Yeah as much as people love to bash on the cable companies.   Imagine if cable internet had never become a reality in the US.  With no competition imagine how much worse DSL monopolies would be.   <shudder>

LOL.  I knew the analogy was going somewhere and it didn't disappoint.

Please learn how bitcoin works.  If after the subsidy cut to 25 BTC a  miner (or group of miners, or even 100% of miners) produced a block which had 50 BTC subsidy (or 20 trillion BTC subsidy) the rest of the network (AKA NON-MINERS) would reject that block as invalid.  By the protocol rules the block is invalid.  Miners can produce anything they want (even blocks w/ 20 trillion BTC subsidies right now) but if the blocks aren't seen as valid they are worthless.    What some miner's do doesn't change the fact that the existing blockchain (w/ the existing rules and existing clients and existing miners who stay on board) will continue to exist.   Nothing miners do prevents user from accepting the Bitcoin (defined by the rules that exist now), or prevent other miners from solving blocks according to the rules that exist now.


The rules are merely a protocol; they can always be changed.   It is impossible for them to not change.  Even advocates of proof of stake don't make outlandish claims that the protocol can't be changed.  A protocol is merely a set of "rules" that users agree to.  If the users unanimously change the rules then they change.  Period.  If some fraction rejects the change there will be a fork in the network.   The way mining works ensures the barrier to such a successful change is extremely high.  However if 100% of users, 100% of developers, and 100% of merchants all agree to a change and all existing clients are updated to the change it is simply impossible to prevent said change.   If some x% of users, x% of developers, and x% of merchants agree to a change the rest don't the network will fork into two competing protocols (sets of rules).  May the best rules win!

Bitcoin is a consensus but it isn't just a consensus of miners it is a consensus of all users (stakeholders).  As an example say some minority of miners create an incompatible fork (lets call it inflate-a-coin).  Now MtGox could either accept deposits in the original Bitcoin or this new fork?  Why would they change.  A bunch of miners producing a fork of Bitcoin used by nobody, valued by nobody, and accepted by nobody doesn't really have any value does it?  How will user's "see" blocks produced by inflate-a-coin?  Well they would need new clients?  Why would they upgrade?  Why not just keep using the same client.   If places they want to to buy and sell things use the existing protocol and their exchange uses the existing protocol, and their current software uses the existing protocol why would they suddenly change to an inferior coin?

So to have a successful change would require not just a super majority of miners agreeing to the change but also a super majority of developers, and a super majority of users (who would need to install the new forked client), and a super majority of merchants, exchanges, service providers, eWallets, hardware manufacturers (someday if hardware wallets become part of the ecosystem).  Even then it is a fork it just happens to be almost EVERYONE (not just miners) is using the new fork.

The idea that miners can simply force a change on the masses is as simplistic and incorrect as gold miners forcing people to pay good money for sand coins so they can sell more coins.   Sure if everyone (or some sizable majority) in the world agreed sand coins were worth $1700 per oz then it would work, otherwise the gold miners would simply have lots of unsold sandcoins.  Likewise miners trying to force a change in the minting rate without global acceptance would simply have a lot more useless worthless alt-coins.

Which is worth more; 25 BTC per block of "real Bitcoins" valued at $x or 5,000,000 BTC per block of "fake Bitcoins" valued at $0?

There are two types of fees in Bitcoin.

a) optional fees (which settxfee specifies) which can be used to make the tx higher priority.  A fee of 0.000001 BTC is essentially worthless you might as well leave it 0, no miner is going to give your tx a higher priority when it would take one million such tx to earn a single Bitcoin.

b) mandatory fees.  if the tx is low priority (due to size or age) you MUST pay the min mandatory fee.  If you don't (i.e. modifying the client) then compliant nodes will refuse to forward your tx considering it spam.   This mandatory fee isn't intended to produce revenue, it is intended to protect the network from spam and DOS attacks.

https://en.bitcoin.it/wiki/Transaction_fees#Rules_for_calculating_minimum_fees

The simple rule of thumb on min tx fee is "one bitcoin day".  If you receive 1 BTC and wait 1 day before spending it then you can send it for free (or whatever you have specified as an optional fee).  If you receive 20 BTC you would need to wait 1/20th of a day (~8 blocks) before you can send it for free.  Note the amount you are spending doesn't matter.  What matters is the AGE and VALUE of the input.

bitcoind settxfee & the conf paytxfee both set the optional fee (can be set to zero).  You can't override the mandatory low priority fee in the default client without modifying it at the source code level.  WARNING: modifying the spam prevent rules in the source code can result in your tx getting "stuck" and rejected by miners and compliant nodes.


Your transaction is low priority and thus is required to pay the min mandatory fee of 0.0005 REGARDLESS of what you specify as an optional fee.  If your tx was high priority (larger than one bitcoin day in coin age) then there would eb no min mandatory fee and your optional fee (even 0.0 BTC) would apply.

As above the rule of thumb is "1 bitcoin day" in coin age for the input but lets calculate the actual priority.

priority = sum(input_value_in_base_units * input_age)/size_in_bytes
priority = (5779899 * 78 ) / 278
priority = 1621698.281

The treshold for high priority is priority =  57,600,000
1,621,698.281 <  57,600,000 therefore tx is low priority and must pay the min mandatory fee to protect the network.   If you modified the client source code you could remove this restriction however each node and miner will also recalculate priority and they will see the tx as invalid (low priority without required min fee).

If the cartel is mining the fork then there is no restriction on mining the original.  Unless it is your claim that the cartel will be so powerful as to have a monopoly on the mining of both the fork and the original.   I know that is your argument because you have months ago denounced proof of work as unviable but it is just your unproven conclusion.

Of course that wouldn't be bitcoin and given there are no barriers of entry the remaining non-cartel miners could continue to real bitcoin fork.  In time more miners would join the real fork because that is where the value (from utility, adoption, and scarcity) is at.

It would be like saying.  Yeah someday gold miners could get tired of limited quantities of gold and start making coins made out of sand.  Then people would buy the sand coins and the supply of sand coins would explode.   Except they wouldn't.  They would continue to use the gold coins due to their value (from utility, adoption, and scarcity).

Doubtful.  Diamons aren't a unified structure.  It is the presence of inclusions and other abnormalities which are used to determine if a diamond is natural.  Also the lab made diamonds are getting better and better so a diamond marked natural may actually not be.  Diamonds also have the advantage of a monopolistic cartel.  Since 90%+ diamond pass through the cartel they can be marked with the origin. 

Gold on the other hand is just gold.  You can melt it and reform it.  Take 10 oz of gold coins, melt them  and make a 10 oz gold bar and you can change the form completely but it is still 10 oz of gold.  If synthetic gold could be made it likely would be nearly impossible to detect.  Also who cares?  It is gold.  It isn't like it is fake gold.  It has all the properties of gold right down the atomic structure.   The value of gold would quickly fall to slightly above the marginal cost of production.   The good news is that marginal cost of synthetic production is currently in the millions of dollars per oz. 

It shouldn't.  Hg 197 (isotope of mercurcy) captures a neutron to become Hg 197 which decays rapidly to Au197.   Most of the unstable isotopes of gold have a half life in seconds so the quickly will decay to non-radioactive "non-gold".   If you produced "gold" in a lab and it was radioactive the portions which were radioactive are either non-gold or soon will become non-gold.  In refining the non-gold elements can be separated out. 

Of course all this is academic, IIRC the cost to produce 1 oz of gold is on the order of millions of dollars.  It is simply easier, cheaper, and faster to just dig it out of the ground.  Still if lab created gold was ever economically viable you may need to "age" the gold.  By letting the gold sit for say 5 years before refining you could cause 99.999999999% of the unstable gold isotopes to decay to non-gold.

So much misinformation.  Coinbase (and PayPal, and Dwolla for example) use ACH.  ACH takes 3-5 business days.  The banks keep it slow on purpose.  Note that is business days (excluding weekends and banking holidays).  I doubt coinbase is any slower than funding Dwolla account or PayPal account from a bank account.

I thought it was going to be panic rise Monday?  Monday has now become throughout the week and if it declines throughout the week becomes throughout the month, which yields to Bitcoins will eventually go up?

What dilemma would that be?

Correct and in either case the NET profits are taxable.  For some strange reason some people in the US think a "hobby" profit isn't taxable.  Both business income and hobby income are equally taxed as regular income (unless the biz is incorporated).   The only difference is the IRS doesn't see losing money in a hobby as a taxable event.  Essentially the worst of both worlds: taxes on net profits, no deductions on net losses.

The same applies to gambling.
Gambling as a hobby
 - taxes on net profits.
 - no deduction on net losses.

Gambling as a biz (yes it is possible a professional poker player for example)
- taxes on net profits.
- deductions on net losses.

Simple version.  CryptoXChange has been going down hill for 6+ months now.  There daily volume is now <300 BTC per day so that massive profit is probably on the order of $20 per day (before costs). 

None of that excuses the poor customer support but you aren't dealing with some multi-billion dollar multinational corporation.  Just a small company who has been doing badly for a very long time now.

Your idea of interesting and my idea of interesting must be two different things.   The redistribution confiscation of assets is theft.  Putting it under the guise of a revolution doesn't white wash it of the immorality that boils down to taking things that don't belong to you.

Great so this will be your last post right?  As others have pointed out you likely have the wrong forum.


We are right behind you.  Lead the way.
Of course if this site was run by the DEA wouldn't it make sense to ALLOW links to prohibited content.  

No because there is income tax and there is also capital gains taxes (don't you love the IRS they tax you coming and going).  

So hypothetical situation (for educational purposes only consult a tax adviser for detailed tax advice):
In 2010 someone generated 10,000 BTC.
Value at the time of production was $0.06
Miner's costs were $500
Today (2012) miner sells 10,000 BTC for $10 ea.

So in 2009 the miner incurred an income of $600 (10K * $0.06).  If the miner was operating a business he could deduct his $500 costs and have a taxable income of $100.   Regardless the coins acquired now have a BASIS of $0.06.

If miner sells today for $10.00 ea he has a capital gain of ($10.00 - $0.06)* 10,000 = $99,400.  Now IF BTC went to $0.01 and the miner sold he would have a capital loss of ($0.01 - $0.06) * 10,000 = $-500.  The capital gain or loss would be recorded on the capital gains worksheet.

Note in this case the value of the coins at production were so low value that while taxes were due if not paid it is unlikely to result in a penalty.  If no taxes were paid then the basis would be $0.00 and thus if sold for $10.00 ea the entire amount ($100,000) would be a capital gain.

Kinda like Schroeder's cat for scams.  It is not possible to be a scam until after the scammer has already stolen the coins!  Insightful.

Income is always taxed when it is earned.

If someone paid you:
$100,000 in dollars,
$100,000 in Euros,
$100,000 in gold,
$100,000 in oil,
$100,000 in BTC

it doesn't matter in all four events you incurred an income of $100,000 (or equivalent) and owe taxes on the income.  Failure to include that income on current year's income tax return would be considered tax evasion.

Now if someone gifts it to you (or it is an inheritance) there will be no taxes due (w/ certain limitations) but once again the IRS would see that as a gift of $100K regardless of the form the gift occurred in. 

That isn't even close to true in the US.  If you earn income in ANYTHING it is taxable when the income is earned.

For example lets say you make a website for me and I pay you in a 1 oz gold coin (hypothetical value at time of transaction $1,700)? What is your tax liability?  By your logic nothing until you sell the coins.  The reality is you have gained income (by IRS definition) of $1,700 at the point I give you the coins.   When you sell the coins you may also incur a capital gain (or loss) but that is independent of the income.    What about unique items?  You build a luxury house for me and I pay you with a Rembrandt original valued at $2.8 million.   Your tax liability?  $2.8 million in income.  It doesn't matter how you get paid, it is income, and it is taxable.


How about pure barter of services?  Your make a website for your dentist and he fills in your cavity.  Once again both of you gained taxable income.  The amount taxed is the "fair market value" of the services.   Income is always taxed at the point it is earned.  It doesn't need to be paid in dollars.  If you receive anything of value for just about any reason it is taxable.  For example say you win a car in a sweepstakes.  Yup you owe taxes on the income value of the car.  $50K car = $50K in income seen by the IRS; have your checkbook ready.   Obviously your casino chip claim is false.  One could simply use casino chips as a proxy (i.e. live in Vegas and pay all your bills by casino chips) and never incur any taxes on casino winnings for life.

More on IRS & Barter:
http://www.forbes.com/2009/11/11/irs-tax-barter-exchange-income-personal-finance-wood.html


http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Bartering-Tax-Center

For a second think about it this way.  If income wasn't taxed until converted to dollars it would be trivially easy to never pay any taxes ever for your entire life by never converting to USD.   i.e. I trade you 1000 shares of xyz inc for 20 oz of gold.  I then take the 20 oz of gold and trade them for a years worth of dedicated server hosting.  The webhosting company trades the 20oz of gold for food at the local grocer to feed his family for the next two years.  Nobody has any income?  Nobody has any taxes?  Really does it even seem plausible the IRS didn't notice this massive loophole.



The only time that taxable events are limited to the time of sale is on capital gains.   So if you purchase a gold coin (or oil futures, or home, etc) for $1,700, and the price of gold goes up to $1,800 how much taxes are due?  That's right; none.  The event is a capital gain and only becomes taxable when the asset is sold.  5 years later you sell the gold coin for $2,000 and incur a $300 capital gain which is taxed based on the year you sold the coin.

Note the two can be combined.  Going back to the website.  Say gold was worth $1,700 at the time the site was made.  You incur $1,700 taxable income.  You pay your taxes, and decide not to sell the coin.  You keep it for a couple years and sell it for $2,000.   You incur a $300 capital gain.  Why $300 and not $2,000.  The $1,700 becomes your basis because it was treated at income at the time you acquired the coin.  On the otherhand say gold tanks to $1,200.  You would have $1,700 income when paid in gold and a $500 tax deductible capital loss on the year you sold the coin.  It is possible both events could occur in the same year but they are independent events.

Got a quote/link on that.  Seriously bad news.