Is ‘The Simpsons’ ahead of the Bitcoin curve?

One of my colleagues recently shared an anecdote with me about ‘The Simpsons’. She told me that during a chat about politics, her son told her, “Well, it was on ‘The Simpsons’ and then it came true.” And then he asked her, “How do they do that?”

Indeed, how is it that the long-running animated series appears to be a more reliable source of future predictions than Nostradamus, or even the MSM? So, I was very interested when one of the writers I follow, Billy Bambrough, published an article at Forbes about the The Simpsons’ predictions for Bitcoin

It’s true that cryptocurrencies, and in particular Bitcoin, have been mentioned in a number of shows, perhaps most relevantly in ‘Silicon Valley’, as well as in The Big Bang Theory, but who might have expected that Luno, a major bitcoin and cryptocurrency exchange, would turner to the Simpson family’s past prediction to figure out when Bitcoin might go mainstream.

Bambrough refers us to an episode that aired on 23rd February, which I must admit I didn’t see. It featured Jim Parsons, who plays Sheldon Cooper in ‘The Big Bang Theory’, and in it, Bitcoin is described as ‘the cash of the future” and that this future is coming closer “each day.”

As Bambrough points out: “Over the show’s 30-year run The Simpsons have correctly predicted Donald Trump becoming U.S. president, the NSA spying scandal, Apple’s FaceTime, smartwatches, and the Disney takeover of Fox.”

Now, here is the interesting bit. The analysts at Luno have calculated that it takes an average of 15.6 years for a ‘Simpsons’ prediction to become reality. That means we’ll see mass adoption by 2036. Marcus Swanepoel, Luno’s chief executive, said, “It seems the creators behind The Simpsons have a knack for picking up on things that seem out-of-this-world, and a way of portraying the impossible as part of day-to-day life,” adding, “I wouldn’t be surprised if they’ve overshot their prediction slightly in this case.”

Indeed, the very fact that ‘The Simpsons’ are talking about crypto and Bitcoin on-screen may give adoption a very helpful nudge, because there is no doubt that public perception and awareness is one of the most important factors in digital assets going mainstream.

Perhaps we should all be keeping a closer eye on ‘The Simpsons’ — it’s obviously about so much more than eating doughnuts!

Is there a link between Coronavirus and bitcoin?

Bitcoin went up, and it was because of the Coronavirus, people said. Then bitcoin went down, and that was also because of the virus. The question is this; has the virus had any effect on bitcoin at all?

The global panic around the Coronavirus, or Covid-19, could be called a ‘panicdemic’ rather than a pandemic. It has certainly caused the traditional stock markets to plunge, and there is no exchange that hasn’t been affected by it.

Some people suggested that money was going into bitcoin, because it is now more often seen as a ‘safe haven asset’. But that was more of an assertion made by enthusiasts.

What in fact happened was that bitcoin collapsed by 15% over the last week, and the rest of the cryptocurrency market sank alongside it. This happened at the same time as the traditional markets went into freefall, and that was definitely due to the spread of the virus.

Billy Bambrough offers a more compelling reason for the slump in bitcoin’s price. He writes, “On Wednesday, the SEC rejected an ETF application from New York-based asset management firm Wilshire Phoenix and options exchange NYSE Arca that wanted to mix bitcoin and short-term Treasuries.”

He believes that the SEC ruling against a “long-hoped for bitcoin ETF,” provoked a sudden sell off.

Why did the SEC not give permission for a bitcoin ETF? In a statement it said: “The Commission concludes that NYSE Arca has not established that the relevant bitcoin market possesses a resistance to manipulation that is unique beyond that of traditional security or commodity markets such that it is inherently resistant to manipulation.”

Still, the SEC ruling shouldn’t have come as a major surprise, because it has a history of rejecting applications, and as James Seyffart, a Bloomberg Intelligence analyst said, “I didn’t see any viable reason why this would be accepted when others were denied.” And as Bambrough suggests, there were comments in the ruling that would lead most of us to believe that the SEC is nowhere near ready to give any ETF application the green light.

Hester Pierce, AN SEC member who is very supportive of cryptocurrencies, made an interesting comment about the recent ruling. She said that it led her, “to conclude that this Commission is unwilling to approve the listing of any product that would provide access to the market for bitcoin and that no filing will meet the ever-shifting standards that this Commission insists on applying to bitcoin-related products — and only to bitcoin-related products.”

We must also remember that bitcoin’s value isn’t derived from the same indicators as fiat, such as interest rates and GDP; it is driven by demand, as Dave Waslen, CEO of HedgeTrade told Forbes. Instead, “Bitcoin is purely driven by demand which is why it often remains steady when other markets are teetering.”

To sum up: Coronavirus has had an effect on all markets, but it would appear that it is not solely responsible for the recent rise or drop in price. However, it is entirely possible that as the virus impacts more countries, and the markets wobble even more, that assets like gold on the one hand, and bitcoin on the other, may benefit. We can only watch and wait.

How do you pay crypto taxes?

I would be prepared to wager that many people who bought cryptocurrencies, never thought about any tax considerations. It is unsurprising that the tax authorities are ahead of the crypto owners, because they see plenty of new income for their coffers. The IRS in particular has started on a crackdown, because when it sees that only a few hndred people report their crypto trades, but Coinbase has 35 million accounts, they know something is going on.

It used to be that you might have got away with saying that the law isn’t clear, but there is no denying it now that the IRS has decreed that cryptocurrency is property. Not an asset or a security — it’s a property. Therefore, as capital assets, they give rise to capital gains and losses when disposed of.

As William Baldwin writes at Forbes: “A profit is taxable as a short-term gain if a position has been held for a year or less, as long-term if held for more than a year. If a coin is held for profit rather than amusement, which is presumably almost always the cases, then a loss on it is a deductible capital loss.” Also, you need to note this: you can go out at a loss and then right back in without losing the right to immediately claim the loss.

Don’t trust your exchange

For some reason, many people are convinced that the exchange they use won’t reveal their name to the tax authorities. Wrong! Especially if you are a prolific trader. For example, in the US, the 1099-K is mandatory for a customer who in one calendar year does at least 200 transactions with proceeds totalling at least $20,000.

Watch out for the forks

The IRS also has a view about what happens when there’s a fork in a blockchain. It believes that a fork gives crypto owners a windfall that should be taxed at high ordinary-income rates.

Also, if you have benefitted from an airdrop, that’s income, and obviously, so is mining. if you join a mining pool, spend $8,000 on electricity and get rewarded with a bitcoin worth $9,800, then Eeen if you don’t sell the coin, you have to report a $1,800 profit, and that profit is ordinary income.

Gifts and donations?

On the other hand, if you donate crypto to a charity, or gift it to your kids, then it is treated like ‘gifts of stock’. Baldwin gives this example: “Say you bought a bitcoin at $12,000 and give it to your niece when it’s worth $11,000. If she sells at more than $12,000, then she uses $12,000 as her basis. If she sells at less than $11,000, she has to use $11,000 as her basis, reducing the capital loss that she can claim. Any sale between $11,000 and $12,000 is in a dead zone that creates neither a gain nor a loss.”

If you’re confused about tax rules around your crypto holdings, I would suggest you find a tax adviser who knows crypto — there must be several trying to occupy this niche now. If they don’t know crypto — you could find yourself in some trouble later on. It really is worth getting expert advice about your crypto holdings.

What Might The Bitcoin Halving Do For You?

It’s a question that I’m sure many Bitocin owners are asking. In around 90 days from now on 8th May, Bitcoin’s mining reward will be cut in half (that’s what a ‘halving’ means) and crypto commentators believe that it could trigger some significant price activity, and boost the BTC price skywards.

Currently there are approximately 18 million Bitcoin in circulation out of a total of 21 million. But, thanks to the halving protocol, this limit won’t be reached in the near future. Satoshi Nakamoto programmed the Bitcoin network protocol so that a halving would take place every four years, or every 210,000 blocks, and cut miners rewards in half. The idea being that this makes producing more coins more difficult.

This may seem counterintuitive, as miners are incentivised by the rewards. As Edith Muthoni, chief editor at Learnbonds.com told Coinrivet: “This brings us into a seeming conundrum: if miners will no longer receive block rewards (or too little), will they continue mining? What will be their motivation to stay on? What does this mean for the network and Bitcoin?”

The impact on Bitcoin mining

Once upon a time people at home could make some money from Bitcoin mining, but that ended some time ago. However, as we approach this halving, there is a serious question to be answered about how the medium and large-sized mining operations will fare.

There are fewer than three million Bitcoin left to mine, and the hash rate is hitting all-time highs. Given the cutting of rewards, it would seem that the effect on mining at least would be negative. Steve Tsou, CEO of RRMine, a Bitcoin cloud mining operation has gloomy view: “The halving in 2020 will have great impacts on Bitcoin miners: 1) Miners with low mining efficiency will be forced to pause and re-evaluate their business operations. 2) Digital mining is becoming the racetrack for giant international companies because they have more advanced machines and cheaper sources of electricity.”

Tsou’s sentiments are echoed by a number of others in the sector, including Alex Lam, one of China’s most prolific miners and CEO of RockX digital assets. He said “The next Bitcoin halving is likely to result in mining profitability decreasing significantly in the short term.”

However, depending on the price of Bitcoin on 8th May, miners’ profitability may not be so dramatically affected, at least in the short term. If the Bitcoin price rises substantially afterwards, then miners may be able to sustain their profits. A price fall, on the other hand, could see some go out of business.

The impact on Bitcoin’s price

Unless you are a miner, how many Bitcoin owners can honestly say that they are concerned about the impact on mining. What they want to know is the halving’s impact on price.

This is not the first time that a halving has occurred. The BTC price stood at $12 when the mining reward was first cut in November 2012, and stood at $652 at the time of the second halving in July 2016. Of course, as you remember, the following year brought us that sensational bull run, driving Bitcoin to $20,000. Weiss Ratings, which analyses the impact of halving’s on price, said: “So, does the Bitcoin halving help drive prices higher? Absolutely. The only question now is how high will #BTC go this time around?”

Jimmy Nguyen, president of the Bitcoin Association commented: “Some people expect the coin price to magically increase before the halving and help cover the 50% fewer coins. Even if there is some price increase, it is doubtful coin prices will double from now through April or May 2020. So mining will most likely be less profitable after the halving than it currently is.”

Ultimately, what we are likely to see when the Bitcoin halving happens is this: it will have a major impact on mining in the short and long term. Furthermore, we’ll see smaller, less sustainable operations give way to larger mining farms with access to low-cost energy.

Miners, like Bitcoin owners, will be hoping for a hike in the Bitcoin price, because that is the key to ensuring profitable mining, as well as profits for investors.