IRS opens huge BTC long

[johnny211]

Doesn't the recent IRS ruling mean the following:

* IRS is hugely exposed to BTC vola since they are providing all US BTC holders a built in vola dampener. Lots of people say the volatility is hindering bitcoins use as currency. Well there you go, problem solved.

* IRS effectively holds a long BTC position corresponding to (total US BTC holdings * fed.taxrate)

Seems the stars are getting into alignment Cheers guys!

EDIT: Doh! Just realized the vola dampener doesn't dampen prices denominated in BTC so argument no. 1 doesn't hold. What about no. 2?

EDIT2: D'oh ^ 2. or actually yes it does??? getting confused here.

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[cryptomatt]

Sorry but I don't get what you're trying to say.

[Revolution]

Is this even english?

[5thStreetResearch]

Doesn't the recent IRS ruling mean the following:

* IRS is hugely exposed to BTC vola since they are providing all US BTC holders a built in vola dampener. Lots of people say the volatility is hindering bitcoins use as currency. Well there you go, problem solved.

* IRS effectively holds a long BTC position corresponding to (total US BTC holdings * fed.taxrate)

Seems the stars are getting into alignment Cheers guys!

EDIT: Doh! Just realized the vola dampener doesn't dampen prices denominated in BTC so argument no. 1 doesn't hold. What about no. 2?

EDIT2: D'oh ^ 2. or actually yes it does??? getting confused here.

The only long bitcoin position the government has is the bitcoin's that have been seized from silk road/gox/etc.  The volatility exposure scenario you speak of really makes no sense at all, they aren't writing option contracts bro.  I really dont know how you even came up with this.  Please feel free to elaborate...

[johnny211]

Not my native language lol. I'll try again:

Lets say the capital gains taxation rate is 25%.

Scenario 1: I buy 10kUSD worth of BTC, later spending them getting 12kUSD worth of items. I need to pay 2k * .25 = 500 USD in cap.gains tax.

Scenario 2: I buy 10kUSD worth of BTC, spend them for 8kUSD of items. I have a 2k loss that that lessens my tax burden by 500 USD.

In essence, the government is long the total US BTC holdings multiplied by the effective capital gains taxation rate. BTC goes up, they get more money. BTC goes down, they get less money. It's the same exposure as a long BTC position.

At the same time, since the 20% appreciation/depreciation only shows as 15% in my pocket, the volatility has effectively been dampened by 25% due to the IRS sharing my exposure.

Because of this the government is hugely long BTC, this can't be bad for bitcoin.

Another aspect is that bitcoin is 25% less volatile for US users, perhaps making it more useful as currency.

[J_Dubbs]

All I know is usefulness as a currency is going to be hard as hell now. The masses know one thing about money: How to spend it. They are scared to invest in stocks, don't know what short term capital gains are, and generally think of money as a medium of exchange for goods. So now in the US if you buy Bitcoin and 2 months later purchase coffee everyday for a month it ends up looking like a scenario similar to 30 short-term stock sales. For consumerism and Bitcoin this shit was a death blow. Only hope is a wallet with automatic withholding on profits or loss reporting, and even still I don't think the spending masses will rally behind that, ever. Sucks.

[5thStreetResearch]

Not my native language lol. I'll try again:

Lets say the capital gains taxation rate is 25%.

Scenario 1: I buy 10kUSD worth of BTC, later spending them getting 12kUSD worth of items. I need to pay 2k * .25 = 500 USD in cap.gains tax.

Scenario 2: I buy 10kUSD worth of BTC, spend them for 8kUSD of items. I have a 2k loss that that lessens my tax burden by 500 USD.

In essence, the government is long the total US BTC holdings multiplied by the effective capital gains taxation rate. BTC goes up, they get more money. BTC goes down, they get less money. It's the same exposure as a long BTC position.

At the same time, since the 20% appreciation/depreciation only shows as 15% in my pocket, the volatility has effectively been dampened by 25% due to the IRS sharing my exposure.

Because of this the government is hugely long BTC, this can't be bad for bitcoin.

Another aspect is that bitcoin is 25% less volatile for US users, perhaps making it more useful as currency.

Ok well using this logic, the US Government has a long position on every stock, option, futures/forwards contracts, commodity, bond, etc. 

[bitlegger]

...
In essence, the government is long the total US BTC holdings multiplied by the effective capital gains taxation rate. BTC goes up, they get more money. BTC goes down, they get less money. It's the same exposure as a long BTC position.
...

Ok well using this logic, the US Government has a long position on every stock, option, futures/forwards contracts, commodity, bond, etc. 

to have a position in something means to carry some risk.  this applies only to "investors".  extracting profit without carrying any risk is a form of theft, not an investment activity

US government is a thief, not an investor, they have no interest in anything, they simply confiscate profits.

if there are no profits they will simply increase debt ceiling - easy money

US treasuries is a pyramid scheme, the biggest one of all.  bigger than the Egyptian ones.

[alxs]

I think IRS "ruling" is deliberate to control pace and direction of growth.  First property, then currency.

Will change as bitcoin evolves and grows up.

Not going to look it up now but watch Small Business committee? hearing on bitcoin which had Jerry Brito etc
as witnesses.  They mentioned Germany classifying bitcoin as a private currency for tax purposes. etc

4 members of Congress (I think) questioning 4 witnesses.  All 4 members of congress love bitcoin.

[waldox]

the us govt is not long bitcoin
they can print any amount of money to buy bitcoins
plus they can sieze bitcoins with trumped up charges
the us govt knows that bitcoin is a direct competitor to the us dollar as the global reserve currency
they want to kill it by attacking all the US bitcoin businesses and scare the regular folks away with paperwork(IRS declaring it as property) and laws

[alxs]

Total rubbish and naivety [Waldox]

Not even worth responding in detail with proof (you can do that yourself)

Summary:

USGov totally supportive and committed to blockchain (bitcoin unclear)
NSA and IRS salivating over mass adoption of blockchain

IRS ruling a deliberate stall tactic

Forest for trees.  You are looking at weeds

This is an evolution and still in petri dish

Question is will there be a revolution (yet to appear)

[bitlegger]

I think IRS "ruling" is deliberate to control pace and direction of growth.  First property, then currency.

Will change as bitcoin ....

I think their motivation is less complicated. They simply bought some coin at $1000 and now they want to write off their own or their constituents loses.  Now for the first time there are millions of dollars in cap loses and IRS will take a big hit in tax revenue due to this ruling

noone will report gains but many people will report loses

[Velkro]

i dont get it but IRS is not so important