Topic: Not Declaring Bitcoin Income - page 13. (Read 7575 times)

More than 9/10th's of USD is "virtual". Banks do not have a dollar bill (note, or coin) for every dollar they "have" in their accounts. We're talking at least 90% of the USD has no note or coin to represent it. There just is no reason to have that. Coin and note go through fluctuations where banks try their best to predict how much they'll need, which comes and goes from them.

When Bank A sends money to Bank B, Bank A needs to mark it off their books or they are "double spending" (they could also claim they sent it to two different banks). The US uses clearinghouses as a third party to verify that these things are happening correctly, without creating money out of thin air on the books ("double spending"). This is happening constantly as every single debit and credit card is used, on top of other banking/money service activities.

ON the other hand, any sufficiently decentralized virtual cryptocurrency cannot double spend. That's literally the first thing in the Bitcoin white paper. I highly suggest you read this in order to understand a bit more, and the link at the end of it is very good for a slightly technical understanding.

Hm, how exactly do you double spend fiat? I thought that was the problem unique to the virtual currencies.

That's because you can double spend good ole fiat. The problem doesn't exist with Bitcoin and most cryptos. There just isn't the need for the same regulation and oversight, especially when anyone can look at the blockchain.

There are many reasons to have bitcoin, not the least of which is protection from the IRS.
But also as an investment to hedge the devaluations and inflationary aspects of fiat.
As far as spending liquidity goes we are seeing many interesting tools/coins evolve; LTC, ETH, DASH, XMR, ZCASH, STEEM and some others.
With the BTC as the "gold standard", so to speak

I think these secondary currencies will evolve to meet the various liquidity needs of smaller markets.

I would think many "investors" out there are like me who hold a porfolio of these alt-coin in wallets which support multiple coins.

The government's incentive to allow Bitcoin would be to regulate it. One day we'll all have to own up   

Once bitcoin and altcoins get incorporated into investments firms and real world assets, I wonder how the government is going to navigate that...

The banks and government depend on monitoring bank transactions. I wonder how long that's going to be.

In France, for example, there is legislation on cryptocurrencies
if you have a capital in cryptocurency you must declare it if you change it in classic currencies. if you store it it is not taxable
here.
In some countries, notably in Africa  , there are no laws surrounding cryocurrences, in this case, free to everyone to possess them without declaring them;), some countries prohibit such currencies ...

It's very difficult to find trusted sources about taxation and what we have to declare or not.
What seems logical is to declare it. If you have a certain amount that you convert into fiat, anyway you will be asked by your bank where does it come from.

In my country there is not yet legislation on bitcoin, so no taxes can be charged on those incomes. Off course I would have to declare the incomes when making any exchanges. But anyway for the moment I'm just keeping my bitcoins as an investment.

     Here's the kicker,  if you never plan to cash out, then whats the point in holding any coins at all? Doesn't that defeat the purpose? Will you just hold for the sake of holding? Do you see the dilemma we all face now? It's quite a contradictory situation we're in, by having any coins at all. Up until a few years ago, bitcoin was really operating within the gray areas of law (which varies from country to country).
     The governmental bodies, and regulators across the world aren't completely against the idea of Bitcoin, and its methodology on decentralization, because if they were, they wouldn't have issued any guidance whatsoever to help people. They would have just outlawed it entirely (all things crypto coin related).
        We live in a digital age. To completely issue a cease, and desist on all operations concerning Bitcoin, and Bitcoin related developments, would be to smother the searing flame of human innovation. Especially when our future as Mankind depends upon it. When it comes to worldly affairs, other countries usually wait to see what the U.S has to say about anything first. Though Bitcoin wasn't exactly green lighted, guidance was issued in order to take some of the stress of early pioneers, do to the fact that the technology behind the coin, is simple, yet highly innovative, solving many real world financial problems, with many reputable organizations adopting blockchain technology.

Of course, we can be under the radar of the government (especially with the tax collecting agency) if we announce (by words or actions) it to the whole world that we are making big money with cryptocurrency or anything online. I prefer to have a discreet lifestyle so that no one can be spreading rumors about my riches. We should not put a challenge against the powers-that-be.

Yeah when we start having self proclaimed millionaires popping up all over the place the government will start taking a harder look at this stuff. Where they could be losing millions of potential dollars.

I agree with this. Government is too busy tackling other matters than chasing people who earn income from bitcoin. There are even those that are working online for a decade but do not pay taxes because the government is busy in other matters and they are more concern to those people who earn big like celebrities and doesn't pay taxes. They are their first target so if someone is popular, make sure you pay taxes because the government will have a lifestyle check and then check if you pay taxes properly.

People who earn bitcoin in developing countries should enjoy it for now because once the government realize the potential earnings in bitcoin then maybe they would concentrate more on people earning from it so it would not be tax free anymore.

That's better than any other country,, it might be considered as a passive government as long as no criminal activity that may controversial that used bitcoin.. I think government and your country would not bother that freedom your experiencing as of today.. As my country is concerned we do have almost the same situation but differ on government regulations on some transactions and exchanges..

Would they have ever done that without the spectacular BTC price increase in the last months?
If the market cap of BTC would still be under 10 billion $, they wouldn´t have started cooperating
with blockchain analytics companies in my opinion.

In my country,  bitcoin is not yet regulated by the government,  so its not taxed.  But when you convert that and cash out,  its not bitcoin anymore. so suggest to pay tax when bitcoin is cashed out, that is to avoid any problems in the future.  If you earn a lot in bitcoin and your current job cant warrant what youve earned,  you might be subject for investigation. It might not happen though but if you are a law abiding citizen and just want to avoid trouble,  just declare your btc income.

At the moment the IRS can only monitor bank accounts. So if you never cash out, then you're good

I want to ask you that, what you mean by third world country ? There has been misconception among the western countries regarding third world countries. They think that all the third world countries are poor. During the cold war the countries associated with NATO were considered as First World countries; countries associated with Soviet Union were considered as Second World and those who decided to be non-aligned were considered as third world. I agree most of them are developing nations but at this moment, many third world countries economy is much stronger than many European countries, still the west is living in the past.

If we talk about the bitcoins, then Asia region is leading the overall bitcoin market and many 3rd world countries are boosting the bitcoin market. If government regulate the bitcoins then they have right to collect the tax if earned from bitcoins related business. Its new for them as well so government would take some more time to make strict law related to cryptocurrency.

Not deciphering a bitcoin income is a good idea, even if we declare I'm sure not everyone will believe, maybe only people who understand the world of cryptocurency will believe it.