Bitcoin is doomed. Thanks IRS!!! You Ass hats!

[g4c]

bitcoin is only useful if its used as currency - no adoption - no value.

Hey, if you keep saying it, it might be true.

Apparently, it's only useful to you if it's used as a currency. That isn't true for me. So, either I am a lone crazy person, or there is some merit to what I am saying. Either way, it's clear you won't be convinced.

just out of curiosity, how is bitcoin useful to you (or anyone else for that matter) if you can't buy anything with it.

For me, a store of wealth and a currency are two different things.

As a currency it may seem less liquid than a dollar at the moment. But remember the confirmation time for a credit card is like 80 days, and chargebacks seem to be getting more common. from a vendors perspective credit cards are getting worse by the day. Bitcoin is already sweet if you're selling goods.

As a wealth store I see BTC as being far more liquid than precious metals.

And of course nobody would store wealth in fiat fractional reseve bank as the math shows that system as untenable. Nobody wants to be the dumb empty bag holder when the game finishes.

BTC is a game also, but the rules are clearly stated, provided the rules remain unchanged then (to me) the game looks far less risky than fiat and fractional reserve. Of course one should factor in the risks and diversify accordingly, for example; future national firewalls and EMP attacks, you'd be better of with a few silver rounds in that case.

Having said all this; In the future I can imagine a fractional reserve layer built on top of Bitcoin, and then the citizens can have instant gratification and full liquidity (at a cost). In fact I'm sure this will happen as many people will like it this way.

[tvbcof]

For me, a store of wealth and a currency are two different things.

As a currency it may seem less liquid than a dollar at the moment. But remember the confirmation time for a credit card is like 80 days, and chargebacks seem to be getting more common. from a vendors perspective credit cards are getting worse by the day. Bitcoin is already sweet if you're selling goods.

As a wealth store I see BTC as being far more liquid than precious metals.

And of course nobody would store wealth in fiat fractional reseve bank as the math shows that system as untenable. Nobody wants to be the dumb empty bag holder when the game finishes.

BTC is a game also, but the rules are clearly stated, provided the rules remain unchanged then (to me) the game looks far less risky than fiat and fractional reserve. Of course one should factor in the risks and diversify accordingly, for example; future national firewalls and EMP attacks, you'd be better of with a few silver rounds in that case.

Having said all this; In the future I can imagine a fractional reserve layer built on top of Bitcoin, and then the citizens can have instant gratification and full liquidity (at a cost). In fact I'm sure this will happen as many people will like it this way.

Well stated.

I might add that what I would call 'second tier' (rather than 'fractional reserve layers' which they may or may not be) would themselves have the tools to inspire confidence if built on top of (or 'backed') by something which is simple, solid, and transparent such as current Bitcoin.

This in contrast to the variety of dubious derivative ridden re-hypothicated asset types upon which most of our 'modern mainstream' systems rest.  Let's not forget 2008 and how fragile these things have already proven to be.  It's more than some sort of whacked theory that there are some stability problems and poorly understood mechanics which underpin our 'official' economic systems.

[g4c]

For me, a store of wealth and a currency are two different things.

As a currency it may seem less liquid than a dollar at the moment. But remember the confirmation time for a credit card is like 80 days, and chargebacks seem to be getting more common. from a vendors perspective credit cards are getting worse by the day. Bitcoin is already sweet if you're selling goods.

As a wealth store I see BTC as being far more liquid than precious metals.

And of course nobody would store wealth in fiat fractional reseve bank as the math shows that system as untenable. Nobody wants to be the dumb empty bag holder when the game finishes.

BTC is a game also, but the rules are clearly stated, provided the rules remain unchanged then (to me) the game looks far less risky than fiat and fractional reserve. Of course one should factor in the risks and diversify accordingly, for example; future national firewalls and EMP attacks, you'd be better of with a few silver rounds in that case.

Having said all this; In the future I can imagine a fractional reserve layer built on top of Bitcoin, and then the citizens can have instant gratification and full liquidity (at a cost). In fact I'm sure this will happen as many people will like it this way.

Well stated.

I might add that what I would call 'second tier' (rather than 'fractional reserve layers' which they may or may not be) would themselves have the tools to inspire confidence if built on top of (or 'backed') by something which is simple, solid, and transparent such as current Bitcoin.

This in contrast to the variety of dubious derivative ridden re-hypothicated asset types upon which most of our 'modern mainstream' systems rest.  Let's not forget 2008 and how fragile these things have already proven to be.  It's more than some sort of whacked theory that there are some stability problems and poorly understood mechanics which underpin our 'official' economic systems.

Thanks, and good statement from yourself.

Yes I would prefer a future where the "purity" of Bitcoin remains intact.

I just haven't heard of any plans to ensure future purity for all users.

Speaking of users, I fear the "bulk" users might be happy to allow the corruption, confused as they are, it's easy for large players to instill fear with one hand and remove fear (and wealth) with the other.

I'm thinking: Isn't it possible for anyone to create a new layer on top of Bitcoin tomorrow? It may not even need to be directly coupled to it codewise, think a Bretton Woods system using BTC instead of gold.

A darker fear of mine is that prior to new layers the existing blockchain might be abandoned if some entity has pockets deep enough to bribe miners to a new chain.

Highly speculative stuff I know , but I'll be happy to have my fears dispelled.

[Chris_Sabian]

Bitcoin is tanking and that is totally understandable. If they can't track and tax it, they might ban it

How would go about doing that?

[Bit_Happy]

Having bitcoin classified as property rather than currency is the best possible scenario.  The capital gains tax rate is 0% for most people.  0%... hard to beat that.

0% for most people?
What is needed to go above 0%?
Sorry I have no idea.

[freedombit]

Has anyone questioned the idea of a country in the first place? This idea of people being treated differently whether you live on one side of a geological border or the other side is actually kind of obsurd and antiquated. People are people and we all have the intrinsic right to pursue happiness and freedom.

With that rant off my chest, since it seems we (the majority of people as a collective) are going to recognize geographic bound governments and their authority to collect money to pay for stuff we want (again - the majority), then let's do a few comparisons for fun.

How does the same "Bitcoin is property" idea apply to loyalty points (points.com), cell phone minutes, Internet megabytes, basketball game tickets, and food? Every one of these can go up and down in value. If there is an increase, presumably we must pay a tax. If they go down, presumably we get a credit (but never a refund). And why is currency not treated as property?

Just a few questions for which I have no answers.

[tvbcof]

Having bitcoin classified as property rather than currency is the best possible scenario.  The capital gains tax rate is 0% for most people.  0%... hard to beat that.

0% for most people?
What is needed to go above 0%?
Sorry I have no idea.

In my non-professional understanding, one simply has to stay in the lower two tax brackets for earned income.  That could mean that one is basically forced to quit one's job.

It's also worth note that this is federal tax.  State tax is a different matter.  Looks like I'll be paying 9% in state taxes for instance.

[Scyntech]

Ok, read most of the thread. This may have been answered.


What about people in the States that only mine BTC and do not spend USD on it? I've sold about $250 worth of BTC on coinbase. How do I fall into this new law? Also I'm under $14k a year thanks to hour cuts. =/

[InsertUsernameHere]

Am I right in saying that there's no taxation taking place in Denmark?

[b!z]

I don't really care if the United States government embrace Bitcion as a currency.  I far more interested in what the American people embrace it as  and yes the rest of the global population if that was already obvious.

The IRS just legitimized bitcoin.  How could they embrace it any warmer without writing laws that favour bitcoin over other asset classes?  Did people really think the IRS would say "capital gains tax applies to all assets except bitcoin because it is special"?  The guidance simply says that if you realize a capital gain on bitcoin, that you should voluntarily report that gain and pay the appropriate taxes.  But this was the law before the guidance was issued too. 

Check out the post on ZGL wallets to see how voluntarily complying with US tax law could become a breeze. 

+1.

This was bound to happen. It's not good news.

[timecoin]

I don't really care if the United States government embrace Bitcion as a currency.  I far more interested in what the American people embrace it as  and yes the rest of the global population if that was already obvious.

The IRS just legitimized bitcoin.  How could they embrace it any warmer without writing laws that favour bitcoin over other asset classes?  Did people really think the IRS would say "capital gains tax applies to all assets except bitcoin because it is special"?  The guidance simply says that if you realize a capital gain on bitcoin, that you should voluntarily report that gain and pay the appropriate taxes.  But this was the law before the guidance was issued too. 

Check out the post on ZGL wallets to see how voluntarily complying with US tax law could become a breeze. 

+1.

This was bound to happen. It's not good news.

+2
I really don't want to see this happen.

[Sawadekub]

its good news.. because u pay wad u gain.. the good news is.. u can volunteer to pay when u do it in bitcoin =)

so its GOOD news get it?

[BittBurger]

http://www.theatlantic.com/technology/archive/2014/03/why-bitcoin-can-no-longer-work-as-a-virtual-currency-in-1-paragraph/359648/

I hate to admit it, but this story makes a lot of sense.

We can't legally trade BTC for BTC, we taxes at every level because its property not currency.....

Can someone please provide another, hopefully more positive, way to look at this?

Im going to repeat, but only because of how annoying it is when my fellow Americans think they are the center of the universe, and the only country in the world.

Ban Bitcoin in america, and it wont amount to a hill of beans for Bitcoin's ability to continue elsewhere.

The USA is not the only country in the world, and outside our borders, few countries give a shit what the IRS says.

Think Globally folks. 

-B-

[Robert Paulson]

http://www.theatlantic.com/technology/archive/2014/03/why-bitcoin-can-no-longer-work-as-a-virtual-currency-in-1-paragraph/359648/

I hate to admit it, but this story makes a lot of sense.

We can't legally trade BTC for BTC, we taxes at every level because its property not currency.....

Can someone please provide another, hopefully more positive, way to look at this?

Im going to repeat, but only because of how annoying it is when my fellow Americans think they are the center of the universe, and the only country in the world.

Ban Bitcoin in america, and it wont amount to a hill of beans for Bitcoin's ability to continue elsewhere.

The USA is not the only country in the world, and outside our borders, few countries give a shit what the IRS says.

Think Globally folks. 

-B-

perhaps bitcoin will prosper in the real free countries of the world, Hong Kong, Singapore, Australia, Switzerland, New Zealand.
its obvious the debt ridden USA has deteriorated into financial tyranny.

[amspir]

perhaps bitcoin will prosper in the real free countries of the world, Hong Kong, Singapore, Australia, Switzerland, New Zealand.
its obvious the debt ridden USA has deteriorated into financial tyranny.

The legal requirement to pay taxes is really nothing new since 1924 in the USA.  Al Capone's conviction and prison sentence was evidence of that.

What is the most onerous is the provisions from the Patriot Act, which brought in the KYC/AML laws, probably the strongest in the world.   Now the rest of the world is beginning to discriminate against Americans, since they don't want the long arm of the IRS violating their sovereignty.  i.e. Switzerland.

[moderndezigns]

 

For a good look at the currency of the future take a look at Mintcoin It's a new energy efficient Eco friendly coin with a growing number of Merchants and services

[jabo38]

The Good = At least it is legal and (in the eyes of much of the public) no longer a shady underground business for drugs and gambling

The Bad = Bitcoin has some value when treated as a stock.  It is a way to diversify a portfolio.  And I think in theory it can still be used for certain services like large transfers of money overseas cheaply, but that is not where the biggest promise of Bitcoin laid.  Bitcoins biggest inherent value was as a universal currency that could be used anywhere for transactions.  The IRS has made that much more difficult in the US now.  More of a pain to accept as a payment system.  Just use cash.

The Result = Bitcoin has been legitimized, but only in some ways and not the ways that we should have preferred. 

The Winners = People with vast holds of bitcoins that bought a long time ago and squatted.  They can now sell off, pay their taxes and be rich for the rest of their life.

The Losers = Anybody who wanted to use it as a fast, efficient, and quick way to buy things. 

Is this about right?

[J_Dubbs]

The Good = At least it is legal and (in the eyes of much of the public) no longer a shady underground business for drugs and gambling

The Bad = Bitcoin has some value when treated as a stock.  It is a way to diversify a portfolio.  And I think in theory it can still be used for certain services like large transfers of money overseas cheaply, but that is not where the biggest promise of Bitcoin laid.  Bitcoins biggest inherent value was as a universal currency that could be used anywhere for transactions.  The IRS has made that much more difficult in the US now.  More of a pain to accept as a payment system.  Just use cash.

The Result = Bitcoin has been legitimized, but only in some ways and not the ways that we should have preferred. 

The Winners = People with vast holds of bitcoins that bought a long time ago and squatted.  They can now sell off, pay their taxes and be rich for the rest of their life.

The Losers = Anybody who wanted to use it as a fast, efficient, and quick way to buy things. 

Is this about right?

It's especially punishing for small-time miners working with a pool and buying ASIC equipment with BTC. Daily small payouts, frequent purchases of equipment with BTC, expenses, equipment sales in USD, declining BTC value showing more losses on exchange/transactions, reporting loss and risking audit or being categorized as a hobby if losses are more than 3 of 5 years. Lots of record keeping required for this.

[cryptoanarchist]

When I read through threads like this, I realize the buying opportunity.

[jabo38]

The Good = At least it is legal and (in the eyes of much of the public) no longer a shady underground business for drugs and gambling

The Bad = Bitcoin has some value when treated as a stock.  It is a way to diversify a portfolio.  And I think in theory it can still be used for certain services like large transfers of money overseas cheaply, but that is not where the biggest promise of Bitcoin laid.  Bitcoins biggest inherent value was as a universal currency that could be used anywhere for transactions.  The IRS has made that much more difficult in the US now.  More of a pain to accept as a payment system.  Just use cash.

The Result = Bitcoin has been legitimized, but only in some ways and not the ways that we should have preferred.  

The Winners = People with vast holds of bitcoins that bought a long time ago and squatted.  They can now sell off, pay their taxes and be rich for the rest of their life.

The Losers = Anybody who wanted to use it as a fast, efficient, and quick way to buy things.  

Is this about right?

It's especially punishing for small-time miners working with a pool and buying ASIC equipment with BTC. Daily small payouts, frequent purchases of equipment with BTC, expenses, equipment sales in USD, declining BTC value showing more losses on exchange/transactions, reporting loss and risking audit or being categorized as a hobby if losses are more than 3 of 5 years. Lots of record keeping required for this.

Yes, it looks like it is a bad hit for small miners existing entirely in the bitcoin ecosystem.  To that extent, I think it is bad for anybody trying to exist entirely in a bitcoin ecosystem.  Had it been taxed like a currency, then the proposition of existing in an ecosystem would have been much easier I think.  (though I am not an economics graduate so I can't say for sure)

I still think it was a huge win for old school miners from 2011 that were sitting on a ton of bitcoin for relatively little investment at the time.  (true it was a very risky gamble at that time though)