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Forgive me if I'm just being ignorant on the matter (I'm not super familiar with Bitcoin), but wasn't one of the founding principles of Bitcoin the idea that it

by Rudism 13y ago

Forgive me if I'm just being ignorant on the matter (I'm not super familiar with Bitcoin), but wasn't one of the founding principles of Bitcoin the idea that it wasn't/wouldn't be regulated?

jlgreco 13y ago
Personally held bitcoins are not regulated in the same way that personally held cash is not regulated. That is to say, it is regulated... but (depending on how you acquire/spend your bitcoins or cash) it works on the honor system. Think of waiters receiving cash tips.
- joe_the_user 13y ago
  Paper money is private. Bitcoins are public (connecting wallets to people is a challenge but with whole Internet tapped, maybe not a huge challenge).
  - cinquemb 13y ago
    If one considers that the vast majority of people don't go through the lengths to remain pseudonymous on the web, connecting identities to wallets will (eventually) be trivial for the mainstream. However, I find it the case that as of now, that is inversely proportional to the people that use bitcoin. Not to mention all the laundry services out there or that could be placed on the front end of services used through tor (and possibly meshnets in the future).
    - PeterisP 13y ago
      And just as with cash income, attempting to launder bitcoin income turns it from a fine for undeclared income to a prison term for money laundering/intentional tax evasion.
  - jlgreco 13y ago
    Hence the "(depending on how you acquire/spend your bitcoins or cash)". With bitcoin it is much harder to keep your identity unconnected from your wallet (particularly if you want to do anything with it), though it is possible.
cinquemb 13y ago
When you want to establish a business that trades between bitcoins and typical fiat, you are going to be regulated (maybe even just being a business would enable a government to d̶e̶m̶a̶n̶d̶ accept bitcoins as an income tax payment if such a business didn't trade between currencies). As an individual trading and accepting bitcoins for goods with other individuals, you would be out of the scope of regulation, and because of the nature of bitcoins, you could make it scale to business like levels.
- yxhuvud 13y ago
  Nothing stops the state for demanding tax payments in normal money regardless of if the income is in normal money or not. This do happen in real life quite often when people are not paid in cash.
  - cinquemb 13y ago
    Maybe for business/organizations that declare what they made to the state in the first place. But how does the state demand for something of which they did not know took place between individuals? By going around pricing the market value of everyone's assets and demanding payment in they way they want or get thrown in prison? Or by going around to individuals singled out by incumbents?
    - mpyne 13y ago
      They do this the same way they demand taxes on payments made only in cash today. Is it foolproof? No, but it doesn't have to be, just as taxes still ended up coming in somehow even when business ran mostly on cash and cheques. In this case the blockchain is visible for all to see, including the governments, and they only have to resolve the true identity of someone once to be right for all time.
      - cinquemb 13y ago
        For business it will be the same as it always has been: You are naturally under the regulation, effective or not, bitcoins or not, of government when you establish oneself as a business. They can use the blockchain to help, but let us not pretend that in itself is a panacea to taxation required for the gears to keep grinding on in the central banking/ governmental taxation systems (which even under loads pre bitcoin, were faltering). But for individuals, one can create as many wallets as they wish, use as many laundering clients over tor, to remain out of reach. Which is exactly why governments have to set up honey pots to confiscate bitcoins on sites like the silk road (which end up not being effective deterrents and end up being outed as such by the community that relies/favors on reputable past trades). I suspect business/organizations can employ similar technologies to reduce their taxation and how much they declare.
lmkg 13y ago
Ehhh... One of the founding principles was that it doesn't have a central issuing authority. The supply of bitcoin can't be controlled, which makes it immune to politically-convenient devaluation or debasement, unlike government-issued fiat currency. Or in laymen's terms: The fed can't just print more bitcoins. Starting from the above, an extended game of Telephone resulted in some people thinking that Bitcoin can't be regulated at all. This is a silly belief.
- cracker_jacks 13y ago
  Can you explain how can bitcoin be regulated? Regulation defined as the ability to control transactions.
  - Myrth 13y ago
    > Regulation defined as the ability to control transactions. I'm not sure where would you get this definition. https://en.wikipedia.org/wiki/Regulation https://en.wikipedia.org/wiki/Regulation > Regulation may refer to the following: > A process of the promulgation, monitoring, and enforcement of rules, established by primary and/or delegated legislation. > A written instrument containing rules having the force of law. In this context they talk about monitoring and enforcing companies' use of bitcoins within legal system.
    - cinquemb 13y ago
      In this context they talk about monitoring and enforcing companies' use of bitcoins within legal system. As `mrb said here, it is not very clear since it explicitly is dealing with bitcoin exchanges: https://news.ycombinator.com/item?id=6238754 https://news.ycombinator.com/item?id=6238754
  - brazzy 13y ago
    The same way transactions in any other currency are controlled: by making laws that say what you must and cannot do and what penalties apply if you don't comply.
oleganza 13y ago
Once the person sells euros for bitcoins, he can spend these coins much more easily anywhere. He can: 1. Mix coins with others to make it impossible to trace where he spends them. 2. Pay someone for labour. 3. Buy any digital product or service online from anyone in the world. 4. Buy something delivered to his door via postal service. 5. Pay for small purchases like with cash. 6. Buy some assets in another country. Each of these activities are really hard to monitor or affect. Some activities are easier to regulate. If you are going to buy some AAPL shares or a house, you'd have to tell government something about yourself or the source of your income.

by Rudism 13y ago

Forgive me if I'm just being ignorant on the matter (I'm not super familiar with Bitcoin), but wasn't one of the founding principles of Bitcoin the idea that it wasn't/wouldn't be regulated?

jlgreco 13y ago

Personally held bitcoins are not regulated in the same way that personally held cash is not regulated. That is to say, it is regulated... but (depending on how you acquire/spend your bitcoins or cash) it works on the honor system. Think of waiters receiving cash tips.

joe_the_user 13y ago
Paper money is private. Bitcoins are public (connecting wallets to people is a challenge but with whole Internet tapped, maybe not a huge challenge).
- cinquemb 13y ago
  If one considers that the vast majority of people don't go through the lengths to remain pseudonymous on the web, connecting identities to wallets will (eventually) be trivial for the mainstream. However, I find it the case that as of now, that is inversely proportional to the people that use bitcoin. Not to mention all the laundry services out there or that could be placed on the front end of services used through tor (and possibly meshnets in the future).
  - PeterisP 13y ago
    And just as with cash income, attempting to launder bitcoin income turns it from a fine for undeclared income to a prison term for money laundering/intentional tax evasion.
- jlgreco 13y ago
  Hence the "(depending on how you acquire/spend your bitcoins or cash)". With bitcoin it is much harder to keep your identity unconnected from your wallet (particularly if you want to do anything with it), though it is possible.

cinquemb 13y ago

When you want to establish a business that trades between bitcoins and typical fiat, you are going to be regulated (maybe even just being a business would enable a government to d̶e̶m̶a̶n̶d̶ accept bitcoins as an income tax payment if such a business didn't trade between currencies). As an individual trading and accepting bitcoins for goods with other individuals, you would be out of the scope of regulation, and because of the nature of bitcoins, you could make it scale to business like levels.

yxhuvud 13y ago
Nothing stops the state for demanding tax payments in normal money regardless of if the income is in normal money or not. This do happen in real life quite often when people are not paid in cash.
- cinquemb 13y ago
  Maybe for business/organizations that declare what they made to the state in the first place. But how does the state demand for something of which they did not know took place between individuals? By going around pricing the market value of everyone's assets and demanding payment in they way they want or get thrown in prison? Or by going around to individuals singled out by incumbents?
  - mpyne 13y ago
    They do this the same way they demand taxes on payments made only in cash today. Is it foolproof? No, but it doesn't have to be, just as taxes still ended up coming in somehow even when business ran mostly on cash and cheques. In this case the blockchain is visible for all to see, including the governments, and they only have to resolve the true identity of someone once to be right for all time.
    - cinquemb 13y ago
      For business it will be the same as it always has been: You are naturally under the regulation, effective or not, bitcoins or not, of government when you establish oneself as a business. They can use the blockchain to help, but let us not pretend that in itself is a panacea to taxation required for the gears to keep grinding on in the central banking/ governmental taxation systems (which even under loads pre bitcoin, were faltering). But for individuals, one can create as many wallets as they wish, use as many laundering clients over tor, to remain out of reach. Which is exactly why governments have to set up honey pots to confiscate bitcoins on sites like the silk road (which end up not being effective deterrents and end up being outed as such by the community that relies/favors on reputable past trades). I suspect business/organizations can employ similar technologies to reduce their taxation and how much they declare.

lmkg 13y ago

Ehhh... One of the founding principles was that it doesn't have a central issuing authority. The supply of bitcoin can't be controlled, which makes it immune to politically-convenient devaluation or debasement, unlike government-issued fiat currency. Or in laymen's terms: The fed can't just print more bitcoins. Starting from the above, an extended game of Telephone resulted in some people thinking that Bitcoin can't be regulated at all. This is a silly belief.

cracker_jacks 13y ago
Can you explain how can bitcoin be regulated? Regulation defined as the ability to control transactions.
- Myrth 13y ago
  > Regulation defined as the ability to control transactions. I'm not sure where would you get this definition. https://en.wikipedia.org/wiki/Regulation https://en.wikipedia.org/wiki/Regulation > Regulation may refer to the following: > A process of the promulgation, monitoring, and enforcement of rules, established by primary and/or delegated legislation. > A written instrument containing rules having the force of law. In this context they talk about monitoring and enforcing companies' use of bitcoins within legal system.
  - cinquemb 13y ago
    In this context they talk about monitoring and enforcing companies' use of bitcoins within legal system. As `mrb said here, it is not very clear since it explicitly is dealing with bitcoin exchanges: https://news.ycombinator.com/item?id=6238754 https://news.ycombinator.com/item?id=6238754
- brazzy 13y ago
  The same way transactions in any other currency are controlled: by making laws that say what you must and cannot do and what penalties apply if you don't comply.

oleganza 13y ago

Once the person sells euros for bitcoins, he can spend these coins much more easily anywhere. He can: 1. Mix coins with others to make it impossible to trace where he spends them. 2. Pay someone for labour. 3. Buy any digital product or service online from anyone in the world. 4. Buy something delivered to his door via postal service. 5. Pay for small purchases like with cash. 6. Buy some assets in another country. Each of these activities are really hard to monitor or affect. Some activities are easier to regulate. If you are going to buy some AAPL shares or a house, you'd have to tell government something about yourself or the source of your income.