http://www.bloomberg.com/news/2014-03-25/bitcoin-is-property-not-currency-in-tax-system-irs-says.htmlTo me, this means that fast transaction times become meaningless. Not good news. (rethinking it, I guess it's still beneficial)
But yeah, I wonder how this will change the whole crypto world. I'm confused.
The IRS, faced with a choice of treating Bitcoins like currency or property, chose property.
Purchasing a $2 cup of coffee with Bitcoins bought for $1 would trigger $1 in capital gains for the coffee drinker and $2 of gross income for the coffee shop.
Bitcoin miners will have to report their earnings as taxable income with a value equal to the worth on the day it was mined. If they mine as part of a business, they would have to pay payroll taxes as well.
The ruling takes effect immediately and covers past and future transactions and tax returns. The IRS said in the notice that it may offer relief from penalties to people who engaged in transactions before today and can show “reasonable cause” for underpayments or failure to file.
This comment is funny:
The answer is simple bitcoin owners. Set the value of a single bitcoin to 1 million dollars. Then exchange your fractions of bitcoins at the same increments as dollars. If something currently costs 9 dollars and 95 cents it would be 0.00000995 of a bitcoin since you are now using all 8 decimal places. Since each bitcoin transaction carries with it a small transaction fee you can now write off all of your purchases at a loss.
This will accelerate the fiat leak.
Given the lack of confidence and distrust -if not contempt- the US population has for Washington DC & the FED, I would not be surprised that people deal cryptos behind the back of the government and maintain some kind of shady double accounting the like of black market glory because nobody can prove you own a given wallet unless they found it on your devices. Plausible deniability.
So they try to push bitcoin and cryptos to be seen as other stuff than currencies by curbing its use and considering it as a de facto other asset class. Good luck with this. The reall other asset class that is not currency is paper money. What they are doing right now is trying to put back the genius in the bottle before bitcoin floods everything because it's only so much better than whatever we've come to know so far.
They know this is inevitable and they know than soon or late it's going to be fiat which is going to be denominated in cryptos and not the other way round. Why? -Because crypto has limited supply and because they sold all the gold they wouldn't otherwise use to back the USD given the way bretton woods went down in the 60s. It's logical.
This is a last ditch attempt that will be followed by another last ditch which itself will be followed by other last ditches attempts.
The banking cartel is a cornered beast. So dangerous, but so vulnerable. Give it one bank run and they'll be dying despite all the lies they've been feeding us.
They will search and seize wallets next time as they showed us what happened to DPR and other guys. Don't worry it's in the pipe, so split you wallets in multiple smaller wallets, use some mixer to redistribute your wealth in an untraceable form (or write yourself your own mixer, not too complicated but shall be used with a gazillon of other transactions to make people lose track of every single satoshi in there) and store them in different forms in cold wallets, paper wallets, online wallets, etc. Don't put all you eggs in the same basket.
The real last ditch attempt to circumvent bitcoin will be the day they push the internet killswitch.
This time the real cryptos will have to work in the dark, and possible for a very long time.
This is why maybe it is not so stupid to see the future of cryptos as local to a given internet domain/country/region/etc. with possibly everything premined and all client consistently on and in minting mode no matter what.
The AUR coin has this in mind and I believe it will prove useful in the future, but only in iceland.
Other de facto regional coins like SPA, electronic Deutsche Mark, Netherlands Gulden, etc. will not be a stupid concept once shit hits the fan.
And yes, until then bitcoin will be seen mainly as a kind of savings account/SDR to some extent. This is the ideal SDR mechanism IMF could have come up with if they weren't so greedy in the first place.
PS: what surprises me is that given the advance warnings the FED has not come up with their crypto currency, call it the bidollar or whatever to try to use their influence to seize this new market all at once. No, rather than this they entrench themselves and lose ground to bitcoiners all around the world. Never saw such myopic generals in a war. Because this is a war, and they already lost.
Time will tell... 