That is the strange part.  AFAIK Blockchain has no method for manually killing a tx but they normally do stop broadcasting it after a few days if it doesn't confirm.  

The other strange thing is how/why Blockchain allowed you to create that tx outside of some expert raw transaction mode as it had almost no chance of being confirmed in any timely manner.  Low priority, fee below the requirement to relay, and dust output.  You hit the trifecta of "probably not going to make it into the next block".  A good wallet should prevent users from making these types of questionable tx (unless they explicitly request it).  The Bitcoin core client for example would never have made this tx.

You had 7.91776 mBTC (0.00791776 BTC) in inputs.
The tx created sent 7.9 mBTC, which left 0.01776 mBTC remaining.  
It paid 0.01 mBTC as a fee (which was pointless at the time, v0.9 will change that).
That left 0.00776 mBTC which is below the dust threshold of 0.05430 mBTC.

No possible way to make that tx have a worse chance of confirming.  It isn't your fault (unless you used some manual mode) blockchain.info should never have created that.  Do you remember exactly how you made this tx in blockchain.info?

Instead the QT client would have showed you that you have the same 7.91776 mBTC in the wallet (I will assume there are no other outputs available).  It knows the tx will be low priority so it will force a fee on 0.1 mBTC (to avoid this scenario).  Thus it wouldn't let you send more than 7.81776 mBTC.  That tx would have been confirmed within a few blocks max.   If you wanted to send slightly less (say 7.8 mBTC) that would have left 0.01776 after the fee as your change output which would violate the dust rule so the wallet would instead not create that output and increase the fee to the miner to avoid making the dust (i.e 0.11776 mBTC to miner instead of default 0.1 mBTC).

If blockchain.info had paid insufficient fee but not created dust it probably would be confirmed by now (at least one miner must be running v0.9).  What I mean by that is instead of your outputs being:
7.90000 mBTC - what you were trying to spend/transfer
0.00776 mBTC - the change
0.01000 mBTC - the fee to miner

it would instead be
7.90000 mBTC - what you were trying to spend/transfer
0.01776 mBTC - the fee to miner
and no change output

that tx would have violated the relay rules (and min miner fee rules) for v0.8x but those are being reduced to 0.01 mBTC in v0.9 so you would have "lucked out" due to the rule change.   However in your case that dust output is the killer.  It makes the tx non-standard and unless a miner uses some custom logic to pick non-standard txs it will never be part of the next block.  You may want to try submitting the tx to eligus pool directly.  They support non-standard txs but I am not sure they will take it with that fee.

The tx is low priority so it should have included the min fee of 0.1 mBTC that would leave 0.00781776 BTC

The point of wealth is to buy goods and services which improve your quality of life.  A big pile of cash doesn't have much direct value (can't eat it, can't drink it, doesn't make good insulation, wouldn't keep you warm for long, not really entertaining to just watch it, it can't keep you alive if you get sick, injured, or poisoned).

The quote in the OP is only true is either
a) The Bitcoin rich never convert that digital wealth into goods and services.  They die sick, tired, poor, and probably alone.  Kinda defeats the purpose of acquiring the coins to begin with right?
or
b) They are so amazing at managing their wealth that they continually acquire more coins than they spend.  Of course if that was true they likely are already incredibly wealthy in conventional terms.   Given the number of people who lose funds to scammers, hackers, insanely bad business decisions, gambling, etc I would say the average Bitcoiner is no "financial genius".

Between a & b the coins will spread out one way or another.  Also the idea that wealth is finite and currency is all the wealth is flawed.  Global wealth in on the order of $100T however the global money supply (M1) is "only" ~$5T.  Money only makes up 5% of all the wealth on the planet which means 95% of the collective wealth is in forms other than money.  Bitcoin isn't going to be any different in that respect.

If you own a $200K house (mortgage paid) and I own $200K in BTC then everything else being the same today we are equally wealthy.  I could trade my $200K in BTC for a house and you could sell (or mortgage) your house to buy $200K in BTC.  While $200K in BTC might be a sizeable portion of the Bitcoin money supply, all money supplies are a small portion of total aggregate wealth.

That is true however in DWAVE defense what is more interesting is scalability.  Simulated annealing has been an area of study to solve large complex problems long before DWAVE.  With simulated annealing the barrier isn't that you can't solve small problems it is that solution complexity grows exponentially which puts larger problems out of reach.

As an example in one paper I read they showed relative complexity (the computing power/time) for simulated annealing increased about 100x when the number of variables was tripled.  The DWAVE system showed a ~3x increase in complexity or runtime under the same conditions.   So 3x vs 100x increase in computing requirements as the problem scales out.  Another way to look at it is for each magnitude increase in the number of variables to keep the runtime the same the DWAVE would need a one magnitude increase in the number of qubits but the simulated annealing would need four magnitudes (10,000x) increase in computing power.

The major problem with simulated annealing is a couple hundred variables doesn't allow you to solve very "interesting" problems.  So today simulated annealing is faster for problems which aren't very useful and larger problems are uneconomical while the DWAVE is slower but in theory could be faster on larger problems but they are impossible (due to quantum decoherence).  Neither is particularly useful but the quantum approach at least in theory would allow larger problems in the future.


IIRC using a high end card like a NVidia Tesla the average solution time for a problem with a couple hundred variables in measured in hours.  That scales out as 10^4 increase for every 10x in problem size. 
A thousand variable scale problem would be about ten GPU years.  Maybe a rack of high end GPU servers running for a year.   Not too great but possible. 
A ten thousand variable scale problem would be about a hundred thousand GPU years.  The top super computer is roughly 10,000 GPUs so it would need to run ten years.  Feasible but not really realistic.
A hundred thousand variable scale problem would be about a billion GPU years.  Even assume a 32x performance gain from Moore's law for a decade and a hundred thousand future GPU super computer in 2024 you would be looking at a solution time measured in centuries.  Ok we just hit infeasible.

On the other hand due to quantum decoherence, a quantum annealing will either find a solution in a fraction of a second or it may never find one.
A thousand variable problem would require a chip with thousand of qubits.
A ten thousand variable problem would require a chip with tens of thousands of qubits.
A hundred thousand variable problem would require a chip with hundreds of thousands of qubits.

People buying DWAVE computers know simulated annealing doesn't work at the variable scale they are interested in.  Today DWAVE simply can't solve those problems even given an infinite amount of time.  That will require much larger chips but DWAVE went from 128 qubits to 512 qubits in two years.  That is roughly double Moore's law.  Now nobody knows if DWAVE can continue to scale the chips larger at the same rate, and even if they do nobody knows if the solution time will also scale linearly.  Still it is interesting to just imagine both will happen.  A ten thousand variable scale problem would be solvable in 2-3 years.  A hundred thousand variable scale problem would be solvable around the end of the decade.  If you are a major corporation it is worth paying millions of dollars to get up to speed on a potential breakthrough like that.

This.

On edit:In hindsight it might looks like I am trying to educate you kjj.  That wasn't my intention just expanding on what I believe is a similar view on the threat of quantum computing which may be useful to others reading the thread.  Then again I haven't had caffeine yet so no promises.

To expand upon what kjj said and to put it in simplified terms, Quantum Annealing is some pretty "interesting" stuff, but it isn't particularly well suited to breaking most forms of cryptography.  Even if it was repurposed it can't be used to implement Shor's algorithm.  Quantum Computing isn't the magical kill all crypto in the world instantly nonsense that the media makes it out to be.  Quantum Computers can implement Quantum Algorithms.  For the purpose of breaking public key cryptography the interesting one is Shor's algorithm because it provides a massive reduction in the complexity of the problem bring what otherwise would be an impossible to brute force scenario to one which can be completed in polynomial time.  However using Shor's algorithm requires three things.  The first is a general purpose quantum computer (which DWave isn't and never will be).  The second is a public key to be attacked (and until spent the PubKey in bitcoin is unknown, you actually "send coins" to the PubKeyHash), and the third is the ability to construct said QC using a large enough number of qubits to implement the algorithm against keys of that size (and we are nowhere near the material science necessary to build a computer with tens of thousands of qubits).

So if an articles talks about "quantum computing being a threat to public key cryptography (and thus Bitcoin among thousands of other systems including TLS/SSL) it is paraphrased for a general purpose quantum computer with a sufficient number of qubits capable of implementing Shor's algorithm to break a particularly sized public key.  DWAVE's processors may end up being used for solving a lot of unique and interest problems and I am sure they will get larger and cheaper but it will never implement Shor's algorithm anymore than making an internal combustion engine more efficient will allow you to go faster than the speed of light.  Quantum Annealing and general purpose Quantum Computing are two divergent areas of study that sadly are very "nerdy" and share similar names so the media won't ever be accurate enough in their articles.  They use "Quantum Computing" to vaguely cover both fields.

So what about those fabled general purpose quantum computers?  Do they exist?  
Well we have two very public and very reviewed milestones in general purpose quantum computers.  General purpose means a design that is programmable or one which could someday lead to a programmable design.  Much like your PC is an example of a general purpose classical computer.  It can run various classical computing algorithms.  A general purpose (or programmable) quantum computer would be one that could implement Shor's algorithm (a quantum algorithm which requires a quantum computer to execute in real time).

The first major milestone was in 2001 a general purpose quantum computer with 4 qubits was able to factor the number 15 (into 5 & 3).  The next breakthrough came a decade later in 2011.  Keep in mind this is a decade later.  During that timeframe Moore's law improved the transistor density of "classical" computers by a factor of 32x.  That means generally speaking computing power per watt and computing power per dollar also increased by roughly the same magnitude.  So weaker encryption became even more weak by a factor of 32x.  Quantum computer is in its infancy so the rate of improvement should be much higher right?   So 4 bit number factored in 2001, for those playing along at home, how large of a number do you think was broken after a decade of improvement?  18 bits? 40 bits? 64 bits?  Even 64 bit would be decades away from factoring 3,076 bit numbers.  Don't use google or wikipedia just try to guestimate how much progress was made.  From 4 bit to ____ bit after a decade.

Got your guess?  Highlight the blue to reveal the answer.


Both 4,096 bit RSA and 256 bit ECDSA provide 128 bit security.  128 bit security is considered beyond brute force when using classical computers (although keys can be weakened through cryptanalysis).  Key strength is a way to roughly measure the time/energy required to break various different cryptographic systems by providing the equivalent symmetric key security.  4,096 bit RSA (public key - integer factorization), 256 bit ECDSA (public key - elliptical curve), 256 bit SHA-2 (cryptographic hash), and 128 bit AES (symmetric key) all have 128 bit key strength.  Since 128 bit is beyond brute force for any convceivable amount of time the only way these systems will be broken is through cryptanalysis which weakens the key not just using brute force.  So if that quantum computer had factored a 4,096 bit number it would have done something that no classical computing system could do.  In reality it did something, which millions of children have to do each year using pen and paper.


I have said it in other threads, wake me up when a general purpose quantum computer of sufficient size is able to factor 32 bit (or larger) number using Shor's algorithm faster and cheaper than a classical computer. To put it into perspective

For the record in hexadecimal this is a 5 bit number (what was actually broken):

This is a 32 bit number (my "wake me up milestone"):

This is a 128 bit number (a random symmetric key this size is considered beyond brute force for producing a collision):

This is a 4096 bit number (a QC would need to be able factor numbers this large to break 4,096 bit RSA which is the equivalent strength of 256 bit ECDSA):


Quantum Computing is a possible attack vector, it isn't an instant Bitcoin killer.  There is no evidence that anyone is anywhere close to building a general purpose quantum computer of the size needed to be anywhere close to breaking 256 bit ECDSA.  Even if/when that happens there are mitigating factors to consider.

The first is that if the PubKey is unknown Shor's algorithm can't be used, so don't reuse keys.  It gives you options to transistion safely to stronger addresses/keys.
The second is that Bitcoin can as an interim step use larger/stronger keys.  512 bit or even 1,024 bit ECDSA.  If quantum computing can break smaller keys it would provide a cushion of time/cost.
The third is that there are Post Quantum Cryptography (PQC).  Bitcoin in theory could be extended to use addresses based on PQC.

Note despite the similar names Post Quantum Cryptography (PQC) shouldn't be confused with Quantum Computing or Quantum Cryptography.  They are three distinct fields.  Quantum Computing is the study of implementing quantum algorithms to solve problems (like breaking Bitcoin public keys).  Quantum Cryptography is a system is key exchange which uses photons to ensure a key can not be intercepted by an eavesdropper (observing the photon will alter the photon).   PQC are classical computing algorithms for which there is no known polynomial time solution even when using quantum computing.  To date the major concerns with PQC are the need for much larger key and signatures sizes (easily 100x that of ECDSA), a lack of extensive testing, and in some cases weaker strength against classical computing.

Seasteading is really your only option.  Prohibitively expensive but maybe in a couple decades (or centuries) material science will advance enough to make it a reality.  Cryptocurrency would be a perfect extra-national currency for extra-national people.

Well the thread was about bitcoin capital gains.  Foreign Earned Income "can" be excluded from US taxes but the key word is earned income (i.e. salary or wages).   Sadly capital gains, interest, dividends, royalties, etc do not fall under FEIE.  It is also possible the US has a tax treaty with another nation where foreign paid taxes reduce (possibly to $0) the US taxes owed.  Of course this doesn't save the US taxpayer any money (if you owe $10,000 in US capital gains the only way you pay Uncle Sam $0 is if you paid >=$10,000 taxes to another nation) but it doesn't prevent double taxation (paying $10,000 to France and then having to pay $10,000 to US for the same capital gain).

No.  That is the common noob but completely wrong view of how Bitcoin works.  Don't feel back most conventional money systems work that way, but Bitcoin doesn't.


There are no coins in your wallet (there are no coins in my wallet either). "Your bitcoins" are on every single computer which has a copy of the blockchain (>100,000 at last count). But wait you might be thinking if "my coins" are on 100,000 strangers computers what prevents strangers from just spending them?  Transactions have to be SIGNED by the private key of the coins being spent.  Your wallet is really just a keychain, it holds the private keys for your address(es).  The "coins" are in the blockchain but the keys in your wallet are what gives you the exclusive ability to create new transactions "spending" them.  The blockchain is a ledger, by parsing all the transactions all nodes "know" where all the "coins" are at the current time.  When your wallet shows you have 0.25 BTC, what it really means is "parsing the blockchain I find a number of unspent outputs for which I have the private key, and the total value of those unspent outputs is 0.25 BTC". 

So to answer your question, you don't need to be online.  If someone sends Bitcoins to your address, they are signing over bitcoins they control to you.  That action is recorded in the blockchain and a copy is kept by every full node.  Now only "you" (or someone with your private keys) can sign those coins over to someone else.  Now the flip side is that if you LOSE your wallet while it may not contain any coins, it does contain the keys which are the only way those coins can ever be moved/spent.  So the coins remain in the blockchain but they can now never be moved by anyone.

I glossed over a lot of details because "Bitcoin is complicated".  If you are interested in learning how Bitcoin "really works" you should read it in the words of Satoshi.
https://bitcoin.org/bitcoin.pdf

I guess I should be less subtle.  BitSimple never hold any customer bitcoins.  Your coins stay in your wallet, under your control, where they belong IMHO.

You could just use an exchange which never holds a single satoshi belonging to users.  Kinda hard to steal (or "steal") what isn't there.

Since you have already been hacked care to share the exact password (you should never use it for anything else anyways)?
People could point out how secure it really is.

Was the password ever used anywhere else?
Did you have 2FA enabled?
Have you checked your system for malware?


Smart people don't use wallets "owned" by other people.  The thief could have sent the coins anywhere.  To a desktop Bitcoin-Core (QT) wallet, or even a paper wallet for safekeeping.

No.  Sounds like an x-y problem.  What is the "X"?  What are you trying to accomplish?

Take a look at the debug.log.  No it isn't normal.  It may have been a one time reindexing.  If it happens each time then likely there is a problem where the db is getting corrupted and rebuilt every time you run the client.

There are lots of ways to cheat on your taxes.  It is called tax evasion.  There are also lots of ways to legitimately reduce your tax liability.  It is called tax avoidance.  How difficult it would be for the IRS to catch you cheating is a completely different topic than the tax liability.

Tracking cash is also hard.  An employer could pay all his employees in cash, keep fake books, and cheat on his taxes that way.   It doesn't make the tax liability go away.  So keep in mind when you are asking a question, which question are you asking.

A US citizen (and in most cases residents) owes US taxes regardless of where the taxable event occurs.  It doesn't matter if you leave the US and NEVER come back.  The only way to avoid US taxation is to renounce your citizenship (which generally requires you to already have citizenship in another country).  Now if you are asking if you could "get away" with traveling to russia to do cash deals for rubbles and then laundering those funds though a bunch of offshore accounts?   Maybe but that is asking "will I get caught", not "is this legal".  Honestly if it is a small amount of money it probably isn't worth the trouble and if it is a huge amount of money speak to a good offshore lawyer and CPA.  Tax avoidance not tax evasion. 

The IRS allows a number of methods to determine basis.  The default option is FIFO.

So if you bought the following Bitcoins

10 BTC @ $10 ea
20 BTC @ $30 ea
50 BTC @ $60 ea
10 BTC @ $20 ea

and then you decide to sell some Bitcoins (either for fiat or in exchange for goods and services) and the exchange rate today is $50 per BTC then you simply start at the oldest coins.

If you sold 10 BTC it would be ($50-10)*10 = $400 capital gain.  
If you sold 20 BTC it would be ($50-10)*10 + ($50-20)*10 = $700 capital gain.
If you sold 70 BTC it would be ($50-10)*10 + ($50-20)*20 + ($50-$60)*50 =$500 NET capital gain.  Note the third batch is sold at a loss.

Understand capital losses would work exactly the same.  Someone who bought BTC at the peak and then today decided to spend/sell them would get a tax break on the difference in value.

There are more complex forms of computing basis by tracking each individual coin but it doesn't NEED to be done.  It is done by people who want to control their taxes (note it doesn't reduce your taxes but it allows you to control when you pay it).  Hedgefunds and major companies will almost certainly be using coin control to pick the exact coins they sell/spend in order to exactly control their tax liability.

Any company doing international sales is already doing the same thing when it comes to getting paid in Euros.  For most merchants which don't hold BTC there is never any gain.   For merchants that do, and can't do it themselves I am sure processors like bitpay will provide services to track all that and give them a report at the end of the year.

No.

Correct except it is FIFO (likely a typo).  First In - First Out.

The same thing applies to a US tourist traveling overseas.  You take $100 and exchange it for 300 pesos (an example no idea what the exchange rate is) and by the time you spend those 300 pesos they are worth $102.81.  You "should" report that $2.81 as taxable income.

Does anyone do that?  Does the IRS try to round up every single $0.37 in taxes owed? No.  The reality is most people are not compliant with the tax code.  It is asinine in its complexity.  The average tax return has a half dozen errors or omissions.  Now if you buy some Bitcoins and later buy a $40M yatch with those Bitcoins he probably should consult with a CPA on the capital gain impact.

Well not exactly, they are both capital gains.  One is a long term capital gain and one is a short term capital gain.  What your CPA was probably trying to get across is that short term capital gains are taxed at the same rate as "regular income".  Long term capital gains are taxed at a lower rate (potentially 0%).   If you hold an asset for 365 days it is a long term capital gain.  If you hold it for 364 or less days it is a short term capital gain.

The blockchain is the most perfect broker record you could hope for.

With coin control you could sell exactly the coins you wanted to at exact the basis you wanted to at any time.