I think the answer he provided was about as direct as possible under the circumstances; that they would not pass on the loss to their customers.  Maybe I'm missing something.


I don't follow your logic.  The answer to that question, yes or no, has nothing to do with making it public or not.  IMO, making it public was the appropriate course of action.  IMO, they got scammed.  Other words that come to mind are ripped off, defrauded, and cheated

Why wouldn't they make this public?  They did a service by making this public.  It should be made public. 

Noted.  Thank you Adam.  Given the circumstances, I can't see how you could take any action other than to cover the trades surrounding this fiasco.  Still, the question had to be asked.

Excuse the repeated question Jered, but did any of your customers lose money in this?  That's really the only concern I have.

Guilt people into paying taxes?  I suppose that's one way to look at it.  You can declare your bitcoin earnings or not, as you see fit, but if you don't, and you get audited, be prepared to pay the consequences.  Income tax evasion is a serious crime.

Not much 'how they are taxed' info at all.  We get this:



Which is slightly misleading and completely unhelpful.  You'd have to declare the $ value of the BTC earnings, but I'm not sure when that conversion would be fixed: time of exchange, time of declaration, average exchange, etc.  Of course, none of that matters unless they audit you.  You could just declare it on a 1040C as other income and hope for the best.  So long as you declare in good faith, you'll be okay in the legal sense...unless you're somehow not.    Anyway, the worst they'd likely do is adjust your exchange method to better benefit them.

Jered,

What Tradehill customers were impacted by this?  IOW, the scammer bought BTC and cashed out.  Did the BTC sellers get their cash? 

I'm not understanding your argument.  If you are a U.S. merchant and accept BTC as payment, then come tax-time you must report the equivalent dollar amount of BTC that you earned as income.  The irs even has several point papers on it for their auditors.  They assist the auditor in detecting these transactions.  Here's one
http://www.irs.gov/businesses/small/article/0,,id=210735,00.html
but there are many.

I think the irs would currently treat this as a barter.  and being the irs, they have that covered.
http://www.irs.gov/taxtopics/tc420.html

So, you can report it or not report it, as you see fit.  If you choose not to report it, you're breaking the law.  If you get caught, you'll pay the fine (or potentially worse).  So there it is.

1. lending at interest isn't the cause of 'world economic collapse', however you are defining that term.  fractional reserve banking may be part of the problem, but not the lending itself.

2. lending bitcoins at interest is a risk investment.  you lend based on the borrowers promise to pay you back.  you make it worth your risk by charging interest.  if the borrower defaults, you lose your investment.  that's all that happens.

3. the other question: to the extent that taxes are owed, the IRS requires payment in dollars...or blood.

That is an excellent start.  What does that transaction count represent?  Say Bob buys a widget from Alice for 1.76BTC.  How many transactions take place (sorry if that seems is a dumb question).

Is there any way to establish the average transaction amount?

Any way to expand on that?  For example, I don't run my BTC client all the time.

Still, that would be a useful metric in itself.

I'm looking for a estimate as to the total number of people holding BTC. 

Actually, I'm looking for the means by which such a number can be estimated.

I was going to put some qualifiers on 'holding BTC' but any definition might limit otherwise useful answers.  Therefore, a useful answer must define a holder to some degree.

Any ideas?

Good luck with that.  I think you're marketing to the wrong audience.  You're throwing your advertising dollars away.  I know you say you're not doing it for a profit but I almost wish you were, because that way somebody gets something out of this.

Your first tier marketing should target web merchants: Getting merchants to put the BTC logo on their payment option list.  That's face to face, hit the pavement, cold calls, basic high-end sales work.  Take the money you would have spent on cheesy late-nite ads and spend it instead on taking successful and rising web merchants out to expensive lunches with lots of booze.  Succeed in that and the rest will take care of itself.  

there are three possibilities:

1) bitcoins were counterfeited
2) the author is intentionally misleading readers with the headline
3) the author is stupid

you decide which of the three is true.

yes.  set them straight.  leave a comment and email the author.  i did.  you should too.

this rumor, once started, will spread like fire.

PC World Claims Counterfeit Bitcoins

read it for yourself.

http://www.pcworld.com/article/234890/counterfeit_bitcoins_caused_price_crash_exchange_reveals.html#tk.hp_new

mt gox is claiming (or implying) the coins dumped were counterfeit.

true or untrue, this is very serious. 

I can't see any way this would not be self-correcting.  Participating in a mining pool is voluntary affiliation.  As soon as the transactions started going awry, people would notice, pool miners too.  Pool miners have an obvious vested interest in the stability of valid transactions; they are part of the bitcoin market.  It would not be in their best interest to continue their affiliation.  The pool would self-destruct.

Or...what am I missing?

I agree with you 99%.  The wild swings in trading prevent merchants from adopting BTC as a useful currency; there's no easy way to price a good or service.  The 1% disagreement I have regards the impact of speculators.  Stability will happen only when there are more speculators; the market needs to be saturated.  As more speculators enter, the more narrow the margins become.  Stability follows. 

Embrace greed.  It is your friend.

It's true, you could do that, unlikely as it is you'd purchase that card while you're out at walmart with the wife and kids in tow; you probably have other things on your mind.  But if you're alone at your computer and already have a bitcoin wallet -- and bitcoins in it to spend -- I think that would be the preferred way.

Bitcoin: The Blush Market

The blush market is comprised of all potentially embarrassing goods and services.  Porn probably tops the list as does pretty much any good or service related to sex.  It is in that market that bitcoin will find its greatest utility first.  Sure, you’d like to review the latest cinemagraphic masterpiece by the legendary erotic producer Dandy York.  Yes, you’d much rather watch it in HD instead of perusing free, low quality three-minute clips.  But no, there’s no way you’re going to give your credit card number to the seedy slime balls proffering such filth.  You don’t even like taking your computer to that smutty URL.  You only surf there when the house is empty, the curtains are drawn and the door is locked.  You delete your browser history when you’re through, too.  Of course you do. 

What to do?  Bitcoin to the rescue!  It’s not a perfectly private solution, but it’s good enough at first blush.  Sure, it’s possible those late-night transactions could be tangentially related back to you but it is pretty unlikely anyone would go to all the trouble to analyze such transactions down to a likely source account.  It’s hard to even imagine a scenario where anyone would bother going that route to slime you; much easier routes exist if people are that determined.  Unlikely too they’d be able to prove anything; at best they’d have a probable relationship rather than hard evidence.  It could be a slight risk if you happened to be running for president and a ton of reporters employ a team of analysts to fine-tooth-comb every dark corner of your whole life looking for the tiniest crumb of dirt, but if you’re less public than that, you’re pretty safe. 

Okay, some people might have a problem with bitcoins being used for that.  Maybe a few righteous-minded, principle-driven, pure-as-the-driven-snow bitcoin idealists would rather bitcoins be used for more honorable purposes.  Maybe they’d rather bitcoins not be associated with such ugly undercurrents.  Well, too bad, they don’t get to decide that.  The market will decide that.  We already know (or should know) that bitcoin is not a really smart choice for the darker black market enterprises; where finding the transaction relationships might be worthwhile to a determined law enforcement agency.  Sure, not even a careful analysis is bound to prove beyond doubt that you’re connected with any given illegal transaction or group thereof, but it would be enough to get warrants where they could get more; it can put them on your trail. 

And so, bitcoin is going to find its own moral level of utility.   I’m not saying it won’t find utility in higher-browed markets and some grayer markets too, it clearly already has. I just think it is going to be a long time before we see a bitcoin payment logo as standard fare on mainstream merchant sites.  But I do predict that payment logo will soon be ubiquitous to those that turn Google Safe-search off.