRS considers any exchange of one cryptocurrency for another to be a sale of a capital asset and purchase of another.
Yes. They are assets and you must pay tax every time you swap them or even use them to make a purchase. It's like making a purchase with Apple stock or swapping Apple stock for Google stock. Pay tax.
Typically they use account information from the exchanges and follow that onchain
But they generally rely on individuals to report accurately. Obviously wage-earners arent used to that as their employers withhold money for taxes and report to the IRS so this crowd may find this new found freedom to be foreign and a chance to “get away with” something, but everyone else has lived in a world where they report their taxes voluntarily and accurately
IRS considers cryptocurrency as property, and exchanging one for another is a taxable event.
See "Q16. Will I recognize a gain or loss if I exchange my virtual currency for other property?" [1]:
A16. Yes. If you exchange virtual currency held as a capital asset for other property, including for goods or for another virtual currency, you will recognize a capital gain or loss. For more information on capital gains and capital losses, see Publication 544, Sales and Other Dispositions of Assets.
I think that’s more a function of Puerto Rico not having federal taxes than anything about crypto (ie, no capital gains or income tax on anything, including crypto).
Like-kind exchange doesn't apply to cryptocurrencies. Exchanging BTC for a stablecoin does trigger capital gains as does selling a stablecoin for fiat. In the BTC-USDC scenario it is a little trickier to calculate the basis in USD but capital gains taxes still apply.
Yes, if you record the USD value of both sides at the time of trade. If you only record the execution price of your BTC/USDT trade you will need to later find the price of BTC/USD and USDT/USD at the time of execution.
Trickier in the sense that it requires more attention than simply recording the execution price and fees of a BTC/USD trade.
Most charting and accounting services do this for any time period if you need to look it up, or do it automatically
Only more annoying when you have to use an AMM’s info site and the chart isnt very granular or go back far enough. Pancakeswap’s info site doesnt even work.
So yes best to keep track at that exact time of trade
I’ve paid many people with stablecoins, even make in-kind investments (not like-kind)
You dont have a way of quantify if people are tax cheats (as what you described does not prevent capital gains liability), stores of value, or buying hamburgers
USDT is a concern, because it probably can't survive a big net outflow.
Right now, dumping Bitcoin and buying, say, yuan is something a hedge fund might do. Or may have been doing over the last few weeks.
What happens when some trader cashes out a few billion dollars in USDT to buy yuan? Coinbase has to wire transfer out that cash.
> People dont have to talk about them as currencies because they just work
Well that's not really true, it was headline news when Tesla started accepting crypto payments (and then headline news when they stopped).
Stores accepting crypto still makes the news, it's not common and not something that "just works." But what you can do is at least semi-reliably convert between crypto & things that stores do accept using the various conversions you listed. But you still do have to convert from crypto to a traditional currency to use it as a currency.
There have been debit cards loaded with crypto for almost a decade now
Your fictional higher standard of currency would say that the euro is not a currency because my transferwise debit card converts it to dollars when I spend in the US
The peer to peer payment mechanism works and all crypto assets inherit that
Yep, used USDC just last night to buy a new computer, just before this big crash happened, thankfully (since I converted some crypto to do it). Actually using that for its intended purpose.
That's like saying I payed for my new house with stocks. Which is not the same thing as stocks being a currency. What actually happened is that you liquidated some crypto and used the proceeds to buy your new computer. You even say that directly in your parenthetical. (since I converted some crypto to do it)
I converted from one form of cryptocurrency to another cryptocurrency (USDC is USDCoin, a Stablecoin).
I was paying on NewEgg using their BitPay method, which supports payment with only the following cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum, Wrapped Bitcoin, Dogecoin, and 5 stablecoins (GUSD, USDC, PAX, DAI, and BUSD).
I have Bitcoin and could have paid directly with that, but I wanted to keep holding it and pay with Litecoin. So I converted that to USDC (for free, but I will have to pay taxes on the gains next year since every conversion or purchase is a taxable event in crypto in the US), and then sent that to Bitpay.
So yes, I still maintain I used USDC for its intended purpose.
I did, however, do what you said and liquidated some Ethereum to fiat several years ago (right at the previous bull run's top, by happenstance, got super lucky then) to pay for the downpayment on my home. I would have paid with it directly if I could but there was just no mechanism for it, at least not back then.
No didn't you read all the other comments, that didn't happen because nobody uses them as currencies, or it didnt happen because either the payment processor, merchant, or their daycare provider eventually converted to the state’s local fiat currency so your experience is invalid /s
