I am sorry but I do not understand how one can use Bitcoin to avoid VAT if it is classified as "digital service". Services are also subject to VAT, in fact there is a EU directive for VAT on e-services which standardises the procedures. Assuming Bitcoin is not a financial instrument or currency from the perspective of VAT, if you're exchanging something for Bitcoins then, you need to add VAT on top of it. For B2B or C2C transactions, the net result is zero, because either the VATs cancel each other out or there is no VAT. For B2C transactions, if the business is "paying" with Bitcoins, they need to add VAT upon it (from account perspective, subtract the VAT from the sum paid out). This might have effects on salaries being paid in Bitcoin, but I see no other practically relevant situation.

Am I mistaken?

Also, I don't understand why it would be a problem if Bitcoin users could use a legal loophole to lower their taxes. On the contrary, that would be beneficial both for the users and for the spread of Bitcoin.

There are precedents where "theft" of virtual goods (e.g. from a MMORPG) went to court and the prosecution was successful. Furthermore, irrespective of whether the "theft" aspect is recognised, there is still an unauthorised computer access involved, and this is illegal and subject to damages. Also, unlike "theft" of virtual goods, the prosecution of an unauthorised use of computers is compatible with the anti-IP legal systems.

This is a fascinating debate. I don't have time to reply now but will revisit it in the future.

I praise you for admitting a mistake. You've got my respect . On all the points you mentioned in this post, we seem to agree, even though we appear to be using different approaches.

You are mixing legal and economic factors, again. If A and B exchange a good G1 for a good G2, this act is not an act of A of entering into a contract with C, who is not owner of of either G1 or G2. Now, if C owns another good S, which from economic point of view acts as a substitute of G1 or G2, there is an economic relationship between S on one side and G1 or G2 or the other. But this does not imply a legal connection. It works the same way irrespective of whether one of the goods involved is money or not.

Yet, for some inexplicable reason, you argue that it's different with money.

Ok then. Let's assume we have barter, media of exchange evolve, and gold outcompetes the other media of exchange into money. At what point does it start being a claim? At what point do the actions of A and B start violating C's rights?

Non-sequitur. You're avoiding answering questions.

The function of money is an economic one, not a legal one.

Again, the point where you explain how an economic phenomenon influences property rights is missing from your answer.

Correct. But I can own another good, S, which economically acts as a substitute of the rock of gold. If the production costs of S are below those of the rock of gold, the supply in that market will increase and the price will decrease. Again, this is not particular to money.

In order for a rock of gold to be some sort of claim, there needs to be a counterparty to that claim, with which you have a contract. People other than this counterparty cannot be held accountable if this claim is reneged upon. Who is this counterparty and when did they agree to a contract?

Non-sequitur.

There is no "point of money". Furthermore, it's a non-sequitur. You did not address why particular economic differences result in legal differences. It's like saying that it's ok to steal from the rich because rich are richer than the poor.

Once again, you are still to provide a coherent argument. Since all media and all computers involved in the functioning of Bitcoin are private property of the owners of these objects, it is logically impossible to also have "rights in Bitcoin". Such rights would be either redundant or contradict the rights in the media / computers. For a more detailed elaboration, see aforementioned Against Intellectual Property.

Wait, what? You can't be serious. What specific other property rights apply to money that do not apply to other goods? What property rights apply to gold that do not apply to other goods?

Ahh, so you're a proponent of the labour theory of value? If some guy X does not "work", and this is somehow causally related to a decrease in the price of Bitcoins, he's violating your rights?

You're having a hard time because you cannot formulate coherent arguments. You randomly jump between all kinds of assumptions.

If I increase a supply of a good and this decreases its price, is it fraud? If not, is money covered by different property rights than other goods? If not, then your argument is erroneous.

The concept of "retaining a claim on ownership but relinquishing the actual ownership" makes no sense. It's just an obfuscation. Furthermore, again based upon TTTC and Kinsella's work, there is no ownership of Bitcoins. There is only ownership of the media and computers involved in the functioning of Bitcoin. Bitcoins are already an abstract concept, so derivative instruments issued by Bitcoin "banks" are even more abstract and there is even less reason why their issuance should be in any way legally related to each other.

Assuming your conclusion again. The fraudulence needs to be the conclusion, not the assumption.

This is a bit imprecise. FRB creates more instruments than they have reserves. But this only leads to an increase in the money supply if these instruments act as a substitute of money itself, i.e. if they are used as a method of payment.

Non-sequitur. Merely because money is special economically does not imply that different property rights rules apply to it.

You argue that because the market price of BTC has decreased through FRB, this is a violation of property rights. However, this is what you have to prove, not assert. You are assuming your conclusion.

As I said already, almost any act whatsoever can decrease the market price of BTC. A creation of a new currency, say Bitcoin2, which has superior features than Bitcoin, for example, could cause this. Is that illegal too?

The fundamental economics is the same. Some goods S act as substitutes of another good M. If the production costs of S are lower than M, this leads to an increase of supply and a decrease in price. This happens everywhere and is not particular to money. Should it be illegal in those other cases too? Or should it be different with money?

A deposit contract means that the depositor retains ownership. So your argument makes no sense. What you are describing is a loan contract, where the ownership is transferred.

An operator cannot invest more than 100% of his reserves, that's logically impossible. However, he can issue instruments whose price exceeds that of the reserves. If these instruments are usable in some way (for example, they can be used for payment, or at least speculation like on Bitcoinica), he can make additional profit on that, and he is operating at fractional reserves.

In other words, you assert that money is a special type of good, and normal property rights do not apply to it. It's a sort of collective ownership, where a change of price thereof constitutes an illegal act. The problem is, almost any act whatsoever changes the prices, so almost any act whatsoever therefore should be illegal.

Ad hominem, non-sequitur and an appeal to emotion.

Appeal to emotion and circular reasoning.

You have yet to provide a coherent argument and instead divert attention into ad hominems.

If A and B agree on trading their own properties, on their premises, why is C's opinion relevant in any way whatsoever relevant for the legality of this transaction?

I have already disproved that fraud is a necessary attribute of FRB. I am merely adding that irrespective of this, demand for substitutes leads to fractional reserves.

I explain the situation about Bitcoin and FRB on the Bitcoin wiki page

The payment of interest is a proof that the reserves are not 100%. Unless of course the operator is running at a loss.

This assessment belongs to the buyer, not you or me. If you try to interfere with this process against the wishes of the buyer, you are violating his rights.

Let's put it differently then. Technically, the money is not created out of nothing, there is always some non-zero cost associated with it. If not for any other reason, at least for opportunity cost of the resources (e.g. bank's computer) involved for the duration of the creation. Let's say I would find out a way to produce oranges more cheaply (for example, by using Star Trek replicators). Or by inventing a car I would put the horse-pulled carriage operators out of business.

A more deep reason why this is happening is that the newly printed money acts a substitute for the old money, similarly as a car acts as a substitute for a carriage. But absent legal restrictions, it is not the producer who determines whether the new money acts as a substitute or not. So the producer's act of creating new money, per se, cannot violate anyone's rights. Similarly, B and C trading this new money as if it was old does not violate the rights of D. The only way the new money can be used to violated D's rights is if someone trading with D misrepresents their characterstics, or forces D to accept it.

Trading "counterfeits" may be fraudulent, but there is no necessity. If I put a sticker on a piece of rock saying "orange", and sell it, it also may or may not be fraud, depending on the context.

Maybe you can start by rereading my post. For further information, maybe you can start with Against Intellectual Property by Stephan Kinsella.