Hi Stacey,

I apologize but I think you should check into the taxation of Bitcoin in your jurisdiction.  Maybe you're somewhere that I'm not aware of the tax law, but in the United States, Bitcoin is treated as a capital asset, which yes, is "property".  It is not, however, subject to what is commonly referred to as "property tax".  Property tax, assessed at the state/county/local level, is assessed on real estate, land and improvements to land (i.e. buildings).

At the Federal level, Bitcoin is taxed as a capital asset, which means that gains are subject to capital gains taxes.  A smart tax advisor would structure things in a few creative ways to achieve a minimum of taxation.

As far as an ICO, if they (the ICO issuer/startup business) was smart in how they structured their entity/entities, they wouldn't pay any taxes on incoming investment.  Again, this varies depending on if the crypto asset is considered a security pursuant to Howey and/or any other applicable exemptions from the Securities Act.  A token that represents prepaid usage might have to be treated differently, but again, I can think of a few interesting ways to structure things to avoid/minimize taxation, which any competent tax professional would advise.

Of course, I am not a tax professional and you should seek one for guidance specific to your circumstances.  Talk to your doctor about Bitcoin.

One last thing, we need tax policy to reflect Bitcoin and other cryptocurrencies as currency, true tokens as prepaid services, and Securities Act applicable tokens as, well, securities.  IRS is forming an advisory committee shortly that is going to examine this issue in the context of their existing statutory authority, when they publish the nominations notice in the Federal Register, I'll let all of you know.  We have to stay on top of this stuff.  Plus get some revisions to the laws.

Best regards,
Ben

I am personally not in favor of KYC for ICO projects, but I do recognize that it's required by governments in some cases.

Given that, I believe a better KYC system needs to be put in to use by everyone.  It has to balance the legal requirements that the business has with the privacy interests of the customers.  There's methods to explore to accomplish this and I plan on working on announcing a working group to focus on this issue once I can.

I remain concerned about U.S. regulators and am planning a trip to DC to sit down with lawmakers and regulators to articulate the different considerations that are necessary with respect to KYC in ICO/ITO offerings.  I'm looking at how stock exchanges perform IPO's and the personal information that is exchanged with the public company is not much, and it's done through their stock exchange.  There is no advance KYC for IPOs except for private offerings.

Lots of things to work on.  But my view is if we don't come to some consensus on how to handle these things, the (legacy) financial services lobby will make it come out in their favor.  I am opposed to extensive regulation that will slow the pace of innovation and maintain large bank's grip over finance.

Best regards,
Ben

I agree with much of this.

Adoption is the most important factor to any mass-scale payment method, of course.  Once something is trusted as money, it has to be able to be used as money.  Scaling a blockchain is very difficult, there are many more considerations to be taken into account than many believe.  Off-chain solutions such as LN, and probably others, are needed to handle transaction volumes that can overtake credit and debit cards, etc.  These take time to build, perfect, and then scale (fixing whatever problems arise along the way).  Promotion as a payment method is absolutely important, but if we get too far ahead of ourselves and create a situation where the network is maxed out due to scaling problems, that could blow it.  Consumer confidence is not always easy to get back once its lost.  Slow and steady wins the race.

Legalization of bitcoin is assured, the question is how many hoops will they make us jump through.  My focus is to make those hoops as little as possible.  We have to remember that huge vested interests, centuries and even millennia in their entrenchment, are only "with us" to the extent they can find a market for themselves.  Some of that we can work with (i.e. legalization overall), some of that we're going to have to fight against (i.e. making regulations draconian).  A good factor we have in our favor is that some countries are seeing the power of Bitcoin and overall decentralization, distributed ledgers and are making good policy choices.  Other countries won't want to be held back.  It will take time, but expect the overall outcome to be positive for the new paradigm.  Advocacy at all levels of government is needed.  I also believe that common-sense, industry-supported voluntary standards are needed to show that the industry (yes, industry) can self-regulate.  Regulators work with responsible industries, and work against what they perceive to be "bad actors".  They look at things through the eyes of a regulator.  Does this industry cooperate with us?  Or are they a bunch of outlaws?  Do they really think they can escape ME, the all-powerful SEC/CFTC/IRS/FinCEN/etc/etc/etc?  Cooperation when possible gains you credibility.  The ostrach approach ("sticking your head in the sand") doesn't work in the long run.

What people do with their Bitcoin is their business, absolutely.  And I am most libertarian at my core, but I also know how this system works, and a pragmatic view is that cooperation to make some standards that are voluntary, but if applied, will reduce things like ICO fraud, ridiculous code exploits, KYC fraud, etc., can go a long way in the eyes of a regulator.  That's why I believe that BTRIC Institute is going to offer real benefits to the industry with advocacy as well as standards maintenance, IETF style.  We just made a commitment to the Blockchain Defensive Patent License yesterday, even though we do not yet have any patents.  But it's the right thing to do.  The technology we all use to build a better world is too valuable to be subject to restrictive controls on its usage.

On the technical side...

I am in favor of rapid adoption of innovations such as SegWit, LN, and bech32.  The market must demand this from those they transact with.  Coinbase, or any other business, is not required to do anything more than what is necessary for them to keep the profits rolling in.  If customers say, implement SegWit or I will go, they'll implement it.  (And they just have.)  Same goes for other improvements and innovations.  In my view, best practices is that an exchange should be implementing in testnet what is being developed in core, so they can launch it on their production servers/mainnet as soon as possible after a launch.  That requires engineering resources but it would set yourself apart from many of the other exchanges.  It's what I would do if I ran an exchange, but I understand why others cannot afford that sort of engineering for something that may eventually get scrapped.  That's part of what we hope to do with BTRIC Labs, R&D projects that can be used by many people, as soon after things launch into production as possible.

Regarding increasing block weight, I'd be in favor of some type of scaling block weight that was a reasonable increase over the current limit.  But I believe that any increase should be sliding/scaling, based on the size of the mempool.  To me, that seems a balance between the need to have blocks of a reasonable size for propogation purposes and the need to uncongest the network.  I am not a blockchain expert, so perhaps I'm missing some important consideration, but that's my view based on what I do know about Bitcoin.  I imagine Bitcoin nodes in places with crap internet, I think about what Bitcoin would be like on dial-up.  Bitcoin is everywhere in the world and there's places out there with pretty bad internet.  I want Bitcoin to be accessible by those people too.

I am not sure how I feel about an increase in the max supply of Bitcoin.  I've never thought about it, I'd have to spend some time thinking to come up with my personal view on the subject.  Regardless, we are some time away from having to decide about that.

What I do think would be something that should be considered is some sort of non-profit, decentralized backbone of a mining pool.  It should not be controlled by any one entity, it should not be based in any one country, on any one continent, etc.  It should be decentralized as much as possible.  This means that some places that are mining would be paying more in electricity than others.  The costs would be shared by everyone, it would be a non-profit venture, any profits would be put back into development or increasing the decentralization.  It is not a good idea for an important global currency to be dependent on a cheap source of electricity, and have mining power concentrated in those places alone.  It gives power to governments to make tax-incentives or offer to subsidize electricity and then abuse that power.  So I envision a collective where some nodes are just breaking even or even going backward a little bit, but it's more than made up for by the other nodes.  In this way, the overall network is protected by a concentration in mining hashrate, government action, a single company or organization, etc.  I think that type of resilience can increase the quality of the network.

Well, that's my two Satoshi worth.

Best regards,
Ben

It is considered an asset presently.  When you see "property tax", that's really real estate tax.

Our organization is incorporated in New Jersey, but it's a non-profit and we were advised that we didn't have anything to gain by incorporating out of our home state for the non-profit.

For the businesses we launch, we're very carefully looking at Nevada, but that's a review we're going to keep current on as projects graduate the incubator.  Business and crypto savvy lawyers are advised!

We also don't rule out forming businesses outside of the United States if the regulatory climate requires it, but I'm really hoping the US doesn't fall behind because they shove regulations we can't live with down our throats.

Best regards,
Ben

Yes, I agree that KYC information after you've performed work for them by participating in a bounty campaign or other promotional effort is outrageous.  Sounds like they're just looking for a reason to say you failed KYC and deny you the earned bounty.  I am concerned about the exchange of any unnecessary information whatsoever.  If an ICO is doing KYC I can understand that, especially given the current regulatory mess.  However, if they need to do that on bounty participants they should state that up front and do it in advance.

I've had my identity stolen twice in my life and it is not fun to say the least.  One time was, unfortunately, an ex-girlfriend, which I suppose I could have prevented though I had no way to know she'd turn out how she did.  The other person was apparently a federal prisoner and I only found out because the IRS put a hold on my tax filing because they'd already processed one from someone else with a return address of some prison in Arizona! (I live in New Jersey.)  Now I have to go through extra measures every year when I file my taxes, but I guess it's "for my protection".

Doesn't make me like the IRS any better, lol.

Best regards,
Ben

The MtGox trustee is apparently not very savvy with cryptocurrency, as the job of a bankruptcy trustee is to return maximum value to the creditors.  Trading patterns suggest that they should have brought in an expert advisor and/or listened to an advisor if they have one.  But that is not a valid reason to fork the world's leading cryptocurrency.  In fact, I don't believe there is any valid reason to do that.

It is my view that Bitcoin will never "fork". People might fork AWAY from Bitcoin, but the real Bitcoin, the one you access with the Bitcoin Core client, isn't going anywhere.  I'm sure the Bitcoin of version 0.50.0 of the client will be VERY different from the Bitcoin of 0.16.0, but it will still be Bitcoin.  It will adapt to changes in technology and usage, as it should.

That's what makes it so powerful, over and above every other cryptocurrency.  It's reliable, even when the market is in the toilet because of this or that reason.  The people that work on the project are super talented, the very best in the world at what they do.  And, just as importantly, they approach Bitcoin with the highest integrity.

If Bitcoin were to fork at every impulse to do so, or maybe throw in a little bit of Ethereum "roll back the clock" mutability, it would not be the leading cryptocurrency.  If Bitcoin fell, it would not be good for the wider cryptoasset landscape.  The whole field is still so very new, so much more to conquer.

Best regards,
Ben

The ideal scenario is that a business you already trust, such as your fiat/crypto converter, has performed KYC as a part of your account onboarding with them.  Then they could participate in this pool and they would be the place you already trusted.  The data itself would be decentralized and in the custody of that business, acting as a KYC trustee. 

Working out some details related to different KYC jurisdictions.  Also have to sketch out under what conditions the information would be released, such as judicial order, etc.

KYC goes both ways in some sense.  Personally, I hope it eventually goes away entirely, or nearly entirely, but while it's necessary, I'm trying to find a way to comply that is as easy as possible for everyone involved and balances privacy issues.

I'm looking at Visa's model, they require KYC be done by banks in order to issue certain products as well as for merchant processing services.  They have to deal with different KYC requirements all over the planet.  I'm applying to that the FinCEN guidance on KYC but making it a more even system.

I also believe that ICOs should have to do KYC type verification so that you know who you're investing in.  The other day there was an ICO people were memeing on Twitter that used Ryan Gosling's picture as one of their team members.  That crap has to stop.

Best,
Ben

That's the plan.  Though it's not "one" entity in that it's a centralized point.  It's the one entity that YOU trust, which may not be the same as the entity that I trust.  All of the entities will be following the same rules for KYC, in federation essentially.  I don't want it to be a single, solo entity because that gives them too much power and control.  But sure, a few leaders that have earned trust for safeguarding the information would be the probable result.  But there's nothing stoping a new entity from coming into the field.

I have this on the drawing board, I want to make something of it.  I believe it would have great utility across the crypto field, and I've spoken to attorneys that believe if it was designed in the right way it would be fully legal and compliant.

Best regards,
Ben

It's all about "money laundering and terrorism financing" is what they say.  The reality, a lot of it is about tax evasion.

Many, but not all, people in crypto already "trust" at least one entity with their KYC information, that being an exchange that allows buy/sell to their fiat bank account.  I think these organizations should work together on a model KYC policy that if you're known to one member of the group, it can be attested to that your KYC is on file.  A decentralized way to accomplish this would be nice, I've sketched out some ideas.

I've seen some third-party ICO's that are trying this angle, but it might be better to go to the exchanges and see if they'll get on board.  I've had to do similar work before to track traceability of food, different providers made certain attestations that were relied upon without actual transfer of the information in 99% of cases.

I'm looking into this because it's definitely becoming "a thing" from the regulators perspective.

Best regards,
Ben

Yeah, as we see the U.S. definitions evolve -- not through regulations but rather by court cases and letters to Congress (novel way that will probably stick until/unless Congress gives them additional legal authorities), it's clear that a crypto-centric SRO needs to get organized or the large financial institutions are going to run the tables.

They're basically pointing all exchanges at FINRA which is legacy finance's largest SRO.  Good luck with that.

I'm thinking on this issue and am going to reach out to a bunch of people/organizations.

Best regards,
Ben

These are a good start, but a true evaluation of ICO/ITOs and other crypto businesses should also evaluate legal, technical, logistical, security, and some other areas.  I envision a public standard, differing in some ways for different type of entities (cryptocurrency, tokens, exchanges including decentralized, etc.), but based on the same key criteria that I listed.

Best regards,
Ben

Hi leopard,

I completely agree that the place the standards need to be applied is in ICO/ITO issuers, to rate their quality, security, and really evaluate the project potential in a standardized manner.  So many scams out there.  In addition, I also believe standards should be applied to crypto businesses such as exchanges.  When you're dealing with electronic money or other cryptoassets that can be stolen just like someone breaking into your house or business, it's important to know that the exchanges have in place best-practices for security.  Most people wouldn't trust a million dollars to just be sitting inside of their shed, with no security to speak of besides potentially a padlock.  With cryptoassets, we are talking about much more value than $1 million in many cases, trusted to businesses with unknown security.  Some do a great job, some are horrible.

My organization is looking at having a set of 1.0 standards during April.  The first draft will be published to GitHub soon and public comment and participation is welcomed.  It's all open, usable by anyone.

Voluntary standards can improve on this situation.  No standards would be forced on anyone, but voluntary standards can become "expected".  They need to take into account the unique factors of the various different types of cryptoassets and other businesses.  It can also help us stave off government regulations, by demonstrating self-regulation.  They're going to stick there noses in this field whether or not we want it, but I believe that there's ways to encourage "light touch" regulations that don't stifle innovation.  I agree with much of Coin Center's position on regulatory matters, but there's some areas where I believe a more permissive approach is needed.

As far as KYC with ICO investors, I believe the current framework that is basically bolted on from the model that banks use is inappropriate for many/most "ICO" investments.  There may be exceptions, but the more we go down the "securities" path, the more concerned I become about heavy regulation that will favor large financial institutions and hurt new entrants and small, but innovative, organizations.

Best regards,
Ben

Hello everyone,

Our Executive Director BenOnceAgain just posted a new article to our news and updates site on Medium.

In it, he discusses how BTRIC's business incubator and startup accelerator programs will advance modern, blockchain election systems as well as explore even more disruptive approaches to government structures, such as liquid democracy.

Blockchain Voting and Liquid Democracy — Technology Will Reshape the Very Structure of Government
https://medium.com/btric/blockchain-voting-and-liquid-democracy-technology-will-reshape-the-very-structure-of-government-f754dd37861c

Thanks for reading!

Full Title: FinCEN raises major licensing problem for ICOs in new letter to Congress.
https://coincenter.org/link/fincen-raises-major-licensing-problem-for-icos-in-new-letter-to-congress

Excerpt:

First of all, don't risk more than you can lose.  ICO and ITOs are very speculative, and if you look at the statistics from last year, over half of them have already failed.

There really isn't currently much of an objective standard to evaluating ICOs, but in general, I suggest you look at them like you would any other investment.

In time, standards will come, but for now you have to be extremely careful and do research.  Also be aware that your legal recourse may be limited if you lose funds.  This is an emerging area of securities law in most places in the world.

Be very careful about marketing "hype".  The best projects may be hidden gems, and the projects hyped the most may be trash.  It's not always that way, but I've seen some pretty bad projects sell out their ICOs quickly while other projects that in my view had much better potential/plan struggled.

None of this is actual investment advice, and if you're really wanting an opinion, a qualified investment adviser is the best source of information (even though most know nothing about ICOs, there are some that do).

I personally believe in currencies that are multipurpose (like Bitcoin/Ethereum/Zcash/etc.) as opposed to limited purpose tokens, but I recognize that tokens are an important funding vehicle for great businesses.  I don't view currencies as investments though, I believe they're the same as dollars, euro, or yen, just going through the type of appreciation that is typical of a technology adoption curve.  At the same time, those fiat currencies are losing value through inflation, so it creates the "feel" of an investment.  But you could look at fiat currencies in the same way because of their relative value against other currencies changes.  But they are not investments, and eventually, I believe Bitcoin and other true cryptocurrencies will be treated as a currency as opposed to an investment.  That's not the case right now in the U.S. for tax purposes, but it's a goal I support and advocate for.

Best of luck with your ICOs, make sure to do research and once again, my personal (not investment advice), never risk more than you can afford to lose.

Best regards,
Ben

Indeed.  If the rest of the world were wiped out, it's very unlikely that a node running in a rack in a small server closet in central New Jersey would be miraculously be spared.

Brings a thought to mind though.  Are there any known Bitcoin nodes that run in highly secured and hardened facilities?  I remember reading an article about people storing private keys in a decommissioned nuclear bunker now used as an archival site.  But I'm wondering about actual, operating nodes.

Hello,

Very nice website!  I've been meaning to go through my addresses and figure out what's what with all these forks.  People will really like this.

As for suggestions, I guess when you are able add some styling over the basic bootstrap code, but that's appearance, not functionality (so in my book it's lower priority).  Honestly, I'm not the best when it comes to UX, I leave that to the amazing graphic designers, but maybe you're better at it than I am.  Or maybe you can find someone that's willing to help your project by giving you some fancy CSS and/or template HTML to drop in.

I think the idea of having prices would be awesome, but I read and understand what you mean about the extra overhead and API calls.  Possibly a compromise would be to set up a separate cron job to run on a periodic basis (hourly maybe), that would grab the current price for each coin and then you could do the math based on the balances.  It's not real-time but it's a pretty good gauge of the price if it's just an hour delayed, and that wouldn't add too much overhead I wouldn't think.

The only other thing I can think of off-hand is, here's the ad that displays here on the forum about a wallet splitting service:


I think I know what most of those ticker symbols are, but not all of them lol.  But I assume these are the forks that are worth anything, guess Bitcoin Pizza didn't make the cut?  Anyway, if and when you can add any of these that you don't have to your site, that would be super useful.  Of course, if this ad is showing a coin that is worthless, I wouldn't bother taking the time to put it in place, certainly not if you're running any nodes for this unless you have the infrastructure to spare.  But if there are any other coins besides those that you've listed that are worth anything, might be something to shoot for to add them in.

Also, I'm not sure how your code is structured, but if these forks continue, might be good to have it so that adding new coins is pretty plug and play.

Best of luck with your project!  Oh, can I tweet out the URL to your site?  I'm sure others will like this service.

Best regards,
Ben

Thank you for pointing out this feature!  I am by no means an expert on BBcode and was struggling to find some way to handle embedded images in my announcement thread because they do seem to take a long time to load, at times, regardless of where I host them or how optimized they are.

I'm going to put this in place right now, really appreciate it!

Best regards,
Ben

Some of us do run full nodes to help increase the resilience of the network.  If somehow the world got wiped out and my server was the only copy of the blockchain remaining, we'd be happy to propagate it back to other nodes as they rejoined the network.  Of course, that's highly unlikely, but I try to do what I can to help advance Bitcoin, and that's really the least I can do.  Yes, the blockchain grows larger as time goes on, but until/unless it grows so much that I'm unable to provide storage space for it, I'll continue to run a full node.  We also do not do any Bitcoin mining, don't own any ASICs. We just have a lot of excess CPU cycles and plenty of storage space, so we do what we can with that.

But I agree that light wallets are essential for wider adoption.  Most people just want to transact, and for them, the faster they can get in and out the better.

I do like those "node in a box" mini PC devices that are for sale, though most that I've seen seem overpriced.  I believe as we move to decentralized systems, including wider use of Bitcoin, that more operations will get devices like these that are essentially turnkey nodes.  I can see them working for more than just Bitcoin, enabling other decentralized services.  That's something that eventually I'd like to look at how to standardize, a specification for hardware that has very user-friendly services plugins, you could easily add, say, Bitcoin, IPFS, and maybe Mastodon or something.  These boxes could also serve as a Personal Data Store.

As to whether or not Satoshi wrote the quoted text, I have no idea.  I'm not sure it matters, honestly, because but what is quoted is correct regardless of its authorship.  Not everyone needs to run a node and in server environments of Bitcoin businesses, it's unnecessary to run more than a couple nodes (fault-tolerance) in a given farm.

That's my thoughts on it anyway.

Best regards,
Ben