Are SMTs going to be tax efficient enough for real world usage patterns?
Smart media tokens are a great idea which in my opinion can put Steem over the top as a platform. Yet one problem remains which is holding Steem back and that is the problem of tax complexity. More tokens could mean capital gains taxes depending on whether the IRS sees these tokens as separate tokens or as part of the same platform. Due to the recent removal of like kind treatment and the article in one of my previous posts about how short term capital gains tax can quickly overwhelm the ability of earners to pay (due to the fact that the capital gains may be pinned on regardless of if the crypto is spendable or could reach a bank account in a cash out scenerio, it can present a problem at least for US users.
Steem, SMTs and US Citizens
Steem and SMTs are great but for US citizens they may or may not be tax efficient. What would be the consequence if someone has hundreds of different SMTs trading back and forth on the platform connected to their account? What if they are all on external exchanges with separate prices as well? What if some are actual securities as well? This lack of tax efficiency in my opinion is one of the major problems in crypto preventing mass adoption. Since Steem is designed for mass adoption and is ultra transparent this has to be solved (particularly by the same developers promoting the transparency). If we must live in a glass house with unlimited transparency then developers who promote this (and witnesses) must also promote at a minimum a voluntary compliance capability.
A possible solution
A possible solution to the capital gains problem is to simply stop using cryptocurrency directly for payments. How would this solution work? Instead of using cryptocurrency directly where Alice sends Bob Steem Dollars as a means of paying for products and services the solution could be to use Steem Dollars as collateral for a loan which can be used to pay in real dollars. In this way there is no need to care about the price of Steem Dollars and by the design we know Steem Dollars tend to be around a dollar so this would allow for paying back the loan.
A Steem account which has for example $100,000 Steem Dollars could in theory or should be able to in theory take out a loan in real dollars from a bank to pay in real dollars. Companies do stuff like this (Apple does something similar). This is also the strategy behind SALT. A possible solution for Steem is to simply take the blueprint from SALT and apply it to the Steem ecosystem.
Thaks you information
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That's really a big issue and the more government involving into cryptocurrency space the more things become complicated 😐
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It may be solvable. Consider that you have a Steem account and we can get banks to recognize this in some official way to act as collateral for loans. Suddenly your Steem Dollars can become USD in a bank account 1:1, and you don't have to sell any Steem or Steem Dollars so you don't generate a taxable event. Steem Dollars actually could gain utility and value without having to be spent. This would be tax efficient because Steem Dollars would be treated as "property" and not as "money".
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Now think about how all Smart Media Tokens could also become collateral? In that context everything which is property that you own which has value can become collateral. Then you have a real bank loan real USD based on that collateral. You can have a Steem debit card which spends real USD that is backed by Smart Media Tokens.
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That's an impressive idea about use of smt and sbd as a property but i have a question that Sbd sometimes worth more then $1 as we seen in last year that Sbd touched $15 mark so how can we find a perfect balance while converting them in usd.
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So you'll have even more collateral and everyone will be begging to loan you USD. What is the problem?
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Hmm that's true,thanks for removing my doubt 🤓
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Your understanding of Steem, MSTs and US Citizens is vast.
i like your post.
thank you
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I still know so little about SMTs, i dont want to be left behind grappling at thin air. This will be my objective this week.
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As always you pose a problem to the community and offer a possible solution. I wish there would be more people like you in the government posts. Maybe we would not go so badly.
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Are you talking about as a Steem witness?
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