Bitcoin Forum

"Product or commodity" gives BTC a much better chance of being legal in many countries, so why does our official site/wiki still call it money/currency?
Another option could be "trading units" or anything else related to barter.

Is There A Good Reason To Still Be Calling BTC Money/Currency?

https://en.bitcoin.it/wiki/Trade

^^ that.

Right "trade" / "trading units" / Barter == Legal
Money/ Currency == Illegal.

My point exactly.

Until it is widely accepted in lieu of national currencies, "virtual commodity" sounds best to me. It is, after all, limited (unlike USD evidently) and inherently deflationary (unlike USD, again). Plus a commodity avoids the aforementioned regulatory issues.

It behaves as a commodity and I was inclined since the very beginning I learned about it to call it a commodity.

I agree with the OP, I'd rather we'd call it a commodity then a currency.

I've seen some of your other posts and respect your opinion, thanks for up-vote, hazek.

It would be a commodity except for the fact that people use it to buy things.  If buying things with bitcoins were impossible, then I would agree that it was merely a commodity.  But it is trading like a currency on currency exchanges, and people are using it to buy things.  

What YOU call it is irrelevant anyhow.  It's what lawyers/judges/juries call it that ultimately matters.

Money is generally considered to be a currency which is backed by something -- such as gold, silver, etc.  I would never call a bitcoin 'money'.  But it is a currency, because it facilitates trade, and is not and 'end unto itself'.  People who want bitcoins want them for their ability to facilitate trade.  Not because they are nice to mount on the wall, on top the television, or anything like that.

If I go to you with a pig and ask to trade it for your chicken, we're engaged in barter.  It's barter because the items being traded are desired by each party as an end unto themselves.  They intend to eat the pig/chicken, or such.  Currencies, on the other hand, are an unconsumed facilitator of trading -- which is exactly what bitcoins do.

Alternative currencies are not ilegal.

Maybe I'm wrong hugolp, but Gov has a monopoly on "legal tender/money." Surely you know the Liberty Dollar guy was convicted?
I would enjoy the experience of being taught otherwise*, thanks.

*I'm not being sarcastic, I don't always come up with the right words.

It's my understanding Liberty Dollars got raided because the owner printed currency, and then encouraged people to pass it off as USD. Unless some idiot makes a BTC greenback and passes it off to unsuspecting people, BTC is not likely to catch this type of attention.

Well let's look at what the dictionaries say(top 3 google results for "currency dictionary"):

(I will underline what I think describes Bitcoins)

cur·ren·cy   
[kur-uhn-see, kuhr-]  Show IPA
–noun, plural -cies.
1. something that is used as a medium of exchange; money.
2. general acceptance; prevalence; vogue.
3. a time or period during which something is widely accepted and circulated.

com·mod·i·ty   
[kuh-mod-i-tee]  Show IPA
–noun, plural -ties.
1. an article of trade or commerce, especially a product as distinguished from a service.
2. something of use, advantage, or value.
3. Stock Exchange . any unprocessed or partially processed good, as grain, fruits, and vegetables, or precious metals.

mon·ey   
[muhn-ee]  Show IPA
noun, plural mon·eys, mon·ies, adjective
–noun
1. any circulating medium of exchange, including coins, paper money,  and demand deposits.
2. paper money.
3. gold, silver, or other metal in pieces of convenient form stamped by public authority and issued as a medium of exchange and measure of value.

http://dictionary.reference.com/

cur·ren·cy (kûrn-s, kr-)
n. pl. cur·ren·cies
1. Money in any form when in actual use as a medium of exchange, especially circulating paper money.
2. Transmission from person to person as a medium of exchange; circulation: coins now in currency.
3. General acceptance or use; prevalence: the currency of a slang term.
4. The state of being current; up-to-dateness: Can you check the currency of this address?

currency [ˈkʌrənsɪ]
n pl -cies
1. (Economics, Accounting & Finance / Currencies) a metal or paper medium of exchange that is in current use in a particular country
2. general acceptance or circulation; prevalence the currency of ideas
3. the period of time during which something is valid, accepted, or in force
4. the act of being passed from person to person
5. (Economics, Accounting & Finance / Currencies) Austral (formerly) the local medium of exchange, esp in the colonies, as distinct from sterling
6. (Social Science / Peoples) Austral slang (formerly) the native-born Australians, as distinct from the British immigrants
[from Medieval Latin currentia, literally: a flowing, from Latin currere to run, flow]

com·mod·i·ty  (k-md-t)
n. pl. com·mod·i·ties
1. Something useful that can be turned to commercial or other advantage: "Left-handed, power-hitting third basemen are a rare commodity in the big leagues" (Steve Guiremand).
2. An article of trade or commerce, especially an agricultural or mining product that can be processed and resold.
3. Advantage; benefit.
4. Obsolete A quantity of goods.

commodity [kəˈmɒdɪtɪ]
n pl -ties
1. (Economics) an article of commerce
2. something of use, advantage, or profit
3. (Economics) Economics an exchangeable unit of economic wealth, esp a primary product or raw material
4. Obsolete
a.  (Economics) a quantity of goods
b.  convenience or expediency
[from Old French commodité, from Latin commoditās suitability, benefit; see commodious]


mon·ey  (mn)
n. pl. mon·eys or mon·ies
1. A medium that can be exchanged for goods and services and is used as a measure of their values on the market, including among its forms a commodity such as gold, an officially issued coin or note, or a deposit in a checking account or other readily liquefiable account.
2. The official currency, coins, and negotiable paper notes issued by a government.
3. Assets and property considered in terms of monetary value; wealth.
4.
a. Pecuniary profit or loss: He made money on the sale of his properties.
b. One's salary; pay: It was a terrible job, but the money was good.
5. An amount of cash or credit: raised the money for the new playground.
6. Sums of money, especially of a specified nature. Often used in the plural: state tax moneys; monies set aside for research and development.
7. A wealthy person, family, or group: to come from old money; to marry into money.

http://www.thefreedictionary.com/

cur·ren·cy noun \ˈkər-ən(t)-sē, ˈkə-rən(t)-\
plural cur·ren·cies
Definition of CURRENCY

1
a : circulation as a medium of exchange
b : general use, acceptance, or prevalence <a story gaining currency>
c : the quality or state of being current : currentness
2
a : something (as coins, treasury notes, and banknotes) that is in circulation as a medium of exchange
b : paper money in circulation
c : a common article for bartering
d : a medium of verbal or intellectual expression
 See currency defined for English-language learners »
See currency defined for kids »
Examples of CURRENCY

A new currency has been introduced in the foreign exchange market.
They were paid in U.S. currency.
Furs were once traded as currency.
The word has not yet won widespread currency.
I'm not sure about the accuracy and currency of their information.

com·mod·i·ty noun \kə-ˈmä-də-tē\
plural com·mod·i·ties
Definition of COMMODITY

1
: an economic good: as
a : a product of agriculture or mining
b : an article of commerce especially when delivered for shipment <commodities futures>
c : a mass-produced unspecialized product <commodity chemicals> <commodity memory chips>
2
a : something useful or valued <that valuable commodity patience>; also : thing, entity
b : convenience, advantage
3
obsolete : quantity, lot
4
: a good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors (as brand name) other than price
5
: one that is subject to ready exchange or exploitation within a market <stars as individuals and as commodities of the film industry — Film Quarterly>
 See commodity defined for English-language learners »
See commodity defined for kids »
Examples of COMMODITY

agricultural commodities like grain and corn
Oil is a commodity in high demand.
Patience is a rare commodity.

1mon·ey noun, often attributive \ˈmə-nē\
plural moneys or mon·ies
Definition of MONEY

1
: something generally accepted as a medium of exchange, a measure of value, or a means of payment: as
a : officially coined or stamped metal currency
b : money of account
c : paper money
2
a : wealth reckoned in terms of money
b : an amount of money
c plural : sums of money : funds
3
: a form or denomination of coin or paper money
4
a : the first, second, and third place winners (as in a horse or dog race) —usually used in the phrases in the money or out of the money
b : prize money <his horse took third money>
5
a : persons or interests possessing or controlling great wealth
b : a position of wealth <born into money>

http://www.merriam-webster.com/dictionary/

He was convicted on counterfeiting charges -- his coins were confusingly similar to legal tender coins.  I don't agree with the Jury's decision in his case, but he was playing a game by rearanging the "In God We Trust" into "Trust in God".  

Nobody said that bitcoins were legal tender money.  They are obviously not.  They're an electronic currency which can be converted into legal tender currencies.

Go to disneyland and you have a good chance of acquiring Disney Dollars.  Those are a type of currency that is not legal tender.  And go to an arcade where you get 8 game tokens for $1.  Those tokens are also a currency.

http://www.perrific.com/disney/money/1front.jpg
http://www.boingboing.net/images/gametokens.jpg

Conclusion: Both words can describe Bitcoins it's just that the they are being mostly used right now I'd say Bitcoins are better described as a commodity than a currency.

EDIT: and it can even be called money.

alternative currencies that could be easily mistaken for legal tender are.

being as bitcoin bears no resemblance to US dollars or any other world currency, they are legal.

i personally legally classify bitcoin as a community currency, like canadian tire money and similar.

IANAL, IANYL, TINLA.

1. Legal tender laws dont forbid other currencies. Legal tender law forces you to accept dollars (or the currency of the government of each country) to settle all debts. This is actually attacking your right to a contract. F.e. Imagine you sign a contract stating that you will do X in exchange for an amount of silver. You do X and when it comes to pay you the person refuses and offers dollars. You dont accept since you want the conditions of the contract. The courts will rule that he/she can pay you in dollars instead of silver because its legal tender, and therefore good to settle any debt.

This is why (almost) nobody signs a contract in anything that is not dollars in the USA. If you do it does not matter because the other person can settle in dollars anyway, so everybody ends up using dollars.

2. The government does not forbid compiting currencies directly. What it does is give tremendous advantges to the dollar, basically legal tender laws and forcing everybody to pay taxes only in dollars. This is enough to create a de facto monopolly, but it looks nicer and less facist.

3. Liberty Dollar was taken down because it was accused of copying the government money. They said he wanted to fool people into believing that the Liberty dollars were Federal Reserve Notes. They were not charged for operating an alternative currency, since its legal. The acussation is obviously an excuse to take down a competing currency that was starting to take off. Its one more prove that they will do anything to impose a monopolly on money, but they will try to do it in the nicest way so they can say that they are not imposing the dollar.

hugo is right, alternative currencies are not illegal so log as they don't try to imitate legal tender which what they hanged Liberety dollar on.

http://en.wikipedia.org/wiki/Local_currency

I think a cool description of Bitcoin could be a local globally used currency :))

FYP

Converted / Sold / Exchanged.  The point is still the same.  They're not an end unto themselves, they simply facilitate trade.

Facilitating trade is not an end unto itself? ;)

Nope.  I thought I made myself clear on that point.  They're a medium of exchange.  They're desired because they facilitate trade.  They're not desired because someone wants to place them on their lawn, atop their TV, eat them, etc.  Some weirdo might have a goal to accumulate them without EVER using them to facilitate a trade for SOMETHING ELSE -- but I have yet to run into such a person.  And I doubt that you have either.

Yes I agree. But I wonder why you make the distintion. Facilitating trade is just another function.

I make the distinction because of the definition/etymology of 'currency'.  Currencies, as the name implies, permit trade to FLOW (like a current).

http://www.etymonline.com/index.php?term=currency

One very good reason is that it is the de facto usage and wouldn't be that easy to change in people's minds.

Google search:
bitcoin currency — About 4,330,000 results (0.11 seconds)
bitcoin commodity — About 365,000 results (0.08 seconds)

Heading of bitcoin.org: P2P Virtual Currency.
Bitcoin is a peer-to-peer currency.

Wikipedia: (http://en.wikipedia.org/wiki/Bitcoin) Bitcoin is a digital currency created in 2009 by Satoshi Nakamoto.

Etc.

Yes... and a lot of things flow too, even literally.

What I want to say is that to you f.e. a shovel is not a means unto itself neither I guess? Because it is used to dig wholes. But you could say the wholes are for something else. Where do you draw the line?

You could even say that eating is not a means unto itself, its just a way to stay alive. Its all a matter of definition and subjective opinion, so discussing if something is a means unto itself its rathe pointless. That is what I am trying to say.

Although currency vs. commodity may seem to be just semantics I think it is vital to the future of bitcoin to be considered a commodity for all the reasons already stated in this thread.

The closest physical commodity compared to bitcoins are diamonds - which are traded mostly without government interference.  I perceive bitcoins as digital diamonds where electrons = diamonds.  

Bitcoins in themselves can't be considered a currency as there is no way for a "face value" to be attributed to them.  Even if they did have a attributed face value it would be just as meaningless as other commodities that do have a face value i.e. $50 1-ounce Gold Eagles.

You have no idea how hard I fought this one back in the "early days" of Bitcoin, but I got hooted down. The Bitcoin community has stepped in shit up to its ankles, and there's no way to wipe it off now.

Bitcoin is a program, it is an algorithm, it is a convenience to keep the community's accounts in order.

Bitcoin is not money, it is not cash, it is not dollars, it is not currency, it is not legal tender. These are buzzwords the Establishment uses to keep their franchises safe from competition.

Bitcoin is not "worth" Dollars, or Euros, or Pogs. But it can be traded for them.

There was no good reason to misuse any of the above loaded terms. There were plenty of other options. But the Bitcoin community was invincible, and could call things whatever they damn well wanted.

Now that the Bitcoin community has brought in "The Authorities" to solve their dumbass error of divulging customer identities on Mt.Gox. We will see just how shortsighted this policy of tweaking the nose of the legal system will turn out to be.

I think you're a bit off-base there - Associated Press reported that the guys behind Liberty Dollars recruited businesses to not only accept them, but to hand them back in change to unsuspecting people. That's not a voluntary participation in an alternate currency, that's counterfeiting and just general scumbag/scammer behavior, regardless of what you happen to think of the USD right now.

The authorities in respective countires are the ones who will define whether BTC are regarded as a "currency" or a "commodity", it does not matter what other people associate BTC with.

You probably don't want to call them currency because you want to skirt the laws regarding currencies.  

Diamonds are sought after as an ends unto themselves.  People spend money to have diamonds, not to then turn around and trade those diamonds for other things.  Diamonds can be used for jewelry, cutting things, etc.  That's why diamonds are a commodity, while Bitcoins are a currency.  If bitcoins were useful for anything OTHER THAN TRADE, you'd have a much better time trying to call them a commodity with a straight face.

And again -- it doesn't matter what the community calls them.  Even if you could convince every person in the Bitcoin community to call them a commodity, it won't make a bit of difference.  It's what the judge/jury/law defines as currencies that ultimately matters. 

It most certainly is a currency.  It facilitates trade.  That's what currencies do.  That's why I gave the etymology of the word.  It comes from the word meaning 'to flow' -- it permits trade to flow.

And unlike a commodity, it has no use other than to facilitate trade.  Hell, I could argue that a US Dollar Bill is more of a commodity than a bitcoin is -- because if nothing else, I could light it on fire and generate heat from the paper.  Or I could use them to wallpaper my room.  Bitcoins have absolutely no other use than to facilitate trade.  

One more attempt. Maybe somebody out there is reachable.


It continues:


Don't argue with me. Argue with the guy in the black robe. Maybe he will be impressed with your knowledge of legal jargon. I'm sure not.

This is so unnecessary. All it takes is a rational survey of the terminology and issues, and an agreement on which terms are proper to describe Bitcoin.

But everybody is such an expert...

You are correct that I want to call them commodities because I don't want certain laws to apply to bitcoins.  In the US Cash Transaction Reports (CTRs) and Suspicious Activity Reports (SARs) are a real hindrance to being able to transact in a free, anonymous and non-oppressed manner.  If those same laws were to be applied to bitcoins it wouldn't outlaw bitcoins but it would make most people that use bitcoins outlaws if they failed to voluntary report such transactions.

Diamonds are not necessarily sought out as an end unto themselves except at the retail and industrial level.  At the wholesale level people purchase them because they believe that they can sell them to someone else at a higher price.  

Bitcoins do have a unique utility – this being the ability to send them quickly, securely and without double spending – and this is a unique and noble.  Once exchanges begin to operate in an efficient manner this should allow a party to buy bitcoins using their native currency – send those coins to a third party anywhere in the world – and allow that party to sell those bitcoins in exchange for their native currency, with all of this happening in fewer than three hours.  That is where the value lies with bitcoin, being the relative utility compared to any other method in regards to cost of transfer and the time it takes to make such a transfer.

In practice merchants would likely price their products at their native currency and then a bitcoin price where bitcoin price = native currency price/bitcoin exchange rate in that currency.  Market efficiency should take over and make it so that the value of each currency relative to bitcoin closely follows the corresponding FOREX exchange rate.

It will be MUCH easier to persuade merchants to start accepting bitcoins if there is a liquid market where the merchant can exchange them for their native currency almost immediately after receiving them.  Simply put businesses must turn a profit to remain viable and be able to pay their bills.  Exchanges will be an integral part of the bitcoin economy until businesses can pay their lease, electric, internet and their suppliers with bitcoins.

Even if bitcoins were a semi-accepted form of payment the volatility inherent to the bitcoin market due to its small size necessitates that exchanges be in place if the acceptance of bitcoin was only relative to its value compared to a native currency.  Plainly put if a company could pay their bills with bitcoins but they knew their bills were going to be 500 USD they would need to covert bitcoin to USD immediately upon receipt of the bitcoin if they wanted to stay in business due to the risk of ruin involved in being heavily invested in a very volatile market.

In a technical sense all miners are converting fiat currency to bitcoins as they are using their fiat currency to buy hardware and electricity to convert to bitcoins.  If you actually can sit there “with a straight face” and tell me your computer is printing money there probably is not much I can say to dissuade you.

These citations are misleading unless you read them correctly.  Currency is not just the same word as money.  They are different concepts that just happen to often overlap.  Currencies have historically been comprised of legal money because banks and governments have historically been reliable guarantors of future value.  But there is no reason money must be backed by government force.  And there is no reason that currency must be money.  Anything that circulates as a medium of exchange has currency.  Period.

Money may be currency, if it is readily exchanged.  And currency may be money, if it has future value, either innate or by fiat.  Currency, however, is not necessarily money and money is not necessarily currency.  Over the last decade, for instance, gold and silver have been much better monies than Federal Reserve Notes.  Yet gold and silver are not currencies since they can't be used to purchase a hamburger.


There's no reason to argue with anyone in black robes.  Since the US is a common law jurisdiction,


Which we have done already.  Bitcoin is a currency, since its function is to circulate as a medium of exchange, and since it in fact does so.  But you can call it whatever you'd like.

The only thing that will change Bitcoin from a commodity to a currency is you making something useful, needed, or pretty that you yourself do not need more of and trading it for Bitcoin.  I have an issue with the money market (MtGox, et cet)  because it ain't money unless a boatload of people accept it in trade. For stuff they make.

In economics, currency refers to a generally accepted medium of exchange. I guess it depends on how you define "generally accepted". Bitcoins are definitely a medium of exchange.

They are generally accepted among a particular community. Why not consider them a currency?

Recently someone on these forums pointed out the little-discussed history of "commercial scrip" - today known as corporate currencies.

This discussion points out the multifaceted nature of human exchange systems -- and that Bitcoin fulfills many of the definitions of a commodity (like diamonds) and some of the definition of a currency. 

I recently noticed the advertising campaign of American Express.  Note that they appear to be promoting a "commercial currency," positioning themselves for inter-convertibility with what...Facebook Credits? But look at their image:

http://www.thecubiclechick.com/wp-content/uploads/2011/05/amex-social-currency.jpg

It will be mainly used as a commodity for some time. If bitcoin gets really successful then it will get to be mainly used as currency.

USD is not backed by anything else than the paper they are printed on/metal used for coins. Gold backing etc. was removed a reaaally long time ago.

You should watch: http://www.zeitgeistmovie.com/
The portion about money is made very easily understandable :)

Infact, most money does not even exist what is in circulation. Money is literally printed, and mostly economies are based on loan. Hell, for USD the US govt doesn't even own the currency! :D It's private currency.

Lets call them kittens, everyone loves kittens and kittens will never be illegal.

Only sovereign nations are allowed to issue "money" or "currency". The legal status of Bitcoin is certainly not money/currency. According to US law, Bitcoins are a barter. I have posted on this subject at "Opening a BitCoin exchange is futile - read why" http://forum.bitcoin.org/index.php?topic=21174.0;all Other sovereign nations have similar provisions.

The IRS defines barter as:


http://www.irs.gov/businesses/small/article/0,,id=113437,00.html

So Bitcoins are, per se, legal. However, Bitcoins are subject to multiple laws, e.g. tax laws. In the U.S. (for example) any person engaged in barter "may be subject to liabilities for income tax, self-employment tax, employment tax, or excise tax. Your barter activities may result in ordinary business income, capital gains or capital losses, or you may have a nondeductible personal loss."

http://www.irs.gov/businesses/small/article/0,,id=188095,00.html

I'm all for calling them credits. Thats probably the most appropriate name. "Bitcoin Credits"

Suppose we call it Bitcoin credit; credit must be debited. A Bitcoin account is credited with X Bitcoins whereas a $ account is debited with X dollars. It therefore still constitutes barter according to the law.

digital property

USD is not backed by anything else than the paper they are printed on/metal used for coins. Gold backing etc. was removed a reaaally long time ago.

[/quote]

USD is backed by bullets

It'd be nice to know where you get this idea, since it's blatantly false.

A couple quick notes. 

You are attempting to apply US Law that applies to securities and calling MtGox and the like stock exchanges when those laws apply specifically (and exclusively) to exchanges that trade securities.  Whether "any country has similar provisions" is a non-point but just fyi no they do not.


Now you consider bitcoins a barter system, which I think is also incorrect.

Even if it was a barter system the tax reporting requirements of 1099-b as it applies to commodities with certain criteria attached, namely:


A very important point is that brokers only need to file a 1099-b when a client sells them a commodity that is enough to satisfy a CFTC-approved RFC.  A person can buy an unlimited amount of commodities without any required reporting.  For example a person could buy 5-million dollars in silver and the broker would have no reporting requirements.  That 5-million in silver could then be sold to a private party with no reporting requirements. 

I will also throw in that if the exchange is not based in the US it is not required to report to the US IRS.  That does not mean that if someone makes income they shouldn't report it on their taxes, they should, but if someone sent funds to buy bitcoins, then withdrew those bitcoins there would likely be no need to file a 1099-b even if the exchange was based in the US and the buyer was in the US.

I was blatantly wrong about the The Securities Exchange Act of 1934, inexusably so. However, from 1099-b must be filled when:

"A broker or barter exchange must file Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, for each person:

    For whom the broker has sold (including short sales) stocks, bonds, commodities, regulated futures contracts, foreign currency contracts (pursuant to a forward contract or regulated futures contract), forward contracts, debt instruments, etc., for cash,

    Who received cash, stock, or other property from a corporation that the broker knows or has reason to know has had its stock acquired in an acquisition of control or had a substantial change in capital structure reportable on Form 8806, or

    Who exchanged property or services through a barter exchange"

http://www.irs.gov/instructions/i1099b/ar02.html

I still argue that Bitcoins fall under the scope of what IRS defines as "Internet-based Barter" and "Trade Dollars"

Maybe I expressed myself wrongly; of course a soverign nation may delegate powers, but such powers must expressly be delegated. No sovereign nation has delegated powers to issue "money" or "currency" to an entity that is not controlled or officially affiliated to the nations governance. If in any nation another legal "money" or "currency" was issued, how would tax be paid on such transactions? There is no country that accepts payment of tax in a "money" or "currency" not issued by the sovereign nation.

As no sovereign nation has delegated powers to Bitcoin to issue "money" or "currency", Bitcoin is not deemed as such according to law.

The exemption list is long for 1099-b, it reads as follows:

Exceptions.   Brokers are not required to file, but may file, Form 1099-B for the following.
Sales for exempt recipients, including corporations, charitable organizations, IRAs, Archer MSAs, health savings accounts (HSAs), the United States, a state, or political subdivisions.

Sales initiated by dealers in securities and financial institutions.

Sales by custodians and trustees, provided the sale is reported on a properly filed Form 1041, U.S. Income Tax Return for Estates and Trusts.

Sales at issue price of interests in certain regulated investment companies.

Obligor payments on:

Nontransferable obligations, such as savings bonds or CDs.

Obligations for which gross proceeds are reported on other Forms 1099, such as stripped coupons issued before 
July 1, 1982.

Retirement of short-term obligations with original issue discount that is reported on Form 1099-INT, Interest Income. However, Form 1099-B is required for the retirement of short-term state obligations having no original issue discount.

Callable demand obligations that have no premium or discount.

Sales of foreign currency unless under a forward or regulated futures contract that requires delivery of foreign currency.

Sales of fractional shares of stock if gross proceeds are less than $20.

Retirements of book-entry or registered form obligations if no interim transfers have occurred.

Sales for exempt foreign persons as defined in Regulations section 1.6045-1(g)(1).

Sales of Commodity Credit Corporation certificates.

Spot or forward sales of agricultural commodities. See below.

Some sales of precious metals. See Sales of precious metals below.

Grants or purchases of options, exercises of call options, or entering into contracts that require delivery of personal property or an interest therein.

Would you call a diamond exchange a barter or trade dollar exchange?  Diamonds can be used to barter with but if the exchange only deals in diamonds (reference the New York Diamond Dealers Club) no goods or services are being bartered.  By definition if either side of a transaction involves payment in the form of a fiat currency that is not a barter but a purchase.

bitcoin is backed by sins

Well the Queen Mother hasn't specially knighted anyone and blessed them with the sovereign authority to issue turds into their toilet bowls.  Yet, there they are.

Would you care to cite any of these laws, or are you just unlawfully issuing opinion from your nether regions?


Dollars still exist.  You can pay your tax in dollars, yes?  As far as I can tell, there's nothing preventing the US from printing up more dollars?

Maybe you'd consider updating the Wikipedia. If true, that is a very interesting fact missing from the discussion: http://en.wikipedia.org/wiki/Liberty_Dollar#Conviction

If a person bought $5 million worth of silver and sold it for $5 million within a short time-span, than I agree with you that a 1099-b would not be required. If instead they sold it for a profit of $5000 a form is required. The IRS would presumably have a lot of problems enforcing the law upon thousands of traders based in the U.S., which is why they are more than likely to enforce the law upon the exchange.


Again I am in agreement with you; however similar laws exist in the U.K., Australia, China taxes virtual money trading despite having outlawed the practice, in South Korea "a court ruled in September of last year that profits from the trading of "cyber money" should be subject to 10 percent value added tax (VAT)". So such laws are either global or definately globally expanding. Most of Bitcoin traders are located in advanced economies where the likelihood of such laws already being in existence is high.

http://www.koreatimes.co.kr/www/news/nation/2010/01/116_58775.html

CryptoCommodity; none of these exceptions are applicable to Bitcoins. The issue of "Internet Based Barter" and "Trade Dollars" is multifaceted as Bitcoins have several uses. It can be traded for USD, it can be traded for other goods and services. If you purchase 10 Bitcoins for $100 and sell them for $200 you earn $100. Is that to be considered as a strict capital gain, or do you "earn trade or barter dollars through a barter exchange"? You could be right that this is not considered a barter exchange, however I believe that it is. You could purchase 10 Bitcoins for $100 and after an aprreciation of value exchange them for goods or services valued, say, $200. In this case it is clear that the transaction is considered a barter, in which $100 has been earned which may or may not (due to specific circumstances) be subject to tax.

benjamindees What are you talking about - you cannot pay U.S. taxes with Dwolla, Pound Sterling or any other currency but USD.

That's not a bad idea. I'll offer one gram of kitten for each bitcoin.

A $5000 profit would not create a need for a 1099-b to be filed as it would be a private party sale.  1099-b filing requirements only apply if the sale is in the normal course of trade or business.

Your view that the purchase of bitcoins for fiat currency constitutes a barter exchange because you could possibly trade them for a product or service elsewhere after receiving them is not a valid argument.  First barter is defined as trading goods or services for goods or services.  If an exchange only deals in bitcoins for fiat currency no barter exists.  Any bartering done later by that individual with the bitcoins they purchased is outside the realm of the exchange.  If the person makes a profit it is their responsibility to report income to the proper taxing authority.

I'd love a few milikittens.

Having read a different topic, a person posted that he had spoken to a securities lawyer, and they had reached the conclusion that public trading on the "Global bitcoin stock exchange" (and hence any exchange in the US dealing with securities) would subject it to SEC and relevant laws. A security is defined as:

 "(3) the term “security” means—

(A) a note, stock certificate, treasury stock certificate, bond, treasury bond, debenture, certificate of deposit, interest coupon, bill, check, draft, warrant, debit instrument as defined in section 916(c) of the Electronic Fund Transfer Act, money order, traveler’s check, letter of credit, warehouse receipt, negotiable bill of lading, evidence of indebtedness, certificate of interest in or participation in any profit-sharing agreement, collateral-trust certificate, pre-reorganization certificate of subscription, transferable share, investment contract, voting trust certificate, or certificate of interest in tangible or intangible property;"

US Code Title 18 § 513. Securities of the States and private entities.

Considering the fact that a securities lawyer has a far superior legal comprehension than myself, I concur that Bitcoins are not considered Barter. Also, it cannot be considered both a barter and a security, which I fallaciously argued earlier. However, as Bitcoin is a "debit instrument as defined in section 916(c) of the Electronic Fund Transfer Act" ("As used in this section, the term "debit instrument" means a card, code, or other device, other than a check, draft, or similar paper instrument, by the use of which a person may initiate an electronic fund transfer.") any Bitcoin exchange based in the U.S. is subject to the SEC and relevant laws. And, of course, in the globalized financial business sphere, all stock exchanges in the world are subject to similar legal provisions and all defintions of "securities" are likewise or very similar, and due to "harmonization" the laws and definitions are being aligned continuously.

So all Bitcoin exchanges, wherever situated are subject to the exchange laws of the host nation, as Bitcoin is a kind of "security", I contend. Exactly which tax laws that are applicable is beyond my current knowledge; although the only point that we have agreed upon so far is that gains on Bitcoin trades are subject to some kind of tax.

There is a reason that lawyers "practice" law.  You can ask ten lawyers the same question and get fifteen different answers.  Does it surprise you that a securities lawyer would see bitcoins as a type of security?  A real estate lawyer would see them as real property, an Intellectual Property Lawyer would see them as IP etc etc etc.....

My background is in economics, econometrics, commodities, equities and derivatives so I am also biased.  My opinion is based on what mostly resembles bitcoins in use and utility, I find this to be diamonds.  If we had a willy wonka teleportation machine and could move diamonds instantaneously and securely across space they would function exactly as bitcoins do.  Does Lil Jon have to wear a USB stick with 5000btc in it around his neck to give it another use and make you accept it as a physical good?

There is no way bitcoins are a security.  Bitcoins are individual things.  You could securitize bitcoins by creating a security that signifies ownership in a bitcoin (or bitcoins) and possibly trade that on a stock market but by definition a security is only a document ownership of some underlying thing.

As far as if bitcoins need to be taxed that depends on your jurisdiction.  A blanket statement saying they are subject to some kind of tax is ridiculously broad.

I do not simply listen to any professional and go with what he/she thinks; the wording of section 916(c) of the Electronic Fund Transfer Act describes the functioning of Bitcoin. It is not Intellectual Property, I went through that many hours ago, when some poster suggested it would be Intellectual Property. I would not accept a usb with bitcoins stored on it, as the usb would only be a medium used to store the code. By that reasoning a cd containing Windows 7 would be a "goods" whereas it is "intellectual property".

The tax statement is broad - but in which jurisdiction do the tax authorities say - hey, make a quick buck by selling any random article for a higher sum than you just bought it for, and keep the dough - no probs!

I will look into tax issues of various jurisdictions but did you know that gambling winnings are not taxed in the UK?  You can't assume that all countries have laws similar to the US.

I am not immediately inclined to equate bitcoins to diamonds, but bitcoins unlike securities, banknotes and most other goods, can be directly traded in a digital market. The digital market is the medium, just as vegetables are directly traded in the physical environment of a farmers market. In that sense, I don't see any different between exchanging cash for carrots or exchanging USD for bitcoins, making bitcoins seem like a commodity.

But since bitcoins don't have any other use than as a store of value, means of trade, they are certainly not a commodity.

I'm sorry, but that is simply not the case: General betting duty

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000255&propertyType=document

http://www.guardian.co.uk/business/2009/aug/05/betfair-gambling-tax-offshore

I do not live in the U.S. but Sweden, however I know more about U.K. law than any other jurisdiction. Of course there are variations, but the laws of the FIRE sector have since the deregulations in the 80ies become more aligned, and today the developed world, in particular the U.S., the E.U., Japan have very similar provisions FIRE sector provisions in order to operate on a level ground, which they continously extend to emerging markets who are disadvantaged due to less capital and less input regarding the regulatory framework.

Betting duty applies only to bookmakers that are based in the UK.  As I stated UK citizens do not pay taxes on gambling winnings.

That is because the bookmaker pays the duty, i.e. it is already deducted from the gains. It does not matter to HMRS if they collect taxes from bookmakers or gamblers as long as they collect taxes at some point. In 1997 I opened an account with an English bookmakingfirm online via telephone. When I placed a bet I could chose to pay 10 % tax (I think that was the rate, maybe 15%) on the bet or the earnings. If I chose to pay on the earnings I did not pay tax if I lost. This concept was entirely novel to me, and I looked into the matter and it was due to UK tax laws (albeit I was not a U.K. resident).

Regarding the information from the securities lawyer; I only glanced at the Global bitcoin stock exchange and did not notice that it was a securities exchange, per se. So the lawyer did not state that Bitcoins are "securities". He thought the concept was very new and did not have a clear answer; he thought it functioned a bit like a derivative, although it was too far a stretch to actually call it a derivative. I would not consider Bitcoin to be a derivative, as it has no underlying asset, unless you consider the hardware or opensource code to be the assets. I still think there is a case for Bitcoins to be classified as "securities" as it is a code which may be used by a person to initiate an electronic fund transfer. Am I positive that this is the case - no.

EDIT: The part about hardware or opensource code being the underlying asset is intended as a pun; of course USD is what would back Bitcoin if it were a derivative, but due to the volatility of Bitcoin it defies both common sense, and more importantly, derivative laws (I do not know derivative laws in any detail) which obviously have stipulations against "assets" appreciating/depreciating 20-60 % per day (not only Mtgox, but other exchanges too) and 100% + per week. Although in the case of Bitcoin, it would be some kind of inverse calculation of asset appreciation/depreciation as Bitcoin itself fluctuates and not USD.

So, once again, you are talking out of your ass.

You haven't said a single thing that's even remotely factual or productive in this entire thread.  You are a complete, utter retard.

I disagree, this thread started off by discussing whether or not it was convenient to name Bitcoin as a currency or not. Some posters have engaged in a dialogue as to what the actual legal status of Bitcoin is. As it is unchartered terrirtories, and no authoritative answer exists or at least not easily accessible, such a dialogue will always proceed with a try and fail method. I am guessing you have never read any of Plato's dialogues?

I'm certainly aware of Platonic dialog.  But you aren't asking questions.  You're just making a bunch of assertive claims based on obvious bullshit and then retracting them a few posts later.  It's pointless to engage you, because your starting point seems to be "Bitcoin is somehow illegitimate" and then you work backwards from there, re-hashing a bunch of settled issues in the process.

I've looked back through your post history, and it seems to be 100% nonsense -- a bunch of copy/pastes from the IRS website.  Are you seriously under the impression that any of the criminally corrupt governments on Earth are going to bless Bitcoin as opposed to just accepting the fact that it exists and that they can't do anything about it?

The process is not a strict platonic dialogue, however, I have attempted to obtain an answer. Yes, I have been wrong on several occasions, and the reason I retract previous arguements is because it has become obvious that they are not valid. My first post was: "The authorities in respective countires are the ones who will define whether BTC are regarded as a "currency" or a "commodity", it does not matter what other people associate BTC with." However, the legality question has provoked substantial interest from me.

I can state plainly that I am 100% certain that the unregulated trade with Bitcoins is definately not in accordance with the law. No trade is free from regulation (unless expressly stated otherwise according to law) so this maxim applies to Bitcoins. If it is possible to bring clarity to what law(s) that Britcoin is obliged to follow, it would be very interesting to obtain this information. I am not saying that just because it is not legal people will stop trading or that the authorities will undoubtedly be able to stop Bitcoins. I am an inquisitive person by nature who prefers to have knowledge aforehand than after the fait accompli. Also, if more people within the Bitcoin community became aware of the legal issues, a larger possibility exists that actions can be taken to prevent an outright ban. I currently hold a notion that legal awareness is not very high, whereas "programming skills" are high.

Due to human nature and the Goldman Sachs, Geithners, IRS's, Bilderbergers etc. who are at this moment gathering information (I sent a PM to Gavin saying that whatever he says at the CIA will make no difference, the powers that be are simply on a fact finding mission from multiple sources before they unilaterally decide on which action(s) to take) I am not the least hopeful that Bitcoin will survive, and that the primary threat stems from the legality point.

So I sincerely hope that you can see my point of view, and at least have an understanding of that I am not simply "trolling". The past days I was posting on other legal issues, force majuer etc. and the first post used an example from force majuer within construction work. Needless to say, I was semi-accused of trolling, but later I navigated to the London Stock Exchange and posted their "force majeur" definition - which was entirely different to MagiculTux definition, and was very mcuh aligned to the example taken from the field of construction work.

EDIT: I am not the least hopeful that Bitcoin will survive = thrive/develop from a state of usage by innovators/speculators to a wider commercially sound market

Although I am not claiming that the information contained here within would be applied to Bitcoin, it contains definitions and scopes which could, in at least some aspects, be applied to Bitcoins. The information also shows that Bitcoins is not operating in as much “uncharted waters” as at least I was under the impression. Of course Mtgox is not operating from the U.S. or the E.U. but other exchanges do. Other laws may apply in Japan, as the laws in the U.S. and E.U. differentiate very substantially regarding their applicability to Bitcoins.

Bitcoins are:

A; A code generated created through computational power.

B; A code traded against real dollars; it could thus be described as a form of electronic currency.

C; A code traded for services/goods; it thus performs functions of an electronic currency.

When lawmakers and/or the judicial branch enact laws/pass judgments they consider, amongst other things, the functions of the subject. It is thus likely that Bitcoins will be viewed as something capable of possessing value in an electronic form and something capable of being exchanged for services and goods.

In U.S. law the UNIFORM MONEY SERVICES ACT pertains to money transmissions, and although it puts in place statutory regulations against money laundering during the course of transmissions, money exchanges and check cashing, it contains some definitions that might be applied towards Bitcoins.

Electronic money is usually redeemable in cash, as with Dwolla for example. However this act includes a form of electronic money that is not redeemable in cash:

”Internet scrip

Stored value cards, token or notational systems as well as account-based systems may all involve exchange of value that is not redeemable in money. The term “scrip” has been used to refer to value that may be exchanged over the Internet but which may not be redeemable for money. Scrip is more analogous to coupons or bonus points that can be exchanged by a consumer for goods or services but have no cash redemption value. Scrip can be used by merchants to sell access to value-added web pages on a per-access basis or a subscription basis. They can also use scrip to provide promotional incentives to users. Scrip can represent any form of currency, points in a frequent user program, access rights, etc.”

 “Monetary value

The definition of “money” has been expanded to reflect the fact that certain payment service providers employ a form of value that is not directly redeemable in money, but nevertheless (1) serves as a medium of exchange and (2) places the customer at risk of the provider’s insolvency while the medium is outstanding. The same safety and soundness issues pertinent to redeemable forms of value apply to these irredeemable forms of value. Consequently, a new definition of “monetary value” has been included in this Act.”

Money transmission is defined as following:

“Money transmission subsumes several activities or functions: the transmission of funds as well as the sale or issuance of payment instruments and the sale or issuance of stored value. Stored value, as defined in this Act, is treated similarly to payment instruments, although some kinds of stored value are irredeemable in money. The grouping of funds transmission and the sale or issuance of payment instruments and stored value is consistent with existing state practice.”

Even the concept of mining could, hypothetically speaking, be addressed within the scope of the act:

“Stored value

Stored-value products are a recent innovation in payment systems technology. Stored-value products possess certain basic characteristics. According to the Federal Reserve, stored-value products share three attributes: “(1) [a] card or other device electronically stores or provides access to a specified amount of funds selected by the holder of the device and available for making payments to others; (2) the device is the only means of routine access to the funds; and (3) the issuer does not record the funds associated with the device as an account in the name of (or credited to) the holder.”

However, to comply with UNIFORM MONEY SERVICES ACT one must be licensed to transmit and issue “money”; Dwolla holds a license in Iowa, for example.

In the E.U. the definition of electronic money does not contain provisions where the electronic money is not redeemable by the issuer. The relevant E.U. Directive (Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending) states:

“The definition of electronic money should cover electronic money whether it is held on a payment device in the electronic money holder’s possession or stored remotely at a server and managed by the electronic money holder through a specific account for electronic money. That definition should be wide enough to avoid hampering technological innovation and to cover not only all the electronic money products available today in the market but also those products which could be developed in the future.”

“Issuance and redeemability
1. Member States shall ensure that electronic money issuers issue electronic money at par value on the receipt of funds.
2. Member States shall ensure that, upon request by the electronic money holder, electronic money issuers redeem, at any moment and at par value, the monetary value of the electronic money held.”

Thus, despite attempting not to hamper technological innovation, by setting the requirement of redemption of electronic money, at least Bitcoins is not considered electronic money in the E.U.

Regardless of whether or not above laws are applicable to Bitcoins or not, I am absolutely positive that Bitcoins will be deemed as an electronic currency, and if Bitcoins are successful and become more widely accepted and utilized as a payment in trade, the authorities in respective countries will either apply existing laws, or enact new laws.

UNIFORM MONEY SERVICES ACT
http://www.law.upenn.edu/bll/archives/ulc/moneyserv/umsa2004final.htm (http://www.law.upenn.edu/bll/archives/ulc/moneyserv/umsa2004final.htm)

Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32009L0110:EN:NOT (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32009L0110:EN:NOT)

Fucking lawyers...I fail to see the value in arguing over semantics and form when the essence of what gets accomplished with our taxes is a police state, rampant consumerism, an education system that teaches kids to be good slaves, and endless warfare and destruction of - oh, wait, now I remember.  The Death Cult is here, they're Fear, get used to it.

1) This doesn't describe Bitcoin. 

2) I stand by my assertion that you are a moron.


Go ahead and retract this too since you can't cite it.

When I'm absolutely positive/100% certain of something it would take compelling evidence to change my mind. Compelling evidence in this case would be an actual legislature enacting laws, or a court of law adjudicating, contrary to my current position. And I do not see that happening. So far you have not stated your position - how would you classify Bitcoins?

The Constitution of the United States of America states:

"Section 8.

The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;

To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;"

Following information is from Cornell University Law School:

"The U.S. Constitution, through the Commerce Clause, gives Congress exclusive power over trade activities between the states and with foreign countries.  Trade within a state is regulated exclusively by the states themselves.  As with any commercial activity, intrastate and interstate trade is often times indistinguishable."

http://topics.law.cornell.edu/wex/trade_regulation

But maybe there are sovereign nations where this maxim is not applicable. (rhetorical question)

There are sovereign nations.  One of them begins in your front yard and ends at your back-fence.

It's not at all in my interest to explain to you why what you posted has nothing to do with your original, asinine assertion, and in fact doesn't even say what you think it says.  So feel free to go on believing that you are correct, since that seems to be your goal anyways.

Firstly, when you use quotes, make sure that the quote has actually been used; I never use "more stuff" in writing. Secondly, it ought be abundantly clear that I have altered my views on Bitcoins legal status several times, but only once have I used the term "absolutely positive"; the earlier post when I erronously regarded Bitcoins to be "securites" I explicitly stated that I was not positive.


i.e. Is there any value in the code; What is the code used for etc; this led me to believe that Bitcoins is a form of electronic currency. At this point I started searching laws on electronic currency. It is not apparent to me how you have appeared to come to the conclusion that the definitions "Internet scrip", "monetary value" and "money transmission" do not describe or are not relevant to the functions and mechanisms of Bitcoins; which is what the definitions do/are. Dwolla, Inc holds license nr: 2009-0049 as a Money Transmitter in the state of Iowa.

Due to the fact that the UNIFORM MONEY SERVICES ACT contains provisions that describe or are relevant to the functions and mechanisms of Bitcoins, and that it is not only my belief that Bitcoins perform functions of an electronic currency, it has allowed me to form an assertive opinion that when a law case is brought against Bitcoins, or when lawmakers decide to make specific regulations pertaining to Bitcoins, Bitcoins will be judged/infered to be an electronic currency.

Bitcoins are doing their damndest to become an international currency.  The alternative to Bitcoins in that context is to allow the fascist architects to announce one of their own design.  Would you prefer to pay rent to thugs and murderers or would you prefer to be free?

Difficult choice; however as the thugs and murderers control the political and judicial systems in society, preference does not equal accomplishment. Effort can lead to accomplishment, although history tells us that effort is often hindered from leading to tangible and sustainable accomplishment, although history is oftentimes obfuscated.