If I paid for things with it then every transaction would require calculating capital gains/losses. And it's far worse than conventional assets like stocks because at least the brokers track that stuff for you.
1. Park your ETH/WBTC/BAT (a whole bunch of other tokens) on a smart contract as collateral so that you can withdraw a token that is pegged to the USD, or just go to a regular exchange to buy the stablecoin.
2. Use this token to make transactions online.
Tax advantages: you are not selling your volatile crypto, so you don't have to declare any sales or profits. On the other hand, if the crypto you place loses so much in value to the point where the smart contract liquidates you, you don't need to return the stable token and you can get a tax write-off.
It uses the same “trick” billionaire CEOs use when they borrow against their shares to fund spending, instead of selling some shares and calling it “income”.
With something as volatile as cryptocurrency it's not exactly a crazy idea that you'd buy at say $30k, take a loan at $60k and get liquidated at $50k and get stuck with a big tax bill
And if you peg your money to fiat, aren't you just ending up back where you started?
What you're describing sounds essentially like being my own brokerage back office to provide cash services to myself. That's nice for people who enjoy that sort of thing, I guess.
Not if you are talking about the idea that only crypto allows you to transact without a middleman and without the risk of having your funds seized or your account canceled.
But if you are simply talking about crypto as an way to invest: I can tell where I can park USDC and DAI and get 2% returns per month - and have gotten that consistently for the last 8 months. Can you tell me any traditional bank that can offer this good of a deal?
Well banks offer lower rates of interest, but they're FDIC insured, they have nice (ish) apps, they have regulations to protect consumers, etc.
I can tell you PLENTY of places i've parked my money (for the last 8 months) that have gotten much more than 2% return - but they don't have FDIC insurance (just like crypto).
What if you deposit your cash in a regular brokerage account and every week sell an equal amount (that is, one contract for every 100 shares you can afford to buy) of at-the-money puts on GLD? This is literally digital gold.
If the probability of gold going to zero (or GLD) is essentially nothing, and inflation is inevitably going to pick up, then this feels plausibly "risk free". The worst that can happen is you are assigned some shares, which you can sell or sell calls on. In any case, people are apparently willing to pay a surprising amount for short term volatility on it.
Even better, you can buy the cheapest longest dated out-of-the-money put to lay off some risk at minimal cost.
You may be able to do this on Robinhood, I haven't tried.
Just an idea...of course analyzing how this could hide large risks would be interesting.
Visa: get card from wallet, type in number, type in CSC code.
Cryptocurrency: pull out phone, scan QR code.
In the US you can get a 2% rebate on what you spend with a credit card. In effect, you are credited back most of the merchant fees baked into transactions.
In which case cash or crypto requires a >2% discount to break even.
I completely agree that the instances of use as currency is vanishingly small.
