From my understanding, through reading about the place, I understand Somalia to be:
1) Not to possess a centralized government.  There is an official government that occupies most of the capital, but it currently does not control the country.
2) No taxation that is enforced.
3) No regulations that are enforced.
4) Has no gun ownership restrictions that are enforced.

These qualities appear to be the qualities that an extreme libertarian desires in a theoretical libertarian utopia.  I simply want to know why an extreme libertarian does not consider Somalia to be a utopia.


That's the problem with extreme ideas, is that you do not consider any possibility between authoritarianism and anarchy.  And morality is subjective.  Ayn Rand believed it moral to be selfish, yet died while accepting social security in her final years.

If the IRS considered it currency, your gains would be considered regular income, as is the case with a foreign currency.   By treating it as property, you get a preferential tax treatment for long term gains.

I'm just asking what the difference is.  If you are unable to explain, then I don't think you have a firm understanding of your philosophy.  I honestly want to know.  It's not a smear.   

If you actually have a valid argument as to why Somalia doesn't represent a libertarian utopia, then I may use it myself to argue the other way in the future.

You really don't have to feel insulted when your way of thinking is challenged.

I always thought "In ESCDA and SHA256 We Trust" would be a more appropriate motto.

But seriously, why do you think the government hates bitcoin?   I see the government attempting to regulate it, so it doesn't become a method to break existing tax evasion/money laundering laws, but nothing more onerous than what it already applies to existing payment methods or bartering systems.  You would still get reported to the IRS if you deposited $10,000 worth of cash to your bank account vs. a transfer of $10,000 of USD from a bitcoin exchange.

To the IRS, it is when you create a taxable event, exchange them for cash or good and services, in a way that is reported to the IRS.   For instance, like buying a house with a duffel-bag full of cash or bitcoin.

That wins this debate for sure, congratulations.

Clearly, I'm not announcing an attempt to evade taxes on a public forum.  ROFLMAO.
I'm just not ignorant of the ways that the IRS can put you in jail.

Here's where you're wrong:  
The IRS sees you get some income via a report (required by law) via a third party.
The IRS notes that you didn't report this income on your tax return.
The IRS takes you to tax court as a civil action, not a criminal action, if you disagree with their findings.   The IRS supposes that you owe tax on all that income.  It is a civil action, so the court doesn't require the IRS proving that it was income beyond a reasonable doubt.  You are not innocent until proven guilty, as you would be in criminal court.
The tax court judge orders that you pay the tax.
It becomes criminal when you don't follow the court order.  The IRS must prove beyond a reasonable doubt that you did not follow the court order for a conviction.

Not a loophole, gifts are regarded as taxable income, unless you are legally a non-profit corporation.

Actually it's much worse than that.  Before 1933, every US dollar had the promise that the central government would redeem the dollar in gold upon demand.   After 1933, the government reneged on that promise, and confiscated every US-minted gold coin that it could.

Allow the bank to have possession of your bitcoin, if that makes you feel safer.   I feel more comfortable being the sole possessor of my bitcoin's private keys.

Proof that a free market works, over a banking system that extorts the government and demands a socialization of losses rather than failure.

You are still misinformed.  http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States  Read the article and check the references.

That is a misunderstanding.   The capital gains rates are lower than regular income rates to encourage investment, over actually running a business or working for a living.

You are thinking that the long term capital gains rate is higher than the regular income tax rate.   It is not.

You are still misunderstanding the process.  Without your documentation of your mining operation, the government see that you had unexplained funds transferred to your bank account.   They will want to tax all of it at the regular income tax rate.

If you want to lessen your tax liability, you would document your expenses in your mining operation to deduct it from gross income, and if you held onto the profits for more than a year, you would document the gains from your holdings at a lower capital gains rate, which is how Warren Buffet and Mitt Romney pay lower tax rates than the average American.

If you hypothetically wanted to evade taxes and break the law, you would find methods that don't trigger a report to the IRS.

How about mining operations that illegally tap in the electric grid, using used mining rigs that would no longer otherwise be profitable?

It's probably already happening.

I've got nothing to do with you, other than having a philosophical argument on a public forum.   I'm just saying that if you plan to break the laws of the USA, then telegraphing your intent in public to do so is not the smartest thing to do.   If I hypothetically were to want to evade taxes, then I would not choose to publicly declare myself a sovereign citizen, print my own license plate for the car I drive in public, and then eventually be taken to court then jail.  You can be angry and upset all you want, but you would be really dumb to think that it wouldn't happen.   I would more likely be want to have a good understanding of the laws and methods that the government uses to investigate the breaking of its laws, and how to avoid them, because declaring ignorance of them won't help you in court.

BTW, your use of the word "criminal" above is as it applies to a violation of your personal philosophy, not in relation to the government's laws.

Look, I may or may not be sympathetic to your cause, and I may or may not be a government agent or an informant.   You should regard anybody as a possible informant when you actively break the government's laws.   In fact, you should be most suspicious of those that appear to completely agree with you.   Just because I don't pick up an assault rifle and march along side you to overthrow the government, doesn't mean I'm not partially sympathetic to your views.

Just to be clear, it is a hypothetical.   I'd like an extremist libertarian to explain how Somalia differs from a libertarian utopia, just like I'd ask an ideological communist why the Soviet Union didn't turn out to be the worker's paradise that Karl Marx envisioned.

So far the only answer presented is that a very young, internationally recognized government that has held the majority of the capital city for less than three years, is to blame.

I don't think you get bitcoin.   There are solutions for chargebacks by using escrow.   However, bitcoin is very similar to cash.  With cash, you must physically protect it against theft.   With bitcoin, you must prevent your private keys from be stolen.   Most of my BTC is on paper wallets (with no possible online access to the private keys) that reside in my safe, along side my cash.

If you don't trust yourself to insure the protection of your private keys, then using a bank might be your solution.   Ask bank account holders in Cyprus, or gold holders in the United States that kept gold in safety deposit boxes during the US gold seizure of 1933, if that method is the most secure.

It is based on the rigid philosophy that bitcoin should only be used to break the law, which makes bitcoin a target for criminal investigation.   It would seem to me that law breakers would want public and legitimate adoption of bitcoin to grow, lessening the notion that bitcoin is used only for tax-evading/money laundering/black market activities.

You are talking about a government less than three year old, that barely holds on to Mogadishu.   If extreme libertarians wanted to support the libertarian paradise, then they would flock to Somalia and participate in assassination politics to keep a centralized government from forming that controls all of Somalia.  It shouldn't be hard to do at present, with enough guns.