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09: Decentralized Decision Making: Proactively Building Dash Decentralization

https://www.dashcentral.org/p/DIF-FUNDING-PROPOSAL-APR-JUN-3MONTHS
The polling vote DID NOT PASS. WHICH MEANS THE DIF HAVE NOT RIGHTS TO MAKE AN INVESTMENT WITHOUT THE MNO NETWORK APPROVAL.

That was not a polling vote, it was a budget proposal. It was the DIF asking for 500 Dash for three months. I think i voted NO on this specifically because i found the amount too high for three months.

qwizzie - 10 months ago
I decided to vote NO on the funding part of this proposal, as i think the amount per month (500 Dash) is too high, particularly taking into account the 7,1% block reward reduction that will take place within this month.

I also gave this comment :

qwizzie - 10 months ago
Unfortunately this budget proposal has transformed from being just a budget proposal seeking funding, to being both a budget proposal and a polling proposal seeking approval for the included 'Material change request'.

This is awkward to say the least.

As you can see I decided back then to ignore the polling part and just focus on the funding part of the budget proposal.
It really should have been left out of the budget proposal completely and either announced to the Dash community seperately or polled separately.

With regards to material change request :

After much internal discussion between the DIF supervisors we believe it’s in the DIF and the Dash network’s best interests to request a change to the current agreement that we submit decision proposals to the MNOs for approval on any investments, the requested change is to remove this requirement going forwards. In exchange for the proposed increase in autonomy, we propose an increased transparency of decision-making down to the individual level. In this way, the MN network can have further insight into each individual supervisor's thought processes, contributions and performance.

Well, not really a surprise to me. I always figured the DIF would go this way at some point.
They consulted the network a few times, and are now on their own. As i said before it would have been better if they announced this separately, but whats done is done.

When the DIF was created it was not created with the notion that every single decision about how to spend the DIF funds, is suppose to be voted upon by masternode operators. For the first few times yes, but at some point the idea has always been that the DIF would make their own decisions on how to spend the DIF funds. That is how i remember it at least from the early days, when the DIF was introduced to us.
 
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The polling vote DID NOT PASS. WHICH MEANS THE DIF HAVE NOT RIGHTS TO MAKE AN INVESTMENT WITHOUT THE MNO NETWORK APPROVAL.

You're forgetting one thing DeepBlue. That proposal was created by the previous group of DIF supervisors. The latest DIF funding proposal passed even though the DAO was well aware of the "change in process," and so I would posit that the change in the DAO's attitude towards this question is a reflection of the DAO's high level of confidence in the current supervisors.
 
Agree. Although I don't talk about price, it is no responsibility or domain of media/marketing. None of the team behind the project should be responsible for or shill the price.

To say this in 2021 means we're still stuck in 2017 mentality when people just found us easily on the market cap rankings (the one a lot of people say are meaningless). Sitting back and waiting for something to happen MNO-style, when it comes to the social media side of marketing, is fatal for the network. It's a "if you build it they will come". You hear more of this when the prices go up. The only bright spot for the network is that Mark gets the external audience. I do think the community needs to do more organically on social media with big thanks to FoxTrot - Fruit Salad Panda for killing it. Mark's actually showing leadership in taking the bull (run) by the horn, no one else will consistently (with few exceptions).
 
It's not clear what you're suggesting @DeepBlue . Would you rater

1. People not have capital gains?
2. People not use Dash as digital cash?
3. People use a very centralized payment processor like VISA.

The Dash/CrayPay solution does not rely on VISA or MasterCard.

My point is that using Dash as a form of payment for general (no specialized goods) in the USA, where cryptocurrency is dealt with as property is a non starter, that is, if people spending DASH actually wish to stay within the IRS US Tax law. Under the current US law cryptocurrency is treated as property which means that every transaction, no matter how small, the user would have to calculate if they have to pay capital gains tax on it when they buy something. Bearing in mind the price of Dash is constantly fluctuating on an hour by hour basis and people would need to keep track of when they bought and sold the dash holdings for each hour of each day and calculate the capital gains on every single purchase. If they make a few hundreds purchase on a year that would be a huge amount of work.

It is for this reason it does not make sense to use Dash as form of payment for general goods and services in the USA under the current tax and legal system. Not unless the user is prepared to spend a considerable amount of time doing tax calculations and reporting. This makes the Craypay investment a poor quality investment and a non starter for this reason in my opinion for the reasons given. If Dash users wish to stay within the tax laws of the USA they have a legal obligation to do these tax calculations on every purchase. No such problem of calculating capital gains tax is necessary however when paying with USD, unless that came from the sale of an asset - which under most circumstances is not the case.

This makes USD a better form of payment in the USD over DASH due to the Tax complications involved. Yes, that means using a centralized body to make payments - absolutely correct. But I think most people want to stay within the tax laws or face the very real possibility of heavy fines or possibly even imprisonment for tax evasion.

Capital gains calculations on purchases with Dash is not the case however in many other countries where they either do not charge tax on capital gains or the government themselves have mandated that use of cryptocurrency is classified as cash payments and not property.

What I'm advocating is don't make investments in a country such as the USA where Dash is to be used a cash, because it is not getting treated as Cash. It will be treated as property and cause an nightmare situation in calculating capital gains tax on every purchase, compounded with fluctuating Dash price on a day to day basis.

Dash investments should be made preferentially in countries were tax issues are not incurred.

I don't understand how Craypay can be classed as an intelligent investment due to these tax issues mentioned above. What it can provide is only PR.

The second reason that Craypay in the USA is a poor investment is because Dash holders in the USA are buying Dash primarily as an investment. They don't want to spend their Dash. Why don't they want to spend their Dash - because the USA uses the USD which is the world reserve currency and it works better than Dash for payments. There are no Tax issues and all merchants in the US accept USD. The USD is going down in value which makes it ideal for spending. Dash is going up in value which makes it nonsensical to spend it in the USA - why would people want to spend an appreciating asset? People want to spend depreciating assets, not appreciating ones e.g. the USD.

The places where DASH can be used as a currency are in countries where there is hyperinflation. I've already written several reports on this previously at the forum. Spending money in the USA on payments is nonsensical when were could be spending it where Dash can actually gain traction due to is usefulness e.g. Venezuela, Africa, Turkey etc. It seems the DIF think its a great idea. So, I would be most interested to see the numbers of transactions going through craypay for DASH in the USA. I suspect it would not be very high - if at all. And the members that will be spending their Dash will be people with a lot of Dash e.g. DCG and other libertarians. One solution might be to develop an app that automatically calculated the capital gains on every purchase - however even with this it does not make sense to sell an appreciating asset in the USA.

How could Dash users in the USA spend their Dash without Tax implications or calculating capitcal gains on every purchase?

Disclaimer: The following information is not intended as tax advice. Everyone should get their own tax advice from a specialist tax advisor in their own country. This is only my opinion with the information that I have.

Answer:

If DASH users wanted to spend their appreciating Dash investment what would be a more intelligent and tax efficient way would be to get a secured USD loan on their Dash holdings up to 20% to 30% of their asset holdings. Then they would have no tax to pay on the loan and they would not have to calculate capital gains tax on every purchase. This is the most tax efficient way to spend Dash in the USA. This strategy is exactly what wealthy people do. They buy appreciating assets then finance those assets with a loan of 20% of the assets with a 2 - 5% interest rate. If the underlying asset is increasing considerably more than the interest rate on the loan then they are relatively safe and they pay no tax on the loan and they do not have to do capital gains tax calculations on every purchase with their loan.

Conclusion

Therefore I do not see the logic of the Craypay investment in the USA. It is neither tax efficient nor logical in terms of spending an appreciating asset. The money could have been better spent in a country where Dash is needed as a currency and there are no capital gains tax issues when spending Dash.


If Dash investments were focused on converting just one country to using Dash we would have far greater success with the money. In my opinion the best country for this would be Venezuela because they have passed laws encouraging the use of cryptocurrency as a day to day payment method and the Bolivar is useless as a currency. USD is hard to come, and small denomination purchases are impossible with USD, which leaves leaves the path open to Dash being established there. Once Venezuela is converted to using Dash the other South American countries would be likely to follow because many of them also have problems with their currencies e.g. Argentina.

The DIF undertook the investment without notification to the MNO network and therefore we did not get an opportunity to comment on it.

I would like to see the numbers of monthly DASH translations on the Craypay investment.
 
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When could Dash be used as a form of payment in the US?
Where Dash could be used as a form of payment is for specialised goods and services which require the blockchain aspects of DASH as well as the payment e.g. with Alt36 and cannabis, or for document registrations etc. These could be justified forms of payment with crypto. However for general goods it is not a good idea unless the purchase was for very large items such as a car or house where the numbers of transactions are small and therefore the tax calculations are not considerable. However lots of small purchases for small denominations in the USA with DASH is not practical on a tax basis as explained in the post above.

I want to clarify what I mean by Alt36 was not a good investment. The idea of Alt36 and DASH was a reasonable idea however the investment was not a good one not because of the quality of the idea. It was the quality of the investment - which includes consideration of other factors such as legislation.

Alt36
If Alt36 could establish a reputable bank to work with them then that project could eventually work out for DASH. If Alt36 could be made to work with a crypto-friendly bank. My concerns about the ALT36 project have always been due to the requirement for legislation to be able to handle crypto payments in the USA and the amount of time we would have to wait for the legislation to change.

Eventually the US should make legislation for ALT36 to accept crypto payments but the question, is when? I do not see the logic of making speculative investments when there are investments that can be made that have much greater certainty of success in a shorter time frame and in a jurisdiction that has more favourable tax laws for crypto. The money invested in Alt36 project could have already lead to other projects being completed successfully e.g. the entire country of Venezuela being converted to using DASH with that amount of money. Alt36 should be able to work with DASH if the legislation changes but we could have done so much more with that money and have those projects successfully completed by now in countries such as Venezuela and that is why I claim that the ALT36 project was not a good investment. Successful projects completed early would have boosted Dash's reputation higher and created more positive PR for DASH as a payment service.

For these reasons I say that the Alt 36 was not a good choice - even if we eventually get Alt36 to work out and it is rolled out across all of the US. We could have had more success earlier with other projects with that amount of money. That is why I say it was a poor investment. No considerations were given to the legislation at the time in the country involved.

In summary: Investments should consider the legislation and tax laws in the country of investment at the time of investment, and not invest in speculative investments where the laws may or may not change.
 
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You want to wait until America is a failed state with a collapsed currency in order to start marketing Dash here? You might not have to wait long. Also, there are already many people in America who are "unbanked" and many who earn so little they don't need to file a tax return. For those who need to account for their use of crypto, it's not as onerous as you make out. There are software products available that can handle it.
 
@DeepBlue I appreciate your new approach in the last two posts.

Re "Dash as a form of payment in the US", there are people who are already using Dash for payment in US and willing to use it even more. I think more people will join if the Dash payment option availability increases. Existing US tax laws are an important issue but I don't think that it stops an increasing number of people from using Dash as a form of payment and there is a chance that if more and more people use crypto as a form of payment those laws are revisited. What I'm saying here is not based on data but only random observations.
 
As far as i know the tax laws when referring to payments with crypto in the USA are unclear at best. May be wrong, but I asked a CPA i know personally. This was a few years back.
 
As far as i know the tax laws when referring to payments with crypto in the USA are unclear at best. May be wrong, but I asked a CPA i know personally. This was a few years back.


The US tax laws are now clearly laid on on the IRS website. You can review them on the link below. IRS state that cryptocurrency is dealt with as property and that the gain or loss must be accounted for as a capital gain on sale of the coin. Refer to Q4 on the link below.

IRS website Cryptocurrency and taxes:


Bearing in mind that multiple purchases of coins could be made over a period of time further completing the tax calculations. Yes, people in the US can spend their Dash but it if it is not reported correctly they can be tracked down and fined or more. The US is famous for its rigor in collecting taxes. It is one of the few countries in the world that tax citizens on citizenship - meaning even if they have left the country they are subject to US tax law.
 
You want to wait until America is a failed state with a collapsed currency in order to start marketing Dash here? You might not have to wait long. Also, there are already many people in America who are "unbanked" and many who earn so little they don't need to file a tax return. For those who need to account for their use of crypto, it's not as onerous as you make out. There are software products available that can handle it.

Regarding the unbanked and the USA this is something I definitely agree with. Dash would be useful in that circumstance. Six months ago I had thought of a novel marketing strategy for targeting these people that would at the same time raise good PR for Dash. However, I don't have enough knowledge in the US law regarding accepting payments from the unbanked and how this could be made without getting into legal issues. e.g. In the EU anyone accepting payments from someone else would have to undergo a KYC procedure in order to accept the payment. The marketing concept I had been investigating would also be best implemented after the Dash platform is released because there are features in it that would be required.

I do not wish to disclose details here on this marketing concept because it is novel and nobody in the crypto space is doing this. However I think it could work in the US if the people receiving the Dash could cash out their DASH e.g. ATM machines or some other place where they can buy essential supplies in exchange for Dash.

This is an example where DASH would actually be useful as a currency in a place like the US and this would be a good area to make a financial investment. My previous comment on why Dash is not a good payment system currently is directed for people that are within the US tax system through craypay - not for unbanked people. For people outside of the US tax system then definitely Dash is a good option to be used as a working currency.

If there is anyone within the Dash network that understands the Law regarding sending DASH to individuals and organizations that may be outside of the tax system and what the KYC requirements I would be grateful if they could send me a message so that I can develop this concept further.
 
The US tax laws are now clearly laid on on the IRS website. You can review them on the link below. IRS state that cryptocurrency is dealt with as property and that the gain or loss must be accounted for as a capital gain on sale of the coin. Refer to Q4 on the link below.

IRS website Cryptocurrency and taxes:


Bearing in mind that multiple purchases of coins could be made over a period of time further completing the tax calculations. Yes, people in the US can spend their Dash but it if it is not reported correctly they can be tracked down and fined or more. The US is famous for its rigor in collecting taxes. It is one of the few countries in the world that tax citizens on citizenship - meaning even if they have left the country they are subject to US tax law.


Can you link where it was stated clearly? Reading through it, I'm not really understanding how you would determine the tax of dash having paid sales tax at the same time. They aren't very clear overall on micropayments.

"Generally, a person who in the course of a trade or business makes a payment of $600 or more in a taxable year to an independent contractor for the performance of services is required to report that payment to the IRS and to the payee on Form 1099- MISC, Miscellaneous Income "

Which makes me think you don't even have to report anything less than 600$, but again its not clear. Maybe you understand it better, and can enlighten me?


If crypto is taxed for micropayments as you say it is, then that seems unenforceable, because there is no way for the irs to collect the information required, and if they were able to the taxes associated with it wouldn't amount to enough to make it worth doing.

Ill just ask my buddy thanks for the link.
 
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I read what it said... you said its clear, I'm saying it's not.

The IRS has not declared a deminimus rulling for crypto yet, there really is no guidance, but you are right, it
would be an accounting nightmare to try to keep track of every direct payment using crypto.
 
read what it said... you said its clear, I'm saying it's not.

I would like to clarify something. I am quoting what is written on the IRS website. It is not my opinion.

@Nyk I will copy and paste, exactly what is written on the IRS website regarding taxes and cryptocurrency. All of the text below is taken from the link I provided on the IRS website. The way crypto is taxed is clear enough. If you, or anyone says it's not clear then can you state specifically what is not clear about it. Also give you reference URLs to official government website to backup what you say, as I have done. If you cannot give those official references that go against what is written below then you are quoting your opinion only. As I said this is not my opinion below is the text exactly copied and pasted from from the IRS website on the link I gave you previously.


============================Start Copy and paste text from IRS website======================


Q4. Will I recognize a gain or loss when I sell my virtual currency for real currency?

A4. Yes. When you sell virtual currency, you must recognize any capital gain or loss on the sale, subject to any limitations on the deductibility of capital losses. For more information on capital assets, capital gains, and capital losses, see Publication 544, Sales and Other Dispositions of Assets.

Virtual currency is treated as property and general tax principles applicable to property transactions apply to transactions using virtual currency. For more information on the tax treatment of virtual currency, see Notice 2014-21. For more information on the tax treatment of property transactions, see Publication 544, Sales and Other Dispositions of Assets.

What records do I need to maintain regarding my transactions in virtual currency?

A45. The Internal Revenue Code and regulations require taxpayers to maintain records that are sufficient to establish the positions taken on tax returns. You should therefore maintain, for example, records documenting receipts, sales, exchanges, or other dispositions of virtual currency and the fair market value of the virtual currency.


============================End copy and paste text from IRS website======================

Reference URLs from IRS website:
https://www.irs.gov/pub/irs-drop/n-14-21.pdf



The IRS has not declared a deminimus rulling for crypto yet, there really is no guidance, but you are right, it
would be an accounting nightmare to try to keep track of every direct payment using crypto.

@AgnewPickens, you are correct, however my understanding is ruling you are referring to is to request changes to the existing tax laws for crypto, and since this has not yet passed the existing tax laws, stated above are applicable. If they are not applicable I am not clear why it is stating that taxes must be paid on capital gains on crypto?

There are now also new IRS questions regarding crypto at the very top on the Tax form 1040.




The above information is enough to show that the US is taking taxation of crypto seriously and there can be serious penalties for those that do not pay their taxes on crypto gains according to the articles posted and the information on the IRS website. With all that in mind I cannot see how anyone would want to spend their DASH on cheap goods and services to get a 10% discount with craypay, a centralized body, and in so doing, risk being caught out by the IRS. Who would take that risk for a cheap discount? My point that not only is it a complete nightmare to account for gains and losses it is also a complete nightmare when it comes to the taxes and the penalties and the legislation around crypto in the USA. Is it really worth taking the risk?

But not only this people in the US are buying crypto for investment purposes i.e. to see an increase in value. Dash is also appreciating in value over the long time period (5 to 10 years) so who would want to sell an appreciating asset to buy goods and services in the US? It doesn't make sense to do that.

I have made the point as best that I can. It is clear that others feel differently. My point is there are countries in the world where these draconian tax laws do not exist and the governments have actually encouraged people to use crypto and passed laws so that people can use the crypto as a day to day payment as they have done in Venezuela. It makes more sense therefore to invest in such countries to establish Dash and where there is a real need to use Dash as a day to day payment method which is also desperately needed.
 
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Short term capital gains if you are buying/using it a few days a week are likely negligible and long term capital gains aren't taxed up to $40-80k depending on filing status.. so the real problem here is when someone has gained a substantial amount of value in a given tax year and has the currency for less than a year.. This is added to income and anyone making over 40k a year could potentially get into trouble. The other side of this is they would have overpaid taxes in other years due to losses. This doesn't take into account that some of the other pieces of information we have points towards not having to pay taxes on payments under 600$.

I personally know a lot of people looking forward to the craypay app who aren't interested in speculating on crypto.
People like this likely wont even think about taxes and imo the bottom 50% earners in the US wont even need to on micro transactions. (depends on how much Dash they spend).

Regardless, A really shitty pidgeonholed tax system isn't a reason to not focus on things that help adoption.
CrayPay imo is exactly what dash needs to actually get people out and using it.
Building the userbase is the most important part of this entire movement.
I expect soon we will have crypto tax laws that make sense and don't require low income citizens to hire experts to figure this stuff out.
 
One of the biggest problems with the Dash governance system, in my opinion, is that there is a tendency to be blinded by what we wish as opposed to what is actually real. There is a big difference between the two. When MNO's vote in projects that offer something that MNOs want they have a tendency just to vote for it. But that is not a sound way to vote for a project. It must also be a project that is feasible to achieve. Very little consideration is given to is it feasible.

I've read all the comments above about people thinking that the Craypay project is a great investment because there are 155,000 new outlets that accept Dash. Don't you think that I would want this to be a great investment too? Don't you think that I would also want an investment to work like this also? But I do not see what I wish. I see what is real.

The comments made above about Dash and craypay being a great investment in the USA don't seem to add up to me due to the tax issues in the USA. It also doesn't add up because people don't want to spend an investment they bought for increasing in value. It also doesn't add up because credit cards also work just fine in the US and the incentive to spend Dash in Craypay is to get a 10% discount on purchases. What is the point of this when Dash can go up by 10% or more in a day?

People may not like my observations and you may try and find ways to bend reality to fit with what you wish. The fact of the matter is that Dash is not suitable for day to day purchases for everyday goods and services in the USA for people within the tax system. People should not have to worry about tax calculations, or capital gains tax or if they have earned more than or less than 40K . Cash is Cash. People should be able to spend cash for whatever they want without worrying about such constraints to meet US IRS tax laws. You may all support the Craypay deal for whatever reason. So far nobody has given a logical reason based on reality where I can see it is a worthwhile deal compared to spending that money in a country such as Venezuela, or Turkey, or Argentina or Asia where Dash can get established for real as a payment solution without the complicated tax implications. Countries in which there can be real day-to-day adoption for everyday payments. Isn't that what Dash is claiming to be all about? We can get so much more value from investing in countries that actually need a viable financial system rather than countries that already have one.

I could see Dash, however, being useful as a financial system in the USA for the unbanked or those without tax obligations or people who are outside of the tax system and perhaps that is where the potential lies for Dash in the USA. I read a report that stated that 25% of people in the USA are unbanked or without traditional financial services. Dash, for this particular demographic, might be worthwhile and perhaps that is the area where we ought to focus some research to see if Dash could be established in the US.

I feel in order to make sound governance decisions we need to look past what we wish and see what is. We need to assess the team running a project rather than just the project itself. We need to asses the legislation and the tax laws in the country in which the project is expected to operate and most of all we have to be honest with the expectations and base decisions on sound data rather than what we wish things to be. We need to look at markets that are outside the country where we are familiar and instead choose the countries where Dash is most likely to be successful. We need to compare one investment opportunity against another and choose the most feasible one and then compare that winning idea against another and so on until there is just one investment idea left.

Quality Governance decision making appears to me to be one of the greatest improvements that Dash needs to make in order to invest wisely. In addition if someone in the community has shown to consistently not be providing the performance that we expect I see it as our obligation to state that - not to cover it up, ignore it, or protect such individuals just because they are a respected member of the Dash community. They may well be, and their contributions may well be valuable, in other areas but if their performance is not up to scratch in one area we should not turn a blind eye. If someone is consistently not performing in one area I feel it is absolutely necessary to point it out - otherwise we are not dealing with reality again. We're dealing with what we wish to be.

It is essential to be honest in order to see reality and it is only in seeing reality and dealing with reality can we actually build a solid foundation for growth and success of Dash, or in fact any project. Otherwise we are just living in a dreamworld.
 
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...The fact of the matter is that Dash is not suitable for day to day purchases for everyday goods and services in the USA for people within the tax system.

If we succeed, they will have to change the tax system. We're on a mission from God.
 
There are 4 operational steps that will make it easier and more effective to decentralize your decision making:
  1. Obtain and retain knowledge.
  2. Create operational efficiencies.
  3. Continually increase core competencies.
  4. Never stop developing the team. wendy's lunch time surveyzop.com
 
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