Topic: Bitcoin is doomed. Thanks IRS!!! You Ass hats! - page 9. (Read 19756 times)

Everybody please relax.

BTC has been subject to capital gains in the UK from the beginning. It hasn't had the slightest effect on BTC adoption here.

I can be corrected on this one, in case I misunderstood something, but the entire discussion in here seems to miss one point:

The IRS decision (guidance?) applies to capital *gains*, i.e. the difference in value per unit at time of buying said unit vs. selling it. Correct so far?

If, at some point in the future, BTC/USD more or less stabilizes, the problem disappears (or at least become negligible, except for very large amounts traded).


tl;dr This decision might hurt current speculative value, but it doesn't really harm BTC functionality assuming a more stable exchange rate in the future.

I think his point is that people won't bother, they'll just put a hand in their pocket as they always have and buy the coffee with cash.
Anything that complicates a bitcoin transaction in any way reduces the likelihood of normal people or businesses adopting it.

Why would that cafe even bother with bitcoin and add something else to their paperwork when everyone already has a simple and trusted way to pay them?

Not everyone is into crypto, the majority have no idea what the fuck it is yet, they just want something to buy that coffee with and anything new needs to be an improvement on what they know. They don't give a shit about economics or governments or the future...they elected the morons who run our countries.

I'm wondering who's going to be splashing out on thousands in mining gear when the returns aren't there anymore. Most rigs won't break even at the rate we have now. People with 10k rigs on order must be gutted.

It never ceases to amaze me that a currency, whose primary strength is its independence from government and central banks, is used by so many people who live and die by what the governments and central banks say about it.

"The price at which a particular Bitcoin was acquired (and this is traceable) determines the capital gains on that particular Bitcoin when spent. "

Except not every bitcoin needs to be obtained through an exchange or with dollars.

Correct.   However,  the courts will only have a say if you treat it as something else, AND it causes you to figure a lower tax,  AND the  IRS rejects your treatment.  Treatment as 'property'  is generally going to be more favorable for the taxpayer than treatment as currency.

This guidance is in greater disparity with people who were/are holding that their Bitcoins are NEITHER their Property,  NOR currency.

In other words: Folks who pose that  Bitcoins are the same as game currency (Such as World of Warcraft Gold), that,   there is therefore no taxable value from obtaining bitcoins  through mining,  playing video games, or whatever,  since this digital association of hypothetical future value to be spendable  by a private key  (Something you know, not something you have),  according to consensus of the Bitcoin network is not a "Thing".

That is... the person who mines a Bitcoin doesn't become an "owner" of anything, or obtain any 'lawful exclusive right'  to anything of value.

Thus no taxable value for bitcoins obtained in trade.


Such treatment would  result in taxable income  only when Bitcoins are "exchanged" for property assets with real value,  or services/goods are obtained.

Much in the same way that earning Warcraft gold while playing World of Warcraft is not taxable,  but any sale of Gold for cash is taxable.



If you want to be safe,  you should probably   use the least tax-preferential treatment,  as it is the Revenue Code that you need to follow.   The IRS is just providing a service  to assist taxpayers by providing guidance  on their intended interpretation of the law.

The IRS have the right to change their mind,  at any time with regards to their guidance,  if they see it maximizes tax revenue, they may do so  by updating guidance  or  rejecting the standard guidance on a case-by-case basis.


Also, following the IRS guidance doesn't absolve you for underpayment --- if it turns out their guidance was wrong,  and   some less-tax-preferential treatment was correct:   the taxpayer may be subject to paying more including underpayment penalties.


No...  with A mining pool it is still their own initiative.

Mining pools are essentially informal revenue-sharing arrangements;  where people conducting mining combine their computational power,  so they collectively have a better chance of finding a block -----  when one of the miners in the pool does find a valid block,   the reward revenue is redistributed  among the active miners' peers  based on a formula they agreed upon,   which included each miner providing numerous  "intermediary"  hashes  that met a slightly lower difficulty bar,   in order to prove that they were actively mining.


If this is income,  and potential self-employment income, then... of course... the same is true of solo-mining.

I'm not happy with this ruling as it seems to be doing alot of confusing for newer users and those looking to get into bitcoin...  But I think in other ways it's a good thing it's just a matter of how you look at the big picture IMO.

For some reason I don't think satoshi had "regulation" and "taxation" in mind.  Bitcoin was about undermining government monopolies over the world's currency.  We have failed miserably thus far.  

I think that depends on where you store your bitcoins.   I'm still scratching my head wondering why Silk Road mastermind Ross Ulbricht would keep his personal wallet of $80 million USD worth of btc on the same same laptop on which he used to administer silk road, only a password dictionary attack away from seizure.

Bitcoin makes taxes more... consentual. Are they going to freeze your BTC if you don't pay? They may imprison you, but they still won't get your precious cyber coins!

2tights. I don't think thats necessarily true. Gold's industrial value is peanuts compared to its monetary value.

No monetary media needs to have an industrial value. In fact, it's an important property of any monetary medium that it works as well as possible as a token of exchange and as badly as possible for anything else (other wise it has a tendency to go out of circulation as gold jewellery, circuitry and teeth have done). The monetary medium derives its value from it's "role" in the economy, not from any sense of "intrinsic value" (which is a misnomer anyway - it's easily demonstrate-able that nothing has intrinsic value).

Gold was the "bitcoin" of the old physical world markets. It had certain characteristics of fungibility, resistance to counterfeiting, ilmited supply etc which made it function as a token of value. It was the fact that it was widely adopted in a monetary role that have it it's value - not the other way around.

Here's an example to illustrate. If you go to a kids funpark and buy a few of those plastic tokens for the rides, they'll cost you about 5 Eu / Dollars whatever each. On the other hand, if you buy them in a hardware shop, they'll cost about 1 cent each. So you're paying a markup of many thousands of percent for exactly the same plastic token that is in the monetary role. Nothing to do with "intrinsic value" of plastic tokens.

Gold is exactly the same - it doesn't not have any intrinsic value. It's just that people make a deeply rooted association with gold and value historically, so the word 'intrinsic' gets used to reflect that.

We now live in an electronic trading environment, however and you can't "hold" gold electronically so a new monetary medium is required, hence the emergence of cryptocurrencies.

When you look at it analytically in this way, they actually have more justification for a high valuation than gold does.

Correct, it is an opinion, but which mean a lot these unlawful days.

They? The government and their associates, banks, big firms, government owned businesses, half official organizations. They are a set of people. The difference from us, is that they think they are the masters, that they own us, that their power comes from god or the law, or whatever. They think they have the right to every value that is produced, change hands, move or is fixed within a certain geographical area. They leave a little for the producers for their sustenance. The rest is used on themselves and most of it is doled out to different people as payment for support. That is who they are. The rest of us basically wants to be left to peacefully do what we want.

+1

I think by "they" he's referring the elite political class which continues to retain power in this country despite consistent corruption year and year after motherfucking year through political means, corruption, bribery, etc. At least, thats what I mean when I say "they".

How may groups get to give themselves a raise every year, laughing all the way to the bank as they threaten to shut the government down (again). The federal government has gotten WAY too large. And well know government is the most inefficient way to get things done.

So, why on EARTH do the same people who are running this country into the ground with miles of new legislation which expands the size of government, their reach and power, every year still run the country?

Thanks for the thoughtful post Erdogan.  Indeed, the power always rests with the people.  

I disagree with one point: you said "they think they have a say in this," but I believe the IRS simply issued guidance reflecting their interpretation of the current laws.  

Who are "they" anyways?  And how are they different than us?

It should be good for the price of Bitcoin because it encourages people to hold on to their coins.

Large BTC holders aka whales in the USA will think twice about selling large amounts of their coins. Spending them slowly over time is much smarter.

There is also the issue of being a money transmitter that goes away, which is also good.

Lets see how long it takes for this to sink in.

I agree with the first, both posters actually. But do not forget that the basis of the domination system is the fact that the subjects are those who give the masters power and resources, that is from where they get their dominance. Since the tracking of all transactions for tax purposes is so weird, costly, impractical and intrusive, people should and probably will just say no. Certainly, that's what I will do. Report my bitcoin holdings every year? No. Report all transactions? No. Report the net fiat value of coins sold for fiat? Possibly, but not buy in value, where I got them from, how much I have left. No. Not enough people will say yes to this, so the law will go to sleep. The masters have no say in this. They think they have, but they have no say.

I can't believe you think that. That article is utter nonsense made up by an idle-minded journalist looking to create a bit of bluster for the sake of it.

Monetary media don't draw their properties - "fungibility" - or otherwise from the whims of tax regulators. You might as well say that dollars are not fungible in the Euro economy because they attract capital gains tax.

The article is basically a scam. Read this http://en.wikipedia.org/wiki/Fungibility.

Specifically this part:


Do you really think that the fact that one day gold is valued at $1200 and another day at $1500 destroys the fungibility of gold ? Thats what this idiot would have you believe.

Tvbcof and Holliday:  I agree that bitcoin presently has better use cases than day-to-day spending like you both point out.  If the block limit size is increased and blocks are communicated by tx-hash to reduce the orphan cost, do you believe bitcoin will remain less useful for day-to-day purchases?

On the IRS guidance: Am I wrong in understanding the IRS guidance as their interpretation of existing laws?  No laws were actually changed, correct?  To me it seems the guidance was fair: presently bitcoin is more like property than like currency; if you disagree I believe the courts would have the final say.  

But the bigger point I want to make is that as bitcoin grows, it may naturally evolve to become more like currency than like property, and at this point would not the IRS guidance less accurately reflect the existing law (no change in law required, just a change in the interpretation of what a bitcoin is to more accurately reflect…ahem…what it is at that point in time)?  

The same theme applies to the guidance on mining. From my discussions with various community members, I think the general feeling is that hashers are paid for the services they provide to a mining pool whereas miners create bitcoins based on their own initiatives and the acceptance of their efforts by their peers.  I think if the IRS had a deeper understanding of bitcoin, they would have used the word "hashers" rather than "miners" in their guidance.  Based on existing laws, I believe miners (but not hashers) are free to recognize gains on any coins they create when a gain is realized, and a court challenge would rule in their favour.  

This is just my opinion and should not be construed as legal advice.  IANAL.

Gold has industrial value, so its value will remain until viable alternatives compete with those industrial applications.  Fiat and part of BTC value is created by the perception of people like you and me. A piece of paper has no intrinsic value or utility, however BTC goes beyond this and actually does have a very valuable function which is the blockchain.

http://www.forbes.com/sites/kashmirhill/2014/03/26/warren-buffett-says-bitcoin-is-a-mirage-why-marc-andreessen-thinks-hes-wrong/

“A value of a BTC is not arbitrary, in fact it’s the opposite of arbitrary,” he says. “It equals the value of a single slot in a finite sized public cryptographic ledger through which value can move. The total Bitcoin ledger has value corresponding to the volume and velocity of transactions that will run through it in the future; by extension, each slot in the ledger has fractional value determined by the total number of slots (which, in Bitcoin’s case, are limited to 11 million today and 21 million ever).”


“So saying what Warren is saying is like saying ‘a car is great technology but it’ll never actually get anyone from point A to point B,” he continued. “Bitcoin is great technology BECAUSE it lets people get value from point A to point B through the public ledger; that functional use creates the value of the ledger, and a single BTC has a corresponding fractional value of the ledger.”