BITCOIN XT: The Crash; Shooting the Moon; and Taxes

[keepdoing]

I started with Bitcoin XT, not because I favor it, but because it is what I think the most likely scenario is in the following hypothesis....

Bitcoin XT Fork succeeds.  Fiat Players that are backing Billions of Dollars in the Big Bitcoin Exchanges (think New World Order Fiat Banks), and in Blockchain technologies (Stock Market, Ledger, even Governments etc) have their uncertainty fears erased.  They start unleashing the power of all the technological blockchain development that is going on behind the scenes as soon as it is apparent that the new XT Chain is stable.  Traditional Fiat Banks start spinning off Fiat Bitcoin Banks.

Then once most of the infrastructure and preparation is in place - the Crash Happens. It'll be sparked by a terrorist event, a small war, or a "Greek Like" financial crisis.  In short they will intentionally engineer a run on the banks.  Everyone will be trying to save their cash.

Then.... Hail the Saviour of Bitcoin!  People will run TO the puppet Fiat Bitcoin Exchanges and Bitcoin price will shoot to the moon.   I think we've all heard the "1 Bitcoin = $1,000,000" argument.  It actually isn't farfetched because if 1 Satoshi equaled the equivalent of a U.S. based Penny for example - that would just about get us to the correct value of a global one world currency post-crash.

My question is how much the Government will take in Taxes?  and how they may even now be manipulating to make sure they get them?  Governments don't screw around with their tax money.  If I hypothetically have 10 Bitcoins in Coinbase/Circle pre-Crash/Rocket to Moon - and then that is worth $10 Million, I know and expect the Gov't will take a huge chunk.  Personally I won't care because I will still be rich as $H!T    BUT - what about offline bitcoin.  Will they find a way to track it / block it from coming back into the "Acting System" probably XT.   I mean - they want their taxes.  Is it too early / late to start hiding your coins - similar to those that are keeping their gold purchases off-books?

I keep hitting at this from different angles on different boards, hoping I can get an intelligent technological answer.  Everybody knows all the "don't trust the banks / keep your keys" stuff.  And I understand that, and I don't argue any of it.  But I am looking for an angle they could use.  For whatever reason I keep thinking that they may just Block bitcoins somehow.  or seize them.   Specifically ones that are "out of network".   Under this premise they may tax crap out of in network - but that may be better than getting seized under some sort of out-of-network designation.   Sort of like being designated a "terrorist bitcoin".

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[Denker]

Buy your coins person to person. For instance use localbitcoins for that. Meet in a Cafe or other public place and do the trade. I never asked for names or identities. No way to track to which person the coins belong you are buying or selling.Simple is that.

[unholycactus]

If you buy Bitcoin using you real life credentials then it doesn't matter how much you mix them, the gov will ask the exchange/service you used and if you bought 10 BTC and those BTC are 10 million dollar, they know you at one point owned/still own 10 million dollar.

The only way to be outside of the fiat system reach is if you get paid directly in BTC and the payeer doesn't know your real identity.

I don't think that would make sense. Say you bought 10BTC at 250$ each on an exchange that knows your personal info. You sell them for 300$ to your friend. Bitcoin surges to 1M$.
Government has no way to know if you still control those coins and it would be absurd for them to say "Hey you owe us more money than you ever owned".

That's why I like to see Bitcoin taxed as a capital gain. If you hold on and never sell, you won't pay a dime.

[Meuh6879]

Bitcoin have nothing to do with gov.
Bitcoin is people.
Gov is not people.

it's DEBT, war and collapse every 7 years ...
https://www.youtube.com/watch?v=joITmEr4SjY

[keepdoing]

If you buy Bitcoin using you real life credentials then it doesn't matter how much you mix them, the gov will ask the exchange/service you used and if you bought 10 BTC and those BTC are 10 million dollar, they know you at one point owned/still own 10 million dollar.

The only way to be outside of the fiat system reach is if you get paid directly in BTC and the payeer doesn't know your real identity.

I don't think that would make sense. Say you bought 10BTC at 250$ each on an exchange that knows your personal info. You sell them for 300$ to your friend. Bitcoin surges to 1M$.
Government has no way to know if you still control those coins and it would be absurd for them to say "Hey you owe us more money than you ever owned".

That's why I like to see Bitcoin taxed as a capital gain. If you hold on and never sell, you won't pay a dime.

Thank you!  This is touching on the sort of scenario I am trying to figure out.  Here's another concern...

Say I go out tomorrow and buy 10 Bitcoin from a guy on LocalBitcoin.  We meet, cash exchanges for a price of $250 each ($2500 total).   Those coins are in my private key offline wallet, non traceable.  No proven value.   OK.... a month goes by, and the fiat market crashes, everyone runs to Bitcoin, price soars and suddenly my bitcoin is worth $100,000 (10K/coin).

But now I want to buy a House!  Now - that is a lot of money to exchange from Bitcoin >>> House.  Gubment comes along and says, "where'd you get your bitcoin?"  I say, "I bought it from some guy".   Then they say, "Well it has increased in value.  You owe us tax on the amount you have profited from an increase in value.  How much did you buy it for"

So tell me..... What's your answer.   And how will the government react to your answer?

[unholycactus]

If you buy Bitcoin using you real life credentials then it doesn't matter how much you mix them, the gov will ask the exchange/service you used and if you bought 10 BTC and those BTC are 10 million dollar, they know you at one point owned/still own 10 million dollar.

The only way to be outside of the fiat system reach is if you get paid directly in BTC and the payeer doesn't know your real identity.

I don't think that would make sense. Say you bought 10BTC at 250$ each on an exchange that knows your personal info. You sell them for 300$ to your friend. Bitcoin surges to 1M$.
Government has no way to know if you still control those coins and it would be absurd for them to say "Hey you owe us more money than you ever owned".

That's why I like to see Bitcoin taxed as a capital gain. If you hold on and never sell, you won't pay a dime.

Thank you!  This is touching on the sort of scenario I am trying to figure out.  Here's another concern...

Say I go out tomorrow and buy 10 Bitcoin from a guy on LocalBitcoin.  We meet, cash exchanges for a price of $250 each ($2500 total).   Those coins are in my private key offline wallet, non traceable.  No proven value.   OK.... a month goes by, and the fiat market crashes, everyone runs to Bitcoin, price soars and suddenly my bitcoin is worth $100,000 (10K/coin).

But now I want to buy a House!  Now - that is a lot of money to exchange from Bitcoin >>> House.  Gubment comes along and says, "where'd you get your bitcoin?"  I say, "I bought it from some guy".   Then they say, "Well it has increased in value.  You owe us tax on the amount you have profited from an increase in value.  How much did you buy it for"

So tell me..... What's your answer.   And how will the government react to your answer?

At the very start, Bitcoin was worthless. People that were mining in the early days have seen an incredible increase in value and own a valuable asset.

I haven't heard of anybody trading a house for Bitcoin, but I've seen people buy very expensive goods (cars, gold, etc.)
Government and tax collectors are very confused about what to do in those situations. Only time will tell how the tax code will develop.
Right now you can pretty much do anything and be fine, at least where I live.

[keepdoing]

If you buy Bitcoin using you real life credentials then it doesn't matter how much you mix them, the gov will ask the exchange/service you used and if you bought 10 BTC and those BTC are 10 million dollar, they know you at one point owned/still own 10 million dollar.

The only way to be outside of the fiat system reach is if you get paid directly in BTC and the payeer doesn't know your real identity.

I don't think that would make sense. Say you bought 10BTC at 250$ each on an exchange that knows your personal info. You sell them for 300$ to your friend. Bitcoin surges to 1M$.
Government has no way to know if you still control those coins and it would be absurd for them to say "Hey you owe us more money than you ever owned".

That's why I like to see Bitcoin taxed as a capital gain. If you hold on and never sell, you won't pay a dime.

Thank you!  This is touching on the sort of scenario I am trying to figure out.  Here's another concern...

Say I go out tomorrow and buy 10 Bitcoin from a guy on LocalBitcoin.  We meet, cash exchanges for a price of $250 each ($2500 total).   Those coins are in my private key offline wallet, non traceable.  No proven value.   OK.... a month goes by, and the fiat market crashes, everyone runs to Bitcoin, price soars and suddenly my bitcoin is worth $100,000 (10K/coin).

But now I want to buy a House!  Now - that is a lot of money to exchange from Bitcoin >>> House.  Gubment comes along and says, "where'd you get your bitcoin?"  I say, "I bought it from some guy".   Then they say, "Well it has increased in value.  You owe us tax on the amount you have profited from an increase in value.  How much did you buy it for"

So tell me..... What's your answer.   And how will the government react to your answer?

At the very start, Bitcoin was worthless. People that were mining in the early days have seen an incredible increase in value and own a valuable asset.

I haven't heard of anybody trading a house for Bitcoin, but I've seen people buy very expensive goods (cars, gold, etc.)
Government and tax collectors are very confused about what to do in those situations. Only time will tell how the tax code will develop.
Right now you can pretty much do anything and be fine, at least where I live.

Thanks for your comments   And I do get that.  I actually bought most of mine at over the current value, and in the U.S since it is taxed as property / capitol gains - I could sell now and do a tax writeoff   Yay, I saved money by losing even more!  Rofl

BUT - I do think that there is a lot of work being done, and I do think houses, cars and much much more will be the norm to purchase bitcoin in - after the Fork + a year or two.  And I think that the sudden wealth explosion / wealth transfer as Bitcoins shoot through the roof is going to create a sceario that has all Governments drooling over the potential money they can collect.  And I think most of them are keeping a close eye and waiting for the REAL POWERS to TELL them it is time to implement.  I could be wrong.

I guess it is too much to ask how multiple different governments will "Arbitrarily Set Taxable Value" on coins coming into the system (for example - I might be tempted in a 10K/bitcoin world to say, oh yeah, I just bought this off the street yesterday.  Paid $10,500 for it because the guy charged me a premium.  His name?  No, sorry I didn't catch his name.  By the way you owe me $500 Mr Government dude for the $500 loss on my incvestment)  LOL - yeah, that would work

But I am concerned if they could track/trace Off-System transactions.... electronically find your stash and lock it down, or subtract from it, or even just do the old fashion thing and send you a legal notice to appear in court and defend yourself against tax evasion charges. 

Thats a solid question.... If they can trace it, could they partially subtract from it?  Like auto-deducting their fee?  Against your will.  ANYTHING closely remote to that possible in technology land?

[unholycactus]

If you buy Bitcoin using you real life credentials then it doesn't matter how much you mix them, the gov will ask the exchange/service you used and if you bought 10 BTC and those BTC are 10 million dollar, they know you at one point owned/still own 10 million dollar.

The only way to be outside of the fiat system reach is if you get paid directly in BTC and the payeer doesn't know your real identity.

I don't think that would make sense. Say you bought 10BTC at 250$ each on an exchange that knows your personal info. You sell them for 300$ to your friend. Bitcoin surges to 1M$.
Government has no way to know if you still control those coins and it would be absurd for them to say "Hey you owe us more money than you ever owned".

That's why I like to see Bitcoin taxed as a capital gain. If you hold on and never sell, you won't pay a dime.

Thank you!  This is touching on the sort of scenario I am trying to figure out.  Here's another concern...

Say I go out tomorrow and buy 10 Bitcoin from a guy on LocalBitcoin.  We meet, cash exchanges for a price of $250 each ($2500 total).   Those coins are in my private key offline wallet, non traceable.  No proven value.   OK.... a month goes by, and the fiat market crashes, everyone runs to Bitcoin, price soars and suddenly my bitcoin is worth $100,000 (10K/coin).

But now I want to buy a House!  Now - that is a lot of money to exchange from Bitcoin >>> House.  Gubment comes along and says, "where'd you get your bitcoin?"  I say, "I bought it from some guy".   Then they say, "Well it has increased in value.  You owe us tax on the amount you have profited from an increase in value.  How much did you buy it for"

So tell me..... What's your answer.   And how will the government react to your answer?

At the very start, Bitcoin was worthless. People that were mining in the early days have seen an incredible increase in value and own a valuable asset.

I haven't heard of anybody trading a house for Bitcoin, but I've seen people buy very expensive goods (cars, gold, etc.)
Government and tax collectors are very confused about what to do in those situations. Only time will tell how the tax code will develop.
Right now you can pretty much do anything and be fine, at least where I live.

Thanks for your comments   And I do get that.  I actually bought most of mine at over the current value, and in the U.S since it is taxed as property / capitol gains - I could sell now and do a tax writeoff   Yay, I saved money by losing even more!  Rofl

BUT - I do think that there is a lot of work being done, and I do think houses, cars and much much more will be the norm to purchase bitcoin in - after the Fork + a year or two.  And I think that the sudden wealth explosion / wealth transfer as Bitcoins shoot through the roof is going to create a sceario that has all Governments drooling over the potential money they can collect.  And I think most of them are keeping a close eye and waiting for the REAL POWERS to TELL them it is time to implement.  I could be wrong.

I guess it is too much to ask how multiple different governments will "Arbitrarily Set Taxable Value" on coins coming into the system (for example - I might be tempted in a 10K/bitcoin world to say, oh yeah, I just bought this off the street yesterday.  Paid $10,500 for it because the guy charged me a premium.  His name?  No, sorry I didn't catch his name.  By the way you owe me $500 Mr Government dude for the $500 loss on my incvestment)  LOL - yeah, that would work

But I am concerned if they could track/trace Off-System transactions.... electronically find your stash and lock it down, or subtract from it, or even just do the old fashion thing and send you a legal notice to appear in court and defend yourself against tax evasion charges. 

Thats a solid question.... If they can trace it, could they partially subtract from it?  Like auto-deducting their fee?  Against your will.  ANYTHING closely remote to that possible in technology land?

Bitcoin is meant to be decentralized. So that shouldn't happen.

The problem is that fiat exchanges are centralized. Meaning that if the government applies rules to them, every user will be affected.
In other words, if the US government wants to force a tax on transactions, they could very well do it and everyone that wants to use the exchange will have to pay it.

[Meuh6879]

"where'd you get your bitcoin?"  I say, "I bought it from some guy".  Then they say, "Well it has increased in value.  You owe us tax on the amount you have profited from an increase in value.  How much did you buy it for"

So tell me..... What's your answer.   And how will the government react to your answer?

good question.
my answer to IRS : i have buy this bitcoin(s) yesterday in exchange of all my FIAT paper money.

Gov can not see that you have exchange FIAT electronic to CASH fiat money (Bank-run, it's called).
 

But, when the time comes, the bitcoins holders can be the bank for others peoples ... early adopter does already this in the pump/dump situation.

Free market is always a good balance ... not like the real world with CHEATED paper money fiat.

[unholycactus]

Gov can not see that you have exchange FIAT electronic to CASH fiat money (Bank-run, it's called).
 

This doesn't match my definition of a bank run. Also government/authorities can always access your banking transaction feed.
However, it becomes much harder to track if you pay for your coins with cash.