7 ms·

Bitcoin Slips In The Wake Of The IRS’s Tax Decision

65 points by kaa2102 13y ago

neilk 13y ago
Tangential question: could this, paradoxically, make Bitcoin a better medium of exchange, even if it becomes a bad speculative investment? Since the IRS is now imposing a capital gains tax, that penalizes speculators. One of the issues with Bitcoin right now is that so many people are speculating (myself included) that it probably increases the volatility. If people are encouraged to spend, invest, or convert BTC into fiat currency ASAP, the price of a BTC should go down and remain very stable. In this scenario BTC becomes a decentralized money transfer network, for the most part. The only issue is going to be doing all the accounting for the government, but that seems eminently doable since every transaction is perfectly recorded. I'm not very experienced with financial matters, so perhaps someone can correct me.
- asperous 13y ago
  I think most people with tax knowledge expected Bitcoin to be taxed in this way in the us. To think the us would give Bitcoin some sort of special treatment is absurd. People will gamble on anything, as long as the price isn't fixed (and it will never be), there will always be those willing to throw money at it and dream big. Keep in mind: Big players haven't really yet bought in yet, Bitcoin is currently inflationary, and so on. Bitcoin certainly has little hope to become stable any time soon.
- battani 13y ago
  The IRS now treats bitcoin as a property asset, very much the same way they treat stocks, and not all stocks are prone to speculation. So this is expected news for those who hold bitcoin as an investment. The major impact of this decision will be on consumer adoption. Now, every time I want to make a transaction, I need to keep track of my taxes. I know that some wallet services are already developing ways to keep track of this automatically, but that's just an extra headache for the average consumer. This in essence will force consumers to think of bitcoin more as an investment, rather than a "currency" they can spend, and that will impede adoption. I know nobody here likes to hear it, and I feel like a lot here in SV are tuning this out, but bitcoin is really, really struggling to find a relevant use case with consumers. Regular consumers have absolutely no reason to use bitcoin. The "1-click" payment and 1% price discount are not appealing enough to the average Joe who already gets 1-2% cash back, airline miles, and consumer protection on his credit card (and 1-click checkouts on many e-commerce platforms). And more regulation isn't helping the "crypto-anarchist" decentralization angle either. Add price volatility to that and it kills the consumer use case. But... micro-payments? Consumers have always hated them. http://www.openp2p.com/pub/a/p2p/2000/12/19/micropayments.html http://www.openp2p.com/pub/a/p2p/2000/12/19/micropayments.ht... (Shirky, 2000) But... international transactions? Hard to beat the fees at https://transferwise.com https://transferwise.com. Bitcoin is great, FOR MERCHANTS. But consumer adoption is going to determine whether or not it succeeds on a grander scale. Unfortunately, Bitcoin does not solve a problem for consumers. Especially with tap-tap mobile payments around the corner. When it comes to money, consumers want to be insured and cuddled and protected and not run the risk (however small) of being criminally liable for transactions and have someone to speak with if they make an erroneous transaction or have their card stolen. And they can already do all that, which makes it tremendously difficult to compel them to change the habits they've had for in forever to adopt a system that does not provide them with significant advantages. I've been in bitcoin since 2011 and used to be a big believer, but I don't see bitcoin gaining traction with consumers, in part because of the huge regulatory risk. Any significant threat to the banks' business will be met with harmful regulatory control (friendly reminder: Wall Street banks fund the largest political lobbies in Washington). It could be destined to eternally remain an investment instrument (like gold) or find very targeted applications (like machine-to-machine payments). The underlying blockchain technology could be of more use (if adopted by the banking system, for example) but that is still far in the future.
  - danieltillett 13y ago
    Bitcoin will always have value as a new way to think about money. It has started some really smart people thinking about the next system - this is really the norm for any major breakthrough. Nothing is ever perfect the first time or doesn't evolve as things change. I think that given how good bitcoin is has led some people to believe it is perfect.
    - battani 13y ago
      I agree. But it's very difficult to find a system that is so appealing to consumers that they'll make the switch, simply because consumers don't have a payments problem. Incremental reductions in friction (e.g. the consumer won't have to enter their credit card details, or, the consumer will save a percent on their purchase) are certainly not compelling enough to justify changing a deep and old habit. And a new system would have to figure out a way to mitigate the regulatory risk.
  - 2arrs2ells 13y ago
    The "one-click" payment and 1% price discount is not gonna appeal enough to the average Joe who already has 1-2% cash back, airline miles, and consumer protection on his credit card (and 1-click checkouts on many e-commerce platforms). Yes! The credit card is an amazing tool for consumers, and I won't be giving mine up unless I get something significantly more amazing in return (Merchants would need to offer 5-10% discounts on purchases with bitcoin, for me to begin to be interested).
    - sitkack 13y ago
      Not sure how it relates to bitcoin, but Visa and Master Card will pull a merchants account if they give cash discounts. They do this, ofcourse, to make cash and cards equal in the eyes of the consumer even though the merchant takes a pretty sizeable hit.
      - willlll 13y ago
        Except this hasn't been true for several years in most states http://usa.visa.com/personal/get-help/checkout-fees.jsp http://usa.visa.com/personal/get-help/checkout-fees.jsp
beachriot 13y ago
I am pretty surprised that the price of BTC fell after the IRS issued guidance. Like asperous mentioned, most people with tax knowledge (myself included) expected Bitcoin to be taxed this way, and this is what we were hoping for. The author discusses how people now have to "decide whether to report the income and pay steep capital gains tax, or submit fraudulent tax returns." But the thing is, we knew all along that tax would have to be paid. It was simply a matter of whether it was taxed at higher ordinary income rates, or lower capital gains rates.
- panabee 13y ago
  do you mind elaborating why you hoped for this tax ruling? currency seems like bitcoin's most powerful application, but this ruling cripples its currency applications -- not because of documentation purposes (since wallets can easily record tax data), but because now each transaction contains a potential bitcoin capital gains cost. in other words, buying a camera for $200 might cost more than $200 because of capital gains. unless the price of bitcoin completely stabilizes, doesn't this ruling hurt bitcoin as a currency?
  - beachriot 13y ago
    let's say that i purchase a bitcoin for $150. this is my cost basis. the next day, the bitcoin appreciates in value to $200. i use this single bitcoin to purchase a $200 camera. in this transaction, i have spent $200, but i only paid $150 for it. this means that i have essentially received $50 for free. the IRS wants to tax this "free" income. under IRS guidance, this additional $50 that you got "for free" is taxed at a capital gains rate (which is up to 20%). if the IRS had declared bitcoin a currency, this $50 in gain would be taxed at ordinary income rates (which is up to 39.6%). since we'd ideally like to be taxed at a lower tax rate, we wouldn't want it to be considered a currency for tax purposes because currency is taxed at the 39.6% rate. it's also REALLY important to note that the way currency is defined in the tax code is different than how currency is defined for other parts of government, be it another arm for the treasury department (fincen for instance) or even the SEC. so even though bitcoin is not considered a currency in the tax code specifically, doesn't mean that it should be considered less of a currency. am i just talking in circles now? i hope this answers your question.
danieltillett 13y ago
This a huge accounting nightmare for businesses and individuals to deal with. It is also likely to act as a precedence for other tax authorities. The real value of bitcoin is in the low transaction friction (in theory more than practice for most non-tech people). All this accounting is basically undermining this.
coin 13y ago
I wish they'd depict the y-axis starting at 0 instead of 450, which makes the decline seem worst than it is. Also -1 for disabling zoom on mobile devices.
- 7Figures2Commas 13y ago
  The chart with a 0 y-axis is even uglier, actually. It more clearly shows that the price of Bitcoin has broken through a key support level. If this were a stock chart and you were trading the technicals, you'd be contemplating a short position here.
- eCa 13y ago
  Here is the zero-based graph: http://www.coindesk.com/price/#2013-01-01,2014-03-31,close,bpi,USD http://www.coindesk.com/price/#2013-01-01,2014-03-31,close,b... Edit: Or it would have been if the link worked.. But put the start date at 2013-jan-01.
mynameishere 13y ago
The IRS's decision, if actually enforced, is going to make legitimate transactions with bitcoin almost impossible. Filling out a 1099 is a pain in the ass, even with relatively light trading, in which you might buy a block of 1000 shares at 55 dollars, and sell two blocks, one of 600 at 57.568 and another 400 at 57.569. Try doing that with the fluctuations in currency markets. If you buy 10,000 dollars worth of bitcoins, you'll need a new entry for every time you spend them, with a different price for each. And, if they enforce wash sale laws, you could be liable for totally innocent trades. That probably won't happen though.
- loopdoend 13y ago
  I'm pretty sure a company like Coinkite or Coinbase could track and automate this and give you something you can print off each year. It might discourage users from using their own wallets for transactions, but that's all.
- sliverstorm 13y ago
  You just need a 1099 for every transaction you make, how hard is that?
  - shakethemonkey 13y ago
    No, only those transactions over $600. And you don't have to do it at all for payments tendered for merchandise, or almost any payment to corporations. http://www.irs.gov/instructions/i1099msc/ar02.html http://www.irs.gov/instructions/i1099msc/ar02.html
- 2arrs2ells 13y ago
  Calculating capital gains is done with the Schedule D form (http://www.irs.gov/pub/irs-pdf/f1040sd.pdf http://www.irs.gov/pub/irs-pdf/f1040sd.pdf) - not a 1099.
LoganCale 13y ago
Not surprised. The accounting nightmare that results from this means I'm basically done with cryptocurrencies. As a user trying to buy stuff with it I have no interest in dealing with keeping track of every transaction for the purposes of tax reporting, and neither is anyone else except for hardcore supporters.
- gst 13y ago
  > and neither is anyone else who is living in the United States.
  - LoganCale 13y ago
    Or any other country adopting similar rules.
    - danieltillett 13y ago
      They all will soon enough :(
- gnaritas 13y ago
  > The accounting nightmare that results from this means I'm basically done with cryptocurrencies. This was the expected outcome, if you didn't see this from the beginning, maybe you shouldn't be investing to begin with. I mean seriously, what did you think, that the IRS would allow untaxed gains to be kept?
  - LoganCale 13y ago
    I want to use it as a currency to buy things, not an investment. If all you're doing is investing, this is easier to keep track of. If you want to regularly be buying goods and services with cryptocurrencies, it becomes much more difficult for the average person to keep track of. Don't be an ass.
    - gnaritas 13y ago
sxp 13y ago
Since the IRS has given a statement on BTC, people who had bought it last year and sold near the peak for USD or products/services have now realized that they owe a significant amount of taxes. So they now have to sell more BTC to get enough cash to write a check to the IRS. Thus the supply of BTC will increase and the price goes down. The smarter thing would have been to sell the BTC and then put away X% in a savings account (or a stable investment) with a plan to pay that money to the IRS. Then the (100-X)% could be spent freely without issue.
- dragontamer 13y ago
  Regardless of how the IRS was going to do things, you were going to owe significant taxes anyway. There were only two choices: Tax BTC as property, or Tax BTC as currency. In both cases, you owe somewhere between 15% to 30% of your earnings to the IRS.
FatalLogic 13y ago
The article is interesting, but the writer's main point seems to be lacking much evidence. The normally volatile Bitcoin price actually remained flat for days after the IRS announcement - because it wasn't a surprise. The article briefly mentions a much more plausible reason for the sizable price drop, which occurred later: China cracking down on bank to exchange deposits. The writer just sort of handwaves it away. There's no evidence that the IRS ruling pushed the price down, in fact there's plenty of evidence that it did not: the fact that the price did not move. Meanwhile, there's plenty of evidence that China's action did affect the price. As soon as rumors began to spread, trades on the Chinese exchanges were happening at prices far below those on outside exchanges. The Chinese exchanges led the market down every step of the way. (Naturally a price fall in China soon began to pull down prices everywhere, due to arbitrage, and an understanding that the probable withdrawal of Chinese money was very bad news for anyone speculating on the short term price). Chart showing price remaining flat for 2 days following the IRS announcement on 3/25, and then falling sharply on firm news from China (Caixin report 3/27): http://bitcoincharts.com/charts/bitstampUSD#rg60zczsg2014-03-25zeg2014-04-01ztgSzm1g10zm2g25zv http://bitcoincharts.com/charts/bitstampUSD#rg60zczsg2014-03...
- danieltillett 13y ago
  I tend to agree with you on the immediate cause of the fall, but I do think the friction that will result from the IRS decision really damages the value of Bitcoin as a low transaction cost mean of exchange.
  - FatalLogic 13y ago
    >I do think the friction that will result from the IRS decision really damages the value of Bitcoin as a low transaction cost mean of exchange It doesn't seem to make much difference. In its current form, Bitcoin already suffers from a lot of friction when used as a means of exchange. For the average consumer, buying it is difficult, storing it is difficult, the value isn't stable, using it for physical retail purchases can be very clunky. It's a beta. A lot of things would need to work better for it to really succeed. In that context, the rather clumsy reporting requirements of the IRS ruling are yet another minor speedbump, which needs to be either ironed out or worked around.

65 points by kaa2102 13y ago

neilk 13y ago

Tangential question: could this, paradoxically, make Bitcoin a better medium of exchange, even if it becomes a bad speculative investment? Since the IRS is now imposing a capital gains tax, that penalizes speculators. One of the issues with Bitcoin right now is that so many people are speculating (myself included) that it probably increases the volatility. If people are encouraged to spend, invest, or convert BTC into fiat currency ASAP, the price of a BTC should go down and remain very stable. In this scenario BTC becomes a decentralized money transfer network, for the most part. The only issue is going to be doing all the accounting for the government, but that seems eminently doable since every transaction is perfectly recorded. I'm not very experienced with financial matters, so perhaps someone can correct me.

asperous 13y ago
I think most people with tax knowledge expected Bitcoin to be taxed in this way in the us. To think the us would give Bitcoin some sort of special treatment is absurd. People will gamble on anything, as long as the price isn't fixed (and it will never be), there will always be those willing to throw money at it and dream big. Keep in mind: Big players haven't really yet bought in yet, Bitcoin is currently inflationary, and so on. Bitcoin certainly has little hope to become stable any time soon.
battani 13y ago
The IRS now treats bitcoin as a property asset, very much the same way they treat stocks, and not all stocks are prone to speculation. So this is expected news for those who hold bitcoin as an investment. The major impact of this decision will be on consumer adoption. Now, every time I want to make a transaction, I need to keep track of my taxes. I know that some wallet services are already developing ways to keep track of this automatically, but that's just an extra headache for the average consumer. This in essence will force consumers to think of bitcoin more as an investment, rather than a "currency" they can spend, and that will impede adoption. I know nobody here likes to hear it, and I feel like a lot here in SV are tuning this out, but bitcoin is really, really struggling to find a relevant use case with consumers. Regular consumers have absolutely no reason to use bitcoin. The "1-click" payment and 1% price discount are not appealing enough to the average Joe who already gets 1-2% cash back, airline miles, and consumer protection on his credit card (and 1-click checkouts on many e-commerce platforms). And more regulation isn't helping the "crypto-anarchist" decentralization angle either. Add price volatility to that and it kills the consumer use case. But... micro-payments? Consumers have always hated them. http://www.openp2p.com/pub/a/p2p/2000/12/19/micropayments.html http://www.openp2p.com/pub/a/p2p/2000/12/19/micropayments.ht... (Shirky, 2000) But... international transactions? Hard to beat the fees at https://transferwise.com https://transferwise.com. Bitcoin is great, FOR MERCHANTS. But consumer adoption is going to determine whether or not it succeeds on a grander scale. Unfortunately, Bitcoin does not solve a problem for consumers. Especially with tap-tap mobile payments around the corner. When it comes to money, consumers want to be insured and cuddled and protected and not run the risk (however small) of being criminally liable for transactions and have someone to speak with if they make an erroneous transaction or have their card stolen. And they can already do all that, which makes it tremendously difficult to compel them to change the habits they've had for in forever to adopt a system that does not provide them with significant advantages. I've been in bitcoin since 2011 and used to be a big believer, but I don't see bitcoin gaining traction with consumers, in part because of the huge regulatory risk. Any significant threat to the banks' business will be met with harmful regulatory control (friendly reminder: Wall Street banks fund the largest political lobbies in Washington). It could be destined to eternally remain an investment instrument (like gold) or find very targeted applications (like machine-to-machine payments). The underlying blockchain technology could be of more use (if adopted by the banking system, for example) but that is still far in the future.
- danieltillett 13y ago
  Bitcoin will always have value as a new way to think about money. It has started some really smart people thinking about the next system - this is really the norm for any major breakthrough. Nothing is ever perfect the first time or doesn't evolve as things change. I think that given how good bitcoin is has led some people to believe it is perfect.
  - battani 13y ago
    I agree. But it's very difficult to find a system that is so appealing to consumers that they'll make the switch, simply because consumers don't have a payments problem. Incremental reductions in friction (e.g. the consumer won't have to enter their credit card details, or, the consumer will save a percent on their purchase) are certainly not compelling enough to justify changing a deep and old habit. And a new system would have to figure out a way to mitigate the regulatory risk.
- 2arrs2ells 13y ago
  The "one-click" payment and 1% price discount is not gonna appeal enough to the average Joe who already has 1-2% cash back, airline miles, and consumer protection on his credit card (and 1-click checkouts on many e-commerce platforms). Yes! The credit card is an amazing tool for consumers, and I won't be giving mine up unless I get something significantly more amazing in return (Merchants would need to offer 5-10% discounts on purchases with bitcoin, for me to begin to be interested).
  - sitkack 13y ago
    Not sure how it relates to bitcoin, but Visa and Master Card will pull a merchants account if they give cash discounts. They do this, ofcourse, to make cash and cards equal in the eyes of the consumer even though the merchant takes a pretty sizeable hit.
    - willlll 13y ago
      Except this hasn't been true for several years in most states http://usa.visa.com/personal/get-help/checkout-fees.jsp http://usa.visa.com/personal/get-help/checkout-fees.jsp

beachriot 13y ago

I am pretty surprised that the price of BTC fell after the IRS issued guidance. Like asperous mentioned, most people with tax knowledge (myself included) expected Bitcoin to be taxed this way, and this is what we were hoping for. The author discusses how people now have to "decide whether to report the income and pay steep capital gains tax, or submit fraudulent tax returns." But the thing is, we knew all along that tax would have to be paid. It was simply a matter of whether it was taxed at higher ordinary income rates, or lower capital gains rates.

panabee 13y ago
do you mind elaborating why you hoped for this tax ruling? currency seems like bitcoin's most powerful application, but this ruling cripples its currency applications -- not because of documentation purposes (since wallets can easily record tax data), but because now each transaction contains a potential bitcoin capital gains cost. in other words, buying a camera for $200 might cost more than $200 because of capital gains. unless the price of bitcoin completely stabilizes, doesn't this ruling hurt bitcoin as a currency?
- beachriot 13y ago
  let's say that i purchase a bitcoin for $150. this is my cost basis. the next day, the bitcoin appreciates in value to $200. i use this single bitcoin to purchase a $200 camera. in this transaction, i have spent $200, but i only paid $150 for it. this means that i have essentially received $50 for free. the IRS wants to tax this "free" income. under IRS guidance, this additional $50 that you got "for free" is taxed at a capital gains rate (which is up to 20%). if the IRS had declared bitcoin a currency, this $50 in gain would be taxed at ordinary income rates (which is up to 39.6%). since we'd ideally like to be taxed at a lower tax rate, we wouldn't want it to be considered a currency for tax purposes because currency is taxed at the 39.6% rate. it's also REALLY important to note that the way currency is defined in the tax code is different than how currency is defined for other parts of government, be it another arm for the treasury department (fincen for instance) or even the SEC. so even though bitcoin is not considered a currency in the tax code specifically, doesn't mean that it should be considered less of a currency. am i just talking in circles now? i hope this answers your question.

danieltillett 13y ago

This a huge accounting nightmare for businesses and individuals to deal with. It is also likely to act as a precedence for other tax authorities. The real value of bitcoin is in the low transaction friction (in theory more than practice for most non-tech people). All this accounting is basically undermining this.

coin 13y ago

I wish they'd depict the y-axis starting at 0 instead of 450, which makes the decline seem worst than it is. Also -1 for disabling zoom on mobile devices.

7Figures2Commas 13y ago
The chart with a 0 y-axis is even uglier, actually. It more clearly shows that the price of Bitcoin has broken through a key support level. If this were a stock chart and you were trading the technicals, you'd be contemplating a short position here.
eCa 13y ago
Here is the zero-based graph: http://www.coindesk.com/price/#2013-01-01,2014-03-31,close,bpi,USD http://www.coindesk.com/price/#2013-01-01,2014-03-31,close,b... Edit: Or it would have been if the link worked.. But put the start date at 2013-jan-01.

mynameishere 13y ago

The IRS's decision, if actually enforced, is going to make legitimate transactions with bitcoin almost impossible. Filling out a 1099 is a pain in the ass, even with relatively light trading, in which you might buy a block of 1000 shares at 55 dollars, and sell two blocks, one of 600 at 57.568 and another 400 at 57.569. Try doing that with the fluctuations in currency markets. If you buy 10,000 dollars worth of bitcoins, you'll need a new entry for every time you spend them, with a different price for each. And, if they enforce wash sale laws, you could be liable for totally innocent trades. That probably won't happen though.

loopdoend 13y ago
I'm pretty sure a company like Coinkite or Coinbase could track and automate this and give you something you can print off each year. It might discourage users from using their own wallets for transactions, but that's all.
sliverstorm 13y ago
You just need a 1099 for every transaction you make, how hard is that?
- shakethemonkey 13y ago
  No, only those transactions over $600. And you don't have to do it at all for payments tendered for merchandise, or almost any payment to corporations. http://www.irs.gov/instructions/i1099msc/ar02.html http://www.irs.gov/instructions/i1099msc/ar02.html
2arrs2ells 13y ago
Calculating capital gains is done with the Schedule D form (http://www.irs.gov/pub/irs-pdf/f1040sd.pdf http://www.irs.gov/pub/irs-pdf/f1040sd.pdf) - not a 1099.

LoganCale 13y ago

Not surprised. The accounting nightmare that results from this means I'm basically done with cryptocurrencies. As a user trying to buy stuff with it I have no interest in dealing with keeping track of every transaction for the purposes of tax reporting, and neither is anyone else except for hardcore supporters.

gst 13y ago
> and neither is anyone else who is living in the United States.
- LoganCale 13y ago
  Or any other country adopting similar rules.
  - danieltillett 13y ago
    They all will soon enough :(
gnaritas 13y ago
> The accounting nightmare that results from this means I'm basically done with cryptocurrencies. This was the expected outcome, if you didn't see this from the beginning, maybe you shouldn't be investing to begin with. I mean seriously, what did you think, that the IRS would allow untaxed gains to be kept?
- LoganCale 13y ago
  I want to use it as a currency to buy things, not an investment. If all you're doing is investing, this is easier to keep track of. If you want to regularly be buying goods and services with cryptocurrencies, it becomes much more difficult for the average person to keep track of. Don't be an ass.
  - gnaritas 13y ago

sxp 13y ago

Since the IRS has given a statement on BTC, people who had bought it last year and sold near the peak for USD or products/services have now realized that they owe a significant amount of taxes. So they now have to sell more BTC to get enough cash to write a check to the IRS. Thus the supply of BTC will increase and the price goes down. The smarter thing would have been to sell the BTC and then put away X% in a savings account (or a stable investment) with a plan to pay that money to the IRS. Then the (100-X)% could be spent freely without issue.

dragontamer 13y ago
Regardless of how the IRS was going to do things, you were going to owe significant taxes anyway. There were only two choices: Tax BTC as property, or Tax BTC as currency. In both cases, you owe somewhere between 15% to 30% of your earnings to the IRS.

FatalLogic 13y ago

The article is interesting, but the writer's main point seems to be lacking much evidence. The normally volatile Bitcoin price actually remained flat for days after the IRS announcement - because it wasn't a surprise. The article briefly mentions a much more plausible reason for the sizable price drop, which occurred later: China cracking down on bank to exchange deposits. The writer just sort of handwaves it away. There's no evidence that the IRS ruling pushed the price down, in fact there's plenty of evidence that it did not: the fact that the price did not move. Meanwhile, there's plenty of evidence that China's action did affect the price. As soon as rumors began to spread, trades on the Chinese exchanges were happening at prices far below those on outside exchanges. The Chinese exchanges led the market down every step of the way. (Naturally a price fall in China soon began to pull down prices everywhere, due to arbitrage, and an understanding that the probable withdrawal of Chinese money was very bad news for anyone speculating on the short term price). Chart showing price remaining flat for 2 days following the IRS announcement on 3/25, and then falling sharply on firm news from China (Caixin report 3/27): http://bitcoincharts.com/charts/bitstampUSD#rg60zczsg2014-03-25zeg2014-04-01ztgSzm1g10zm2g25zv http://bitcoincharts.com/charts/bitstampUSD#rg60zczsg2014-03...

danieltillett 13y ago
I tend to agree with you on the immediate cause of the fall, but I do think the friction that will result from the IRS decision really damages the value of Bitcoin as a low transaction cost mean of exchange.
- FatalLogic 13y ago
  >I do think the friction that will result from the IRS decision really damages the value of Bitcoin as a low transaction cost mean of exchange It doesn't seem to make much difference. In its current form, Bitcoin already suffers from a lot of friction when used as a means of exchange. For the average consumer, buying it is difficult, storing it is difficult, the value isn't stable, using it for physical retail purchases can be very clunky. It's a beta. A lot of things would need to work better for it to really succeed. In that context, the rather clumsy reporting requirements of the IRS ruling are yet another minor speedbump, which needs to be either ironed out or worked around.