>At some point you need to convert your crypto gains back to fiat to actually use it
Except you don't. It's a currency. Just because it's hot right now and people are treating it like an investment doesn't change the fact that it's a currency itself. You don't need to convert it to anything. It was literally built to be a currency free from bank/government control. That was the whole point.
The sole criterion for the viability of a currency is acceptance in trade. It doesn't require government, bank, or sign off by any authority. If people accept it in trade, it's a currency and it's viable. Just because other, older fiats are more mainstream currently doesn't change that fact one iota.
I'm speaking in the hypothetical where crypto is regulated or banned. If you can't legally use it to trade where you physically reside you either need to convert to fiat overseas or buy your physical goods or services overseas. In either case the government isn't going to turn a blind eye "just because".
Okay, sure, let's consider it a currency for the sake of argument. I would posit that if I can't easily exchange my crypto into a form that I can use to pay taxes with, or buy groceries with, that it's a useless currency, and so people will be able to but won't want to accept it in a trade. Currencies aren't useful simply because they _can_ be traded, they're useful because they _can_ be trusted.
It is a currency. I've bought stuff with it. There's literally a BTC ATM in my local liquor store. There's a famous strip club(!) in Portland that accepts BTC. There many, many more examples: https://coinsutra.com/who-accepts-bitcoins/
>Currencies aren't useful simply because they _can_ be traded, they're useful because they _can_ be trusted.
If people trade them, it's because they already trust them.
That's why I said 'sole criterion'. Say you think fiat currencies, and the USD is a terrible and untrustworthy currency. The market doesn't care. It's viable because it's accepted. Acceptance in trade is all that matters.
Another example: Baby food is as good as cash to drug dealers. The implications of that are disquieting, but don't change the fact that it's true one bit.
When it comes to a currency, acceptance in trade trumps all. Nobody's feelings or long held beliefs matter in the slightest. The growing acceptance of crypto is why it's become seen as an investment, not the other way around.
>Currencies derive their value from government control.
There are countless examples that prove this false. World of Warcraft gold, EVE Online ISK, BTC, Ethereum, Dogecoin, baby food, etc. There are literally jobs in developing countries where farming in game money is a job that pays their bills. Yet we both know that no government is in control of those currencies.
>Until and unless the IRS accepts tax payments in a cryptocurrency, they won't be used in the mainstream economy.
I'm surprised they don't already. They're already used in mainstream economy if you count buying things on amazon or Subway.
It's not speculation though. They literally sell one currency for another. That they have value is a given, or they wouldn't be able to exchange one the other. (notice how it doesn't matter which currency is which in that sentence?)
Acceptance defines value. No other factor trumps it.
Except you don't. It's a currency. Just because it's hot right now and people are treating it like an investment doesn't change the fact that it's a currency itself. You don't need to convert it to anything. It was literally built to be a currency free from bank/government control. That was the whole point.
The sole criterion for the viability of a currency is acceptance in trade. It doesn't require government, bank, or sign off by any authority. If people accept it in trade, it's a currency and it's viable. Just because other, older fiats are more mainstream currently doesn't change that fact one iota.