4 ms·

Merchants don't need to expose themselves to FX risk to accept Bitcoin. Square does that for you, as do Coinbase, Bitpay, and similar companies. I don't think

by natrius 13y ago

Merchants don't need to expose themselves to FX risk to accept Bitcoin. Square does that for you, as do Coinbase, Bitpay, and similar companies. I don't think the tax issues will be prohibitively complicated for consumers. Whichever exchange someone uses to buy Bitcoin and whatever app they use the spend it can easily generate the necessary paperwork. The companies have hundreds of millions of dollars on the line that require Bitcoin to be easy to use. They're going to do it.

7Figures2Commas 13y ago
> Merchants don't need to expose themselves to FX risk to accept Bitcoin. Square does that for you, as do Coinbase, Bitpay, and similar companies. Allowing your payment provider to handle currency conversion for you does not mean that you have eliminated FX risk. You have simply outsourced it, and you (and in many cases your buyer) almost always pay for this. > I don't think the tax issues will be prohibitively complicated for consumers. Whichever exchange someone uses to buy Bitcoin and whatever app they use the spend it can easily generate the necessary paperwork. I suspect you've never had to file a tax return with a significant number of transactions involving capital gains and losses. There are often associated matters, such as carryovers, that the average person will need the services of a tax professional to address. As for the notion that somebody is going to do the paperwork for you: the nature of Bitcoin makes the generation of the paperwork you refer to incredibly difficult. Currently, when dealing with securities like stock, brokers must provide you with a 1099-B which reports information about the transaction, including the cost basis and sale proceeds. If you transfer securities between brokers, the broker transferring your securities is required to report the cost basis data to the receiving broker. To the best of my knowledge, Bitcoin is not a covered security for which institutions must provide a 1099-B, so no third party is obligated to provide you with accurate records. More importantly, it may be impossible for third parties to do this for you. For instance, consider this hypothetical yet almost certainly common transaction scenario: 1. I buy 1 BTC using Provider A. 2. I transfer .5 BTC from my account at Provider A to a local wallet housed on my computer. 3. I later transfer that .5 BTC to Provider B. 4. Using Provider B, I send the .5 BTC to a merchant. In Step 2, Provider A will be faced with the challenge of determining whether my transfer of .5 BTC represented a sale for tax purposes. It should not, as I was transferring the BTC to myself. But how does Provider A know who I transferred the BTC to? In Step 3, Provider B has no way of obtaining my cost basis and in Step 4, it is faced with the challenge of determining whether or not the transfer of .5 BTC represented a sale for tax purposes. How does it know that I wasn't transferring the .5 BTC to myself? Now imagine this across n wallets, including desktop wallets, and with lots of fractions of BTC. You're going to be investing a lot of USD in bookkeeping/accounting. Bottom line: I can't for the life of me imagine why anybody who actually understands the implications of this would ever use Bitcoin as a currency going forward. As far as I'm concerned, it makes absolutely no sense except as a vehicle for investment or speculation.
- hibikir 13y ago
  Having to treat it as a stock or a commodity makes it a bad currency, but it was already a bad currency due to volatility. Using a currency that has major deflation is just as silly as using one that has major inflation. A currency's utility is directly linked at how many people use it as a unit of account, and it's really hard to become people's real unit of account when your value changes a lot, and is unpredictable. Just look at Argentina during the crisis: Even when taxes in the country were paid in pesos, people really used the US dollar as their unit of account.

by natrius 13y ago

7Figures2Commas 13y ago

> Merchants don't need to expose themselves to FX risk to accept Bitcoin. Square does that for you, as do Coinbase, Bitpay, and similar companies. Allowing your payment provider to handle currency conversion for you does not mean that you have eliminated FX risk. You have simply outsourced it, and you (and in many cases your buyer) almost always pay for this. > I don't think the tax issues will be prohibitively complicated for consumers. Whichever exchange someone uses to buy Bitcoin and whatever app they use the spend it can easily generate the necessary paperwork. I suspect you've never had to file a tax return with a significant number of transactions involving capital gains and losses. There are often associated matters, such as carryovers, that the average person will need the services of a tax professional to address. As for the notion that somebody is going to do the paperwork for you: the nature of Bitcoin makes the generation of the paperwork you refer to incredibly difficult. Currently, when dealing with securities like stock, brokers must provide you with a 1099-B which reports information about the transaction, including the cost basis and sale proceeds. If you transfer securities between brokers, the broker transferring your securities is required to report the cost basis data to the receiving broker. To the best of my knowledge, Bitcoin is not a covered security for which institutions must provide a 1099-B, so no third party is obligated to provide you with accurate records. More importantly, it may be impossible for third parties to do this for you. For instance, consider this hypothetical yet almost certainly common transaction scenario: 1. I buy 1 BTC using Provider A. 2. I transfer .5 BTC from my account at Provider A to a local wallet housed on my computer. 3. I later transfer that .5 BTC to Provider B. 4. Using Provider B, I send the .5 BTC to a merchant. In Step 2, Provider A will be faced with the challenge of determining whether my transfer of .5 BTC represented a sale for tax purposes. It should not, as I was transferring the BTC to myself. But how does Provider A know who I transferred the BTC to? In Step 3, Provider B has no way of obtaining my cost basis and in Step 4, it is faced with the challenge of determining whether or not the transfer of .5 BTC represented a sale for tax purposes. How does it know that I wasn't transferring the .5 BTC to myself? Now imagine this across n wallets, including desktop wallets, and with lots of fractions of BTC. You're going to be investing a lot of USD in bookkeeping/accounting. Bottom line: I can't for the life of me imagine why anybody who actually understands the implications of this would ever use Bitcoin as a currency going forward. As far as I'm concerned, it makes absolutely no sense except as a vehicle for investment or speculation.

hibikir 13y ago
Having to treat it as a stock or a commodity makes it a bad currency, but it was already a bad currency due to volatility. Using a currency that has major deflation is just as silly as using one that has major inflation. A currency's utility is directly linked at how many people use it as a unit of account, and it's really hard to become people's real unit of account when your value changes a lot, and is unpredictable. Just look at Argentina during the crisis: Even when taxes in the country were paid in pesos, people really used the US dollar as their unit of account.