[LINK] Bitcoin .. ATO's draft guidance

[Jim Birch]

Tom Worthington wrote:

 > An Australian dollar is not much different to a Bitcoin: it is
only worth whatever someone will exchange it for.

No.  This might be kind of true for the individual at a particular moment
but it is not true from a system perspective, or over time.  Australian
dollars are required to pay tax in Australia which gives it a pretty solid
baseline value as long as there is taxed economic activity in Australia.
 Furthermore, the supply of the currency is managed to stabilise it's
value.  You can't pay your tax in Bitcoin.  You can exchange your Bitcoin
for as many Australian dollars as you happen to be able to get at the time
and pay your tax with that.  This is pretty much like selling your shares
in Blue Sky Prospecting NL to pay your tax.  Furthermore, there is a big
and potentially enormous economic effort devoted to maintaining the
Australian dollar at the value it had last year (less a small but managed
inflation component.)  The value of Bitcoins is essentially in the hands of
speculators.

> Apparently there is a Bitcoin ATM somewhere in the Canberra Center. I went
looking for it, but could not find it.

Virtualised?

>Governments are not the only ones issuing currency. Private banks issue their
own banknotes in Scotland and Northern Ireland

Banknotes were originally issued by private banks as a kind of commodified
letter-of-credit.  This function was taken over governments for different
historical reasons over time but underlying rationale was to have the
stability of the financial system transcend the health of individual
institutions.  The local currencies of Scotland and Northern Ireland are
anachronisms that exist for political reasons like a lot of stuff in the UK
(and elsewhere come to think of it.)  These currencies are a bit weird but
they are essentially under the UK central bank control, have fixed
one-for-one exchange rates, and would be guaranteed by the UK government if
say a financial disaster struck the Royal Bank of Scotland, so are pretty
much only nominally separate currencies.  Even the Scottish separatists
support an ongoing currency union with England.

The value of Bitcoin could half or double next week and no government would
take any action.  They might give you a told-you-so leer but that's about
it.  This is not true of any GX currency.  Or a Scottish pound.

Jim