A Renaissance for bitcoin?

Let’s engage in a little Gedanken (or thought) experiment. What if by virtue of law or just increasing regulatory burden, the exchange of bitcoin to USD in the United States were completely eliminated. Would this spell the end of bitcoin? I would like to suggest not.

Certainly, there would be a precipitous drop in “value” as many of the current business eliminated its acceptance (initially) because of it non-convertibility.  But their are businesses that operate without USD and totally in bitcoin. As long as those employees of those firms and vendors of those firms continue to accept bitcoin the could continue to operate. Arguably, you would see a growth (similar to what we’re seeing now) of other companies willing to accept bitcoin as pent up demand from these employees and companies with bitcoin to spend engaged the market.

The only rub is the non-convertibility poses to the payment of taxes. How do you pay your taxes when you have no USD to pay them with? It also poses an interesting problem for authorities. They could sue for recovery but what are they going to get? bitcoin which has no convertible value? So therefore could a business continue to operate without paying taxes and with no recourse by the government?

 

This is clearly all wild speculation and not to be construed in any way shape or form as tax or legal advice.