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> There is a IMO a very tangible market demand for a financial product that allows one to completely shield value from the myriad of value-eroding propositions

> There is a IMO a very tangible market demand for a financial product that allows one to completely shield value from the myriad of value-eroding propositions that have been baked into the traditional financial system to essentially bleed you dry on a long enough timeline. - "management" fees - capital gain taxes - death taxes (inheritance taxes) - asset seizures (divorces, bankruptcy, random court decisions against you, Cyprus Bank Disaster [1], etc...) - inflation (govt mandated or otherwise) - etc ... Bitcoin does not shield you from capital gains taxes [0] or asset seizures since it's classified as property by the government. At least not in the US. 0: https://www.cnbc.com/2021/02/19/do-you-owe-taxes-on-bitcoin.html https://www.cnbc.com/2021/02/19/do-you-owe-taxes-on-bitcoin....

ur-whale 5y ago
>Bitcoin does not shield you from capital gains taxes [0] or asset seizures since it's classified as property by the government. At least not in the US. It is my admittedly limited understanding of US tax law that - as long as you don't sell - you aren't getting taxed on gains (unrealized capital gains). Should you then decide to use your coins to directly buy - say - a house in Japan: since no actual Yen-denominated price is ever involved in the transaction, how will the US government evaluated your realized capital gains? Also: the US is but one place in the world. There are quite a few folks on this earth that aren't burdened with a US passport, and quite a few places that don't have capital gains on crypto sales.
- WoodenChair 5y ago
  > Also: the US is but one place in the world. There are quite a few folks on this earth that aren't burdened with a US passport, and quite a few places that don't have capital gains on crypto sales. Many other countries are taxing bitcoin as well. In fact it's the rare exception (Google seems to indicate about a dozen) that doesn't tax bitcoin. Your original statement about bitcoin being a way of avoiding capital gains taxes is simply false for most people. > It is my admittedly limited understanding of US tax law that - as long as you don't sell - you aren't getting taxed on gains (unrealized capital gains). And of course capital gains only happen when you sell. That's why it's a gain (the difference between the sale price and purchase price). That's the same way selling stocks works too. You only pay the capital gains tax when you sell.
  - ur-whale 5y ago
    > Your original statement about bitcoin being a way of avoiding capital gains taxes is simply false for most people. Only if they decide to sell. Also, only if they're not willing to do what it takes (i.e. move to a jurisdiction with no taxes on realized cap. gains and toss the US passport out the window for something better). Finally, you haven't addressed the "barter" case (trade BTC directly for goods). I'm sure the US has found a way to tax this on paper (the IRS seems to be the only functioning part of the US govt these days), the question of enforceability is a different one.
- mmastrac 5y ago
  Likely the government will determine the value of the house, deem your disposition of the Bitcoin to be equivalent to that , convert to USD and send you a tax bill. This is pretty common around the world: barter doesn't get around taxes (at least at large enough sums)
- roywiggins 5y ago
  Purchases denominated in BTC are treated as realized gains or losses: > cryptocurrency users must deal with capital gains and losses in addition to whatever sales taxes they might face at the point of sale. > For example, let's imagine you bought $10 worth of Bitcoin two years ago and it has since appreciated to $100 in value. If you sold it on an exchange, you'd have $90 of realized long-term capital gains, just like you would with any other capital asset. > If you instead used that same $100 worth of Bitcoin to buy groceries from the supermarket, you'd still have to pay long-term capital gains taxes on the $90 difference between appreciated value and your cost basis. https://www.kiplinger.com/taxes/capital-gains-tax/603117/how-is-cryptocurrency-taxed-what-you-need-to-know https://www.kiplinger.com/taxes/capital-gains-tax/603117/how... > If the fair market value of property received in exchange for virtual currency exceeds the taxpayer’s adjusted basis of the virtual currency, the taxpayer has taxable gain. The taxpayer has a loss if the fair market value of the property received is less than the adjusted basis of the virtual currency. https://www.irs.gov/pub/irs-drop/n-14-21.pdf https://www.irs.gov/pub/irs-drop/n-14-21.pdf
  - ur-whale 5y ago
    How does the "capital gain" get calculated if you directly barter Bitcoin for goods, say to buy a used car whose price was never listed? [EDIT]: never mind someone answered this above with the whole doctrine of "fair market value".

ur-whale 5y ago

>Bitcoin does not shield you from capital gains taxes [0] or asset seizures since it's classified as property by the government. At least not in the US. It is my admittedly limited understanding of US tax law that - as long as you don't sell - you aren't getting taxed on gains (unrealized capital gains). Should you then decide to use your coins to directly buy - say - a house in Japan: since no actual Yen-denominated price is ever involved in the transaction, how will the US government evaluated your realized capital gains? Also: the US is but one place in the world. There are quite a few folks on this earth that aren't burdened with a US passport, and quite a few places that don't have capital gains on crypto sales.

WoodenChair 5y ago
> Also: the US is but one place in the world. There are quite a few folks on this earth that aren't burdened with a US passport, and quite a few places that don't have capital gains on crypto sales. Many other countries are taxing bitcoin as well. In fact it's the rare exception (Google seems to indicate about a dozen) that doesn't tax bitcoin. Your original statement about bitcoin being a way of avoiding capital gains taxes is simply false for most people. > It is my admittedly limited understanding of US tax law that - as long as you don't sell - you aren't getting taxed on gains (unrealized capital gains). And of course capital gains only happen when you sell. That's why it's a gain (the difference between the sale price and purchase price). That's the same way selling stocks works too. You only pay the capital gains tax when you sell.
- ur-whale 5y ago
  > Your original statement about bitcoin being a way of avoiding capital gains taxes is simply false for most people. Only if they decide to sell. Also, only if they're not willing to do what it takes (i.e. move to a jurisdiction with no taxes on realized cap. gains and toss the US passport out the window for something better). Finally, you haven't addressed the "barter" case (trade BTC directly for goods). I'm sure the US has found a way to tax this on paper (the IRS seems to be the only functioning part of the US govt these days), the question of enforceability is a different one.
mmastrac 5y ago
Likely the government will determine the value of the house, deem your disposition of the Bitcoin to be equivalent to that , convert to USD and send you a tax bill. This is pretty common around the world: barter doesn't get around taxes (at least at large enough sums)
roywiggins 5y ago
Purchases denominated in BTC are treated as realized gains or losses: > cryptocurrency users must deal with capital gains and losses in addition to whatever sales taxes they might face at the point of sale. > For example, let's imagine you bought $10 worth of Bitcoin two years ago and it has since appreciated to $100 in value. If you sold it on an exchange, you'd have $90 of realized long-term capital gains, just like you would with any other capital asset. > If you instead used that same $100 worth of Bitcoin to buy groceries from the supermarket, you'd still have to pay long-term capital gains taxes on the $90 difference between appreciated value and your cost basis. https://www.kiplinger.com/taxes/capital-gains-tax/603117/how-is-cryptocurrency-taxed-what-you-need-to-know https://www.kiplinger.com/taxes/capital-gains-tax/603117/how... > If the fair market value of property received in exchange for virtual currency exceeds the taxpayer’s adjusted basis of the virtual currency, the taxpayer has taxable gain. The taxpayer has a loss if the fair market value of the property received is less than the adjusted basis of the virtual currency. https://www.irs.gov/pub/irs-drop/n-14-21.pdf https://www.irs.gov/pub/irs-drop/n-14-21.pdf
- ur-whale 5y ago
  How does the "capital gain" get calculated if you directly barter Bitcoin for goods, say to buy a used car whose price was never listed? [EDIT]: never mind someone answered this above with the whole doctrine of "fair market value".