Bitcoin's Futile Quest to Be a Currency

[CryptoCurrencyInc.com]

Bitcoin's Futile Quest to Be a Currency
http://online.wsj.com/articles/lawrence-parks-bitcoins-futile-quest-to-be-a-currency-1401661605

Mod note - non-paywall link:
http://webcache.googleusercontent.com/search?q=cache%3Aonline.wsj.com%2Farticles%2Flawrence-parks-bitcoins-futile-quest-to-be-a-currency-1401661605&oq=cache%3Aonline.wsj.com%2Farticles%2Flawrence-parks-bitcoins-futile-quest-to-be-a-currency-1401661605&aqs=chrome..69i57j69i58.3416j0j4&sourceid=chrome&es_sm=122&ie=UTF-8

[bananaControl]

Can we please not link to stuff hidden behind a paywall, or at least put "paywall" in the headline or something?

[adamselene]

Futile quest.

I like that the title makes the conclusion for the reader and poisons the well. Ace journalism.

[jc01480]

Futile quest.

I like that the title makes the conclusion for the reader and poisons the well. Ace journalism.

Depends on your political affiliations.

[franky1]

http://online.wsj.com/news/articles/SB20001424052702304363404579590360416472206?mod=itp_wsj&mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB20001424052702304363404579590360416472206.html%3Fmod%3Ditp_wsj
believe its a non pay wall version. if not i quoted it below (sneaky trick copy the viewable paragraph of a paywall article. and paste the paragraph into google )

Bitcoin is a fascinating and ingenious technology, but most promoters are mindful of neither the monetary nor the tax issues. For all practical purposes IRS regulations issued in March preclude bitcoins from being used as an alternative currency.

The IRS treats bitcoins as property. The result is that bitcoin transactions trigger a taxable event. Buyers incur a tax liability for the difference in dollars between what they paid for a bitcoin when they acquired it and the dollar value attributed to the bitcoin when they spend it. Sellers of course are subject to a tax based on the dollar value of the bitcoins they receive for a good or service.

To comply with these tax regulations, buyers and sellers must log all bitcoin transactions and report them at tax time. For transactions that require future payment, buyers and sellers undertake an exchange-rate risk involving the dollar value of bitcoins. This will greatly reduce, or perhaps eliminate entirely, using bitcoins for settling future payments, which is the principal use of money.

Some bitcoin zealots reject the effect of triggering taxable events on the theory that bitcoin transactions are anonymous. That is arguable. What is not arguable is that one who doesn’t report a taxable bitcoin gain is guilty of tax fraud, which is a felony.

In other words, the future of bitcoins depends on users willing to log all transactions, report them at tax time, and pay a tax or to engage in tax fraud. As soon as one of them ends up in prison, that will be the end of it.

Why bitcoins to begin with? We already have a virtual currency, the dollar, which has the purported benefit of being the world’s “reserve currency.”

Some people see a problem because dollars can be created at the whim of the Federal Reserve, and as former Fed Chairman Alan Greenspan once put it, “without limit.” This depreciates the purchasing power of dollars saved or promised for future payment, such as pensions. At least the quantity of bitcoins is supposedly limited by the mathematical algorithm that creates them. As an interesting aside, the bitcoin folks call the creation process “mining,” an allusion to real money.

Bitcoin supporters understand that dollars are no longer money in the classical sense, i.e., something that has a unit of dimension defined in the physical world, as Sir Isaac Newton put it circa 1699 when he was England’s Warden of the Mint. With neither debate nor anyone voting for it, the dollar has been transmogrified into an ethereal concept of money without any tie to the physical world, created out of nothing, and forced into circulation with legal tender laws.

As Australian comedian Michael Connell so brilliantly put it, what we used to call money has been transformed into “the idea of money.” Mr. Connell’s metaphor is that it’s like playing musical chairs, but instead of chairs there is the “idea of chairs.” It is absurd.

This brings to mind a related issue: U.S. Gold and Silver Eagles, which are legal tender for their face amounts under Title 31 of the United States Code. Yet as with bitcoins, the IRS arbitrarily treats these coins not as currency but as property, thereby preventing their use as money.

Consider: If you pay your taxes with a $50 Gold Eagle, you get credit for $50. No mystery there. However, if you spend a $50 Gold Eagle (or a $1 Silver Eagle), you trigger a taxable event on the difference between what you paid for the Gold Eagle and the market value of the gold in the coin when you spend it. Two recent cases challenging the IRS on this matter went up to the Supreme Court, but the court declined to hear the cases.

It is thanks to the IRS that no one uses so-called gold clauses, which would give creditors the right to demand Gold Eagles as payment in contracts. In other words, IRS policy that has no statutory authorization has rendered inoperative gold clause legislation passed by Congress in 1977.

Bitcoins have neither the advantage of being legal tender nor laws enabling their use. Folks who are accumulating bitcoins should take note.

[leopard2]

In other words, BTC are just as "worthless" as gold. LOL.

Death&Taxes has explained somewhere why this property thing is not a problem for most people

It is certainly not an issue outside the U.S.

Not to mention the Dark Wallet  

Plus the political efforts to overthrow the property classification ... bears should take note.  

[beatljuice]

Of course you can never change an IRS guidance (not even a law) once it's been published.

[BTFjmwn]

Fed Reserve was created 1910 to break stranglehold of banks at the time. Objective was to lower interest rates, and IRS was also created to cover costs (and profits). Surely those that were looking to lower interest rates would see the benefits of a modern technology that effectively removes middle brokers (in Fed Reserve, Mint, IRS, Banks, IMF/UN/World Bank) that are taking billions of unearned income out of the current system. Time will tell an interesting story, and many including previous naysayers, are jumping on the Bitcoin bandwagon.

[Ron~Popeil]

The Wall Street Journal caters to the investor and banker  classes. Their audience wants to hear that bit coin is no threat so that's what they give them.  

[GoldSilverBitcoin]

For those of you that don't know, if you just type the article title and the site in at news.google.com, you can usually get around the paywall.

[bananaControl]

The Wall Street Journal caters to the investor and banker  classes. Their audience wants to hear that bit coin is no threat so that's what they give them.  

Which is really ironic since one must assume that they read papers to be up to date on the latest developments in their field

[Tron]

When we finish https://CoinCPA.com, this 'burdensome' tracking will become trivial.

Then bitcoin holders can still take advantage of the convenience and security of paying with bitcoin, benefit from the investment aspects of bitcoin, and remain compliant with the tax law, while protecting themselves from the reckless and dangerous quantitative easing policies currently employed.

[jbreher]

Fed Reserve was created 1910 to break stranglehold of banks at the time.

No it wasn't. Sure, that was the story used to sell it to the people. But it certainly was not its purpose. The Federal Reserve Act was concocted in secrecy by the heads of the great banks. You're telling me that the heads of the banks set out to reduce their stranglehold (read as profitability)? Stuff and Nonsense!

[benjamindees]

laws enabling their use

What an idiot.  I wonder what laws enable him to spew this drivel.

[Ron~Popeil]

The Wall Street Journal caters to the investor and banker  classes. Their audience wants to hear that bit coin is no threat so that's what they give them.  

Which is really ironic since one must assume that they read papers to be up to date on the latest developments in their field

They live in their own echo chamber just like the politicians. Meanwhile we plebes gather a little bitC more freedom at a time. 

[Beliathon]

I'd take an FBI bullet to the brain before I'd give these fucks a penny of my wealth.

State-sponsored terrorism (=war for profit) is not my favorite aspect of modern reality.