Topic: Why is Bitcoin so cheap? - page 2. (Read 9560 times)

The market price simply represents the aggregate of supply and demand; in the absence of inefficiencies (illiquidity, insider knowledge etc.) this is, by definition, what something is worth. The fact that particular individuals may value something higher/lower than the market price is wholly irrelevant - indeed, their opinions are already priced in!)

If you think that explain how at that exact moment out of all market participants only one was willing to buy for such a high price and only one was willing to sell for such a low price?

This. The market is efficient.

I've been running a business for 7 years and I have an accounting package, and it doesn't know how to handle bitcoin related sales  Even some sales in another country is complicated, since local tax experts have very poor knowledge when it comes to another country, that's why multinational enterprises usually pay very little tax

You likely come out better in the short run by using the fiat currency legal tender as your unit of account, and using an accounting package for transactional GL P&L, and then taking the capital appreciation on the "inventory" retained in Bitcoin against your costs.
All business do this sort of accounting, and in multicurrency businesses it is routine.  If you have never run a business, it is complicated, yes.  There are professionals that can help you.

The great news is that now BitPay does a lot of it for you as they have a QuickBooks interface now for Bitcoin.  With the record keeping in the block chain, this can become even easier in some respects (your backup is cloud sourced for free)

https://bitcointalk.org/index.php?topic=295370.0;topicseen

What about next year ?  Will you again sell 25% of your remaining 75 bitcoins to pay taxes ? :-)

I just looked a bit close in details, it is complicated

If I conduct all of my business in bitcoin, at the end of fiscal year when I do the income declaration, I need to subtract cost from earnings and get the net income counted by bitcoins, for example 100 bitcoins. Then this revenue will be taxed by income tax, say 25%, then I will pay 25 bitcoins to government

However, the government only accept fiat money, then I have to convert these 25 bitcoins into dollars.  If I use the exchange rate at the beginning of the year, they might worth a little, but if I use the exchange rate at the end of the year, they might worth a lot. Maybe most of those income (90 coins) are generated in the first few weeks of the year. My capital (exchange rate) gain of those 90 coins will also get taxed by the government if I use the exchang rate at the end of the year. But in current accounting rules, the capital gain only are taxed when you sell the asset, if you never cash out, you never pay tax. So, if I never sell those coins, how much dollars should I pay government?

Maybe this is an issue of understanding the terms..  "Fiat", "Legal Tender" and "Money"?

"Fiat" means "Forced" or "by legal decree".

While we are free to agree to exchange whatever money we like, we are forced to accept "legal tender" as settlement of a debt (though we may negotiate for something else), and the government is forced to accept it as payment for taxes.  This is the wickedness of "legal tender" laws.

If the type of money is selected by vote and decreed by government, that is then by fiat.  If they just do it and don't bother the government about it that is a different matter.
If individuals negotiate or decide to use what they like by voluntary agreement or contract that may not be fiat...

Bullion, Barter, Bitcoin....  all non-fiat...  Though some US states (notably Utah) have decreed gold and silver to also be legal tender.

This is full of assumptions about "voting" and "government" -- and the possibilities that exist for us lowly people. 

I think fiat money is not forced to be used, just a historical consensus reached among people. If majority of people feel uncomfortable using fiat money, then they will vote a government that use another type of money, but the reality is that they have no knowledge about fiat money and they take it as granted since they were born

I think you are wrong that many people don't care about taxation. Tax to me and many others is money involuntarily taken away or deducted as you say, but a better word is stolen. If you resist to pay tax, you will be forced or face heavy consequences.

The argument remains, we do not have a choice to pay tax (income tax, capital gains tax, property tax, etc) because force will be used if we resist. We have to pay those various taxes in fiat currency. It logically follows that we are forced to use fiat currency. How can you disregard or wave away the simple facts?

Currencies are similar to commodities for many tax jurisdictions.  There is a price in the fiat at time of acquisition and time of "sale" into fiat or conversion into another good with a specific value at a specific time.
This is the "unit of account" property of money, and Bitcoin is pretty good at accounting for it with the record of the block chain.
Volatility is not much of a problem for tax purposes so long as the gains and losses are accountable.  No new law is needed to deal with it in most places unless they want to create exemptions to encourage its development (like Germany).

That is my misunderstanding about the regulated money transmitter, I thought that has something to do with tax

Anyway, tax in bitcoin is totally new for tax authorities, because the value for coin can vary a lot during a fiscal year. I remember that when it comes to foreign assets, normally a tax declaration require an exchange rate at the end of the fiscal year. If a company earned some bitcoin at the beginning of the year but at the end of the year the coin price rised by 10 times, he had to pay 10 times more tax on the same sale, this is not practical

I think all of today's tax system are based on fiat money (which have a stable value over at least a year), if a volatile money like bitcoin comes out, those officials might need to charge the income tax each week, but that will break all the existing accouting and tax reporting procedures 

Sorry, it is my misunderstanding, the original text says only about being money transmitter thus need registration

"A person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter."

Where did you get that from? There are different kinds of taxes that apply to bitcoin.

Taking germany as an example you'd have to pay income tax when you receive your income in bitcoin. You have to pay VAT tax on stuff you produce even if you sell it for bitcoin. You have to pay capital gains tax if you speculate on the value of bitcoin and sell some for a higher price than you bought them for (except if you held them for 1 year). Some even say you have to pay VAT (19% currently) when you sell a "commercially" mined coin.

Even barter is taxed: If a customer buys some product from a company paying with a bitcoin, the company has to pay VAT (in EUR, of course, essentially selling the product for EUR after buying the bitcoin from the customer) and the customer might have to pay capital gains tax (because he just sold a bitcoin) depending on wether or not he held the bitcoin for over a year and what price he had bought it for initially.

Bitcoin isn't somehow tax-free, get over it. It might be easier to hide and cheat, but this is nothing new for tax authorities and companies having to declare taxes and having to have their books in order will go a long way insuring bitcoin income and sales are being properly taxed.

I'm no fan of taxes and/or the state, but this is the reality at the moment.

What. That is not my understanding at all, from the tax code. FINCEN is not, as far as I know, in a position to advise on the tax code. Sources?

(I assume from your reference to FINCEN that you mean USA)

As long as people's income are in the form of fiat money, tax just mean reduced fiat money income, in fact many people don't even care about the tax since tax payments were already deducted from their salary

But if people's income is bitcoin, then the tax payment will be different. It is possible that people do not pay tax for bitcoin income. FINCEN regulation already said that if you purchase goods/services directly with your bitcoin, you don't need to pay tax. It means if you hold your coins for a couple of years and you can buy much more things with the same coin and you don't need to pay any tax even the bitcoin's purchase power increased many folds

I'm surprised they don't do it already.  They are already licensed for currency exchange.

This.  When airport Forex counters trade Bitcoin, we'll be off to the races.

Try paying your taxes with gold, silver or bitcoins then and see what happens.

Also: legal tender laws may force people to accept fiat money.