I'd just like to see that number get out of the reach of larger governments.

mtGox lost then found 200K btc.  That represents 1.6% of the current market cap, which is uncomfortably close to the Attacker Index.

Still not quite the same thing.   Imagine that your prepaid phone minutes increased in price for your favorite burner phone.   Sure, you might make a profit by selling unredeemed phone cards because the price was raised by the phone company, and technically you would be liable to pay tax on that profit.


With the capital gains ruling, essentially, you are conducting two activities, mining and speculating.   You are a disadvantage if you take losses from speculating -- and the error was assuming that your speculation losses could be written off as business expenses.   Hopefully the market will stabilize and bitcoin will start behaving with slow and steady growth so this won't be so much of an issue.  You may also be able to use your speculation losses to offset your future gains, ask your CPA about that.

If

   H = current network hashrate
   M = cost per TH/s
   C = market cap of bitcoin

The attacker index (my invention) would be:

   A = (H*M)/C

which represents the percentage of the market cap needed to purchase enough hashing power to get 50% control the network.

Using current numbers,

   H = 45,000 TH/s
   M = $3000 per TH/s
   C = $5.7 billion

This number is 2.4%.    This seems to me to be too low, thus too easy to launch a 51% attack.   What would be a comfortable number?


Here is my concern:  to control a corporation, you need to own more than 50% of the shares.   To control bitcoin, you currently need only 2.4% of the bitcoins in existence

It would be taxed at higher regular income rates, if there were a market for your 100,000 gold coins -- that is, if you can sell them.

To put things in perspective:

The market cap of bitcoin is currently $5.7 billion.
The market cap of Apple is $579 billion.
The monetary base of the USD is estimated to be $3 trillion ($3000 billion)
The M1 of USD is estimated to be $10 trillion.

Currently, bitcoin is a very small thing in the institutional finance world.   I believe things will change.

Free market.  Find another dealer that you can feel comfortable with.

It may have been someone that is paranoid because they are sitting on a large amount of bitcoin from illegal activities.

Just to be clear, you state suppositions, none of this has happened.


The last move by the IRS gives preferential tax treatment for long term capital gains,  but not good for miners that mined at a high BTC price and sold at a lower price.  In essence, they did not realize they were speculating between mining and realizing the profit.


This is silly.  You are supposing that a merchant has the technology to accept bitcoin, but is unable to keep track of bitcoin sales and access historical price data.  They have apps for that.


This was a centralized money system run by people with strong anti-government views.   I'm not saying it was right to prosecute them, but they made themselves a target.


This is a supposition with no evidence that it's going to happen.   Currently, the IRS has been starved of money by conservative forces in the government, which prevents them from collecting a lot of taxes (even though stronger enforcement would bring in more revenue than would be spent on enforcement.)   According to IRS statistics, the chance that a person making 50K-70K a year has a 0.7% chance of a tax return (or a non-existent tax return with reported W2 or 1099 income) being examined.   Over 5 years, that's about a 3.1% chance of getting caught.


In regards to illegal activities, many jurisdictions (as a revenue generating procedure) will seize large amounts of cash from travelers on interstate highways as suspected drug money.  This is nothing new, and nothing inherent to bitcoin.

In reality, the majority of merchants will convert immediately to fiat and not speculate on bitcoin.  The government is more likely to give merchants a Cyprus-style haircut through their bank accounts than to demand direct access to any bitcoins they hold.   Cyprus haircuts would be very unpopular, and in the United States, the history has been to support sick financial institutions by selling T-bills to prop them up (taxing dollar holders in a non-obvious way)

Supporting legitimate business using bitcoin is the way to go, to reduce the stigma of illegal activity, which makes it harder for the government to use the "illegal activities" excuse to crackdown on bitcoin.


Even if the government totally cracked down on bitcoin, there would still be a bitcoin economy -- street level bitcoin dealers that traded bitcoins for cash to users that gambled and bought drugs through the internet.  

I see the future of bitcoin as positive, as legitimate money is being invested in bitcoin services and merchants.  It will reach a tipping point where it becomes a significant portion of the legitimate economy, where a crackdown would cause harm to the country as a whole.

It is yet another "China will ban bitcoin" rumor.   China is responsible for a significant part of the speculation market in bitcoin.

Currently 10% of the network would require 4,000 TH/s, and with modern rigs, you would pay around $3000 per TH/s.   Evil miner would need $12 million of equipment to provide this service if I did my math right. 

Paypal issues 1099-K's to inform the government of the gross income from the shit you sell on ebay.
Stock brokers issue 1099-B's to inform the government of your capital gains from trading stock.
Contractees issue 1099's to inform the the government of your gross income from working for them as a contractor.

Did you have an expectation that bitcoin-related activity would some how be different?



The decision was not whether to tax the profit you make from bitcoin.  This was a given.   The IRS ruling allows a preferential tax treatment for long-term capital gains, for those that intended to legally pay their taxes.  Perhaps not advantageous to miners that held onto bitcoin and sold at a lower price than it was when mined.

She came to America in '31.   She wouldn't of had to start paying until '35, when the program was instituted.   The first benefits weren't payed until 1940.   

Ayn Rand herself initially resisted in signing up for social security benefits, but was convinced by her lawyer.   This, to me, indicates she realized she was a hypocrite.   I don't recall her stating that she couldn't save up for retirement because she had to a pay a burdensome 2% social security tax on her earnings through her working years.  I'm really surprised that she couldn't survive on her continuing book royalties, unless she was in debt.

Then we are in agreement.   I just so happens that I prefer to be in America, rather than a dictatorship or under the domain of a warlord, as I have some small influence in how things are decided through my vote.

It is the same distinction as between "do unto others as you would have them do unto you" versus "do to others what they do to you."

By accepting social security money, she causes the government to collect that amount of money from younger workers in the government-enforced ponzi scheme.

By not accepting social security, she would have, in a very small way, reduced the required amount of money taken from these younger workers, and remained true to her principles.

Complying with the law is not the same as worshiping the government.  I really don't care that you ridicule and ignore the government, that is your prerogative.  It's the attitude concerning that I don't join you in ridiculing and ignoring the government because I am more risk-adverse than you, that I find objectionable.

If you are proud of your work, you might want to list your customers, which would also allow government agents lurking in this forum to line them and you up for scrutiny.   I personally don't care, and if I were you, I wouldn't do it.   Believe that the IRS is incapable of pursing 1099 cases, think of me when you get that first certified letter.  I know that assumption to be false through personal experience.  Believe me or not, I am not going to post a scan of my notice from the IRS even if I could find it.

If you want to check out my latest business, look here and thank you for giving me an opportunity to advertise in context.   With this low in bitcoin, my shirts are really cheap at the moment.


I'm sorry you feel that way, and I really don't hold any animosity towards you.  If I have lied in a provable way that doesn't violate my privacy (which I strongly believe in), please point it out.  I enjoy a good debate, and if you wish to no longer defend your position, then show some self-control and stop replying.  If your ignore box helps you do it, so be it.

[edit] Let me hit you with some math:  According to the IRS, they examine returns (or non-existent returns, based on reported W2 and 1099's) at a rate of about 0.7% in the income ranges 50-75K a year.  The bracket below that is about the same.   Thus, the chance that you will get caught not filing a return consistent with your 1099s is 0.7% for one year.   If you do this for the next N years, the chance that one of your returns will be examined is  1-(1-0.7%)^N.   N=5 years, that is 3.4%.  N=10 years, 6.7%.  N=20 years, 13.1%.  I'm going to guess you are about 25, based on your idealism; and that you will retire at 65.  At N=40 years, the risk is 24.4%.   Be aware of the risk going forward in your 1099 career, and sincerely, the best of luck on not getting caught.

I like my privacy.  My answer is none of your business.  I don't like the idea of you perhaps mounting a DDOS attack against my website if you have a tantrum.  Oh, wait, I work for the IRS.  http://irs.gov, please DDOS me.

Seriously, I like bitcoin and believe it will succeed.   However, I never believed it was a magic internet money that transcended the laws of the country I live in.  I believe spreading FUD and ignorance about bitcoin as it relates to taxation and this nation's strict AML laws is going to help it.

I realize that you are angry in being told what to do by a government.  I totally get that.

However, I think the anarcho-libertarian utopia can never exist.  I would be totally down with a society that doesn't need government, and everyone treats everyone fairly and nobody steals from eachother.  But the moment more than two people have to exist with each other, one will find a way to take something from the other. 

If my neighbor decides he needs my money, he could come to the door with a gun and demand it.   I could go mad max and try to shoot him before he shoots me, but I am glad that I paid a reasonable tribute to my local government so that there exist police that deter this from happening.

I could live in Somalia, and go mad max on the local warlord that shows up with his militia to demand tribute.  There I would have no choice but to capitulate or fight.

I live in the United States, and I pay tribute by mailing a check when filing my taxes.  It may be onerous, but it could be worse.   The rules are decided in a democracy rather than a dictatorship, and I am fine with that.  I realize that you are not OK with it.  We disagree.

But the world that is the ideal anarcho-libertarian utopia does not exist.  I've been to places in the Pacific-Northwest where entire communities live off the grid, but there are people with guns that are in charge, and those who don't follow the rules are made to leave. 


If you are an active tax-resister, then I hope you would be aware that if a client files a 1099 to report what they paid you, that the IRS may come after you.  I once did this, and when it caught up with me several years later, I paid the taxes with penalties rather than fight off government agents in a gun battle. 

I am not a public sector employee, and in fact, I run several businesses, and file a couple of schedule C's a year.   I pay my taxes because I don't want men with guns to come to the door, I'd rather work and make money than waging war against the federal government.  I do not think there is anything inherently wrong with being a public sector employee.

I am a pragmatist, not an idealist.  I like to be aware of the laws, and avoid going to jail.  Being ignorant of the laws that you are fighting against is not a sign of activism.

It's not a black and white answer, IMHO.  In general, no.

Let me ask you this:  Is it okay for a society in which you reside, by barrel of a gun, to have you banished from that society because you refuse to contribute what is considered to be a fair share to the commons needed for that society to exist?

I feel that principle is the same as "it's ok to steal from someone that stole from someone else."   It makes as much sense as selfishness as a moral positive.  If I were to hold a strongly held belief against a certain system, I would not participate in anyway that I was free choose to, as voluntarily participating would be endorsement.  I would not think her a hypocrite if she chose to become homeless and suffered her condition without medical care, because she did not have the funds to sustain herself near the end of her life.   At the very least, she should have lived at the mercy of the charity of any supporters she had.

I personally find hypocrisy to be morally repugnant, but each person is different.

And if you buy a nice car with $10K in BTC, the car dealer would still have to report you as if you bought it with cash.   I'm not saying it's right, but I don't see how it is a narrow attack on transacting in bitcoin versus transacting in cash.