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Given that it's not a currency according to the government, you probably don't need to pay taxes when you earn a profit in it. When you receive goods and servic
by aneth4 14y ago
Given that it's not a currency according to the government, you probably don't need to pay taxes when you earn a profit in it. When you receive goods and services in exchange for it, you may need to take those as income (since you didn't pay for them) and pay real taxes on the dollar value of that.
There are probably ways bitcoin could survive without being convertible, but there would be major inefficiencies.
In general, currencies must be convertible to other currencies to be widely accepted. You can't deposit foreign currencies that are not convertible because there is no value to a bank.
- betterunix 14y ago"In general, currencies must be convertible to other currencies to be widely accepted" That is not really true. The Soviet Ruble was very hard to convert to other currencies, yet it was widely accepted within the USSR.
- aneth4 14y agoYes, within the USSR. That's equivalent to Bitcoin being "widely accepted" among merchants who accept Bitcoin.
- illuminate 14y ago"Given that it's not a currency according to the government, you probably don't need to pay taxes when you earn a profit in it" What? No. http://www.irs.gov/taxtopics/tc420.html http://www.irs.gov/taxtopics/tc420.html
- aneth4 14y agoUnclear whether the virtual currency itself would be considered of value by the government. If not, the person paying in bitcoin would probably have to pay income tax on the fair value of the goods or services.