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I do agree that from a technical point of view Bitcoin does correspond to M0 or at best Monetary Base; however its use on the other hand does not. Take Bitcoinica for example. We all know that they had a hot wallet with 20% of their BTC reserves that was stolen and a cold wallet with 80% that was not. The BTC reserves correspond to M0. But what about the USD reserves? Were they held in wads of US $100 bills under Zhou Tong's mattress? Not likely, they were more likely on deposit with one or more financial institutions forming part of M1 or even broader money. There is a fundamental asymmetry here.
This reality is true for individuals and business alike. If they hold BTC and fiat, the BTC is for the most part in a wallet forming part of M0 while the fiat on the other hand is on deposit with one or more financial institutions forming part of M1 or broader. If one considers payments we have a similar situation. Bitcoin is not just a replacement for cash (M0) but for debit cards, PayPal, credit cards etc. Again M1 or broader.
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GNU / Linux has about 1% market share on the desktop by some of the most conservative estimates. http://marketshare.hitslink.com/operating-system-market-share.aspx?. For Bitcoin to reach 1% market share one BTC would be worth approx !0,000 USD. How to get this figure: World M1 money supply value approx 21,000,000,000,000 USD. http://news.goldseek.com/GoldSeek/1231778551.php Maximum number of BTC 21,000,000. Purchasing power of 1 BTC for 100% market share. 1,000,000 USD 1% of 1,000,000 USD equals 10,000 USD. |
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The key is that was used to be a B2C transaction now becomes a B2B transaction as consumers register for VAT since they are now in the business of selling "digital services" when they purchase anything with Bitcoin. In many cases the will be forced to register for VAT because they will go over the minimum in transaction volume. Now if you turn every transaction into a B2B transaction there is never any "value added" and hence no tax. There is a reason why every jurisdiction that has a VAT or GST, does not apply the VAT or GST to money. It is the only way such a tax can work. By the way VAT or GST is a very common type of tax. The only major economy that does not apply this tax is the United States. http://en.wikipedia.org/wiki/Value_added_taxI do agree with one thing. If a country is so bureaucratic that they try to apply a VAT or GST to Bitcoin, this could could drive the value of Bitcoin sky high once people figure out how to avoid the VAT or GST using Bitcoin. |
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If there is one critical thing here it is VAT. Bitcoin must be treated as currency or money for the purposes of VAT otherwise there would be chaos with Bitcoin being used as a means to avoid and evade the VAT. The paradox here is that if the EU tries to tax Bitcoin with VAT not only will the EU governments not get additional VAT, Bitcoin could literally undermine the entire collection and administration of the VAT in Europe.
By the way I am in Canada where we have a similar tax called GST.
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This analogy is far-fetched though since you are comparing AAPLes and oranges. Assuming a stock will act like Bitcoin is questionable.
Actually what can happen here is that once the low volatility period is over the price movement in the oranges can be a lot sharper than price movement in the apples. |
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Q - Are you running a drug ring and laundering money for Silk Road?
A - Are you kidding me? I live in the US. If anything I was doing was illegal, my CPA, attorneys, and scariest... my wife would have my head. So to make it clear, nothing I'm associated with is illegal.
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Well I thank you very much for clarifying this. My initial thought remains you are factoring Bitcoin receivables. It is also very likely that you are paying USD for them. This explains the need to hedge the currency risk by borrowing BTC and the need for uneven amounts of BTC. It is a perfectly legitimate and legal business provided that the underlying receivable is for something that is legal. I must admit that because of the very high return Silk Road did come to mind; however given how small the Bitcoin market is and the fact that it is not that easy to short BTC in order to hedge this, I can see how you can pay these high returns even if the underlying receivable is for something that is perfectly legal. |
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Regardless of if they work or not, these attacks are illegal in many countries. They are certainly illegal in the US, even when going after illegal targets.
This hasn't stopped them yet. Correct, the people in those articles have purposefully stationed the programs in countries where it is legal. However, like Gavin said, there is protection within Bitcoin. If it was found that they are being paid by US sources even indirectly they still could be in trouble. N Like Microsoft for example? Ouch. |
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This is actually a very interesting idea. What it entails in reality is very similar to combining a credit card authorization with a Bitcoin payment in such a way that in order to defraud a merchant both a fraudulent credit card has to be authorized and a Bitcoin double spend has to occur in the same transaction!
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I have tried to sort out what applies regarding Bitcoin and VAT in Sweden and since some of the rules regarding VAT are harmonized within EU I thought that I'd share this in order to get some feedback from other EU citizens. These are my conclusions (I'm not an expert in this field so feel free to point out any errors or terms that I use incorrectly): * Finansinspektionen ("Financial Services Authority"?) in Sweden tell me that they do not consider Bitcoin a currency. * The Swedish Tax Agency tell me that I should treat Bitcoin as an "electronic service". Everything that is delivered electronically is considered a "service" instead of a "commodity", there are a few differences in taxation but I don't think that's what's important here. What's important is that since Bitcoin is not considered a currency a purchase with bitcoins will be considered barter. In barter, one should look each transaction separately so that if e.g. a customer (private individual) buys a table from a company and pays with bitcoins these 2 transactions should be considered: 1. The customer bought a table from the company 2. The company bought some bitcoins from the customer I the first transaction VAT is added by the company and recorded as output VAT. In the second transaction there is no VAT since the purchase is from a private individual. Later when the company wants to get rid of the bitcoins this will be considered a sale of bitcoins (regardless of whether they are exchanged for some currency or if something is bought using them) and then VAT should be added to the sale and recorded as output VAT. From what I can understand this is a bit problematic. It will be hard for the company to exchange the bitcoins since they must add VAT (in Sweden this is 25%) to the "sale". No private individual will buy at that price since they can buy from eachother with no VAT. Some other company could possibly buy them since they can deduct the VAT but at some point some company will have to return the bitcoins to an individual. Have other people in the EU reached similar conclusions? If my conclusions are correct it is a pretty big obstacle in getting merchants to start accepting Bitcoin. For Swedish readers, I have started a similar topic in Swedish at bitcoin.se. There is a very critical flaw in this argument especially in the case of Sweden. The "private individual" is no longer a consumer but is in fact a business that is selling Bitcoin and has to register for VAT. Sweden has in fact one of the lowest minimum thresholds for VAT/GST registration in the OECD http://www.oecd.org/dataoecd/12/12/34674438.xls at 30000 SEK or approx 840 BTC at current rates! In a Bitcoin only economy every transaction would have equally compensating input and output VAT credits and equal amounts of VAT charged by each party effectively negating the VAT. The bottom line if that if the tax authorities choose to treat Bitcoin as a "digital service" they have essentially created a huge loophole for VAT avoidance simply by registering for VAT and then using Bitcoin for every transaction. |
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I'll be sure to let you guys know when I get the $300,000 or so I had in long positions before I use it to buy on MtGox.
But if the BTC price were to drop to say $0.50 or rise to say $50 before the Bitcoinica positions were closed and the accounts settled with the clients then the real fun begins. |
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Back to the question of WHEN WILL WE SEE THE FIRST FUNDS BACK TO THE CUSTOMERS? This timing may well lead to more volatility of bitcoin trading and to know this date would be very much appreciated.
Especially when we consider the question of the open positions and at what price they will be liquidated. If the market makes a sharp move in any direction this can get real ugly real fast. |
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The point is, if 500 million isk is worth 10$ and if it's taxable then every eve player should pay taxes while he play but of course we know this is not true
No. It does not matter how the gamer is compensated, namely isk or BTC, or CAD, etc., but rather is the gamer a professional (taxable) or not (not taxable)? Here is an article on the case of poker players and the taxation of poker winnings: http://taxdood.com/2011/03/07/taxation-of-gambling-winnings-in-canada/ What matters here is whether the player is a professional or not. What the pot is denominated in is totally irrelevant. By the way CCP can add "Income Tax Auditor" to the EVE Sandbox |
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2) If you are serious about security, don't advertise your genius ideas.
On the contraire, if your solution is proven and tested, you shouldn't be afraid of sharing it with the public. "Security by obscurity" is just laughable, and the source of problems like the one Bitcoinica is going through perhaps. Let's bet that nobody knows where our server is, or how we secure it. Let's just bet! How very true. The main strength of Bitcoin is that all the security is FLOSS (Free Libre Open Source Software) and yet is an extremely secure system. Now compare this with the multi billion dollar DRM industry, which is entirely based on security by obscurity using propriety software. With DRM the "security" is usually cracked by some teenager who in the process also makes an utter fool out of some multi billion dollar corporation or trade group. This however does not prevent many very deep pockets from paying for the security by obscurity snake oil. |
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If there is a market there is a fair market value quite irrespective of what some EULA may say. Furthermore I have yet to come across a EULA that would override the Income Tax Act in a court of law.
Now to get back on topic. Bitcoins and Namecoins are traded on exchanges worldwide and one can easily establish a fair market value for them in terms of CAD at any point in time.
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Let's speak about WoW gold or EVE isk
I can sell 500millions of isk for like 2BTC or for like 10$ or more. Yes it is a bit against the eula and the EVE rules but not against any law.
So when i run some missions ingame and i gain isk do i have to pay real taxes on them?
Well i say that the answer also apply for bitcoin. If i mine bitcoin i pay no taxes, i'll pay taxes the day i'll sell them/i buy something with them (even if buying things with btc can be tought like barter, well barter is taxed)
I am not a Lawyer or an Accountant, this is just how I see it. Let us say you provided a service to someone (say fix their computer) and they pay you in WoW gold or EVE isk. Is this taxable? You bet it is at the fair market value of the WoW or EVE isk when you were paid for the service. And if you are registered for the GST / HST you would have also to charge them the GST / HST in WoW gold or EVE isk and submit the CAD equivalent to the CRA. The gaming example is more interesting. If the fair market value of the WoW gold or EVE isk is less that what you paid to participate in the game then the argument can be that all you did is reduce the cost of your entertainment since the primary purpose of the gaming was entertainment. On the other hand if the fair market value of the WoW gold or EVE isk is more than what your cost of participating in the game then yes it is taxable. Let us not forget that there are people who make a good income by gaming and then selling the gaming currency and the taxwoman will want her cut. |
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I have repeatedly told people that Bitcoinica is a scam and that Bitcoinica staff should be banned from the forums.
Maybe now people will actually listen.
Bitcoinica is a regulated entity, verifiable by government records. We are one of the most legitimate businesses in Bitcoin community, by any standard. What is it with all the anonymous/pseudonymous guys on this forum repeatedly attacking every NAMED (and easily verified) individual and company and labelling every project run by those most legitimate operators as a scam? Insane! Grow a brain or something. +1 Calling Bitcoinica a scam after they get robbed is like calling a woman a whore after getting raped. Have some class, and contribute something positive to the problem instead of busting out the S word just because something went wrong. How quickly people forget that last time this happened, Bitcoinica personally reimbursed all the funds that had been stolen. That was a milestone event for Bitcoin, I think Zhou and his team deserve at least a little professional respect and mature response from the community. Zhou - I'm very sorry to hear of this incident and I hope you guys are able to power through this, learn, improve, and grow. +1 How is this different from a bank closing its doors temporarily after a bank robbery while the investigation takes place? |
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If you find a way to give the the 30% of all Bitcoins that are passing through your app, I'm sure that they'll accept it  Why on earth would I want to give 30% to Apple, when I can use my credit card at a merchant who may pay 1.6% in Credit Card fees and I get 1% cash back for a net fee of 0.6%. It seems to me that Apple is 50x worse that the credit card companies and banks. I say good riddance. |
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Well there are 'persons' in California that can get Pre-paid cards without a SSN but they do need to provide a consulate Id Number.
Technically that wouldn't be a SSN/EIN/TIN.
So, Hola!
But are they re-loadable? I do not think so. What makes this product attractive is that it is re-loadable. |
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A very common reason why a non US resident would want a USD Debit VISA card is to purchase goods and services online from websites in USD. This avoids the currency conversion fees as the entire transaction is in USD. In addition many US based retailers do not accept non US based credit cards for fear of fraud. There are also persons who for example travel to the US and would want to use it in the US when visiting. Here in Canada the major banks actually issue USD denominated credit cards for this very reason.
There are also those non residents who have a vacation property, business and / or investments in the US and would want use such a card to pay for goods and services related to their business etc. In addition one has those that wish to hold funds in USD in the US for the very same reasons many US citizens and residents may wish to hold funds in a non USD currency outside of the US. It works both ways.
The next group is those that cannot get a VISA or MasterCard branded Debit or Credit card in their own country. In many parts of the world, unlike the US, debit cards that operate as credit cards are either impossible or very hard to get, so this becomes a very attractive option in this case.
By the way funding a US based bank account / debit card with Bitcoin avoids one of the biggest costs and hassles for a non US resident in holding a US bank account; namely funding it, especially with small amounts.
What you will find is that most card issuers will only deal with US residents, because they can not be bothered to research the AML properly; however if you find one that does then this can be a huge business opportunity.
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