IRS Delivers Bitcoin Its Final Deathblow

Comments (8)

  1. Nathaniel says:

    IRS deathblow? Hardly. This is programmable money with programmable wallets and even programmable contracts and payment schedules. Although I’m only a programming hobbyist I was able to easily write a simple script to track value upon entry to my wallet, value upon exit, and keep a log of gains and losses. Professionally produced wallets will certainly have this feature built in very soon with easy export to popular accounting and bookkeeping software. My friends that made millions off of bitcoin aren’t complaining about the book-keeping requirements and a casual user in 2016 won’t be the slightest bit upset when their wallet informs them at the end of the year that their bitcoin holdings appreciated 14% and that they now owe $x USD in taxes for that…. in fact the wallets could even be programmed to set aside amounts for tax liability as you progress through the year…. Don’t worry, us young people will figure it all out for you!


    Curtis Reply:


    Thanks to the IRS Bitcoin investments can not create tax deferred returns, just like that of a Self Directed IRA without any of the fees or penalties.

    One man sees barriers. Another, opportunities.


  2. David says:

    This is just bad timing on neutral news. The blockchain stores every transaction. A program could easily be written to match your addresses with your transactions, matching the current price, and follow your funds. Tax work could take a click.

    The real sad news is that the US WANTS to stiffle this technology, while other countries are open to it. In a free market, the idea with the best value wins.


  3. Carl Shawn says:

    I remember when I had to go to an ATM to deposit a check, or worse yet a teller. I don’t try to convince my 89 year old father-in-law that he needs to dump his flip phone (turned up loud enough to frighten small children) to get a smart phone. I don’t run around yelling that he is crazy not to, but he does complain that he doesn’t understand why I need do all of that stuff with my smartphone. I remember a lady 18 years ago that didn’t want to use a mouse, the keyboard was fine. Anyone see my 5.25″ floppy drive? Can I send an email instead of a print-out in a manilla folder with names scratched out? Is that Internet craze still around?

    Things change, some people don’t like it, or they fear it, and some even want to complain about it or drag it down. I am not sure if Bitcoin, one of the Altcoins, or something not developed yet will change how we process transactions, but it will change. Enjoy the journey.


  4. Nick Bateman says:

    Fair arguments, however it’s been highly questionable all along whether the Bitcoin protocol itself could ever be used to for day-to-day currency transactions.

    The facts remain, Bitcoin software is unusable for people that aren’t enthusiasts:
    – Initial network sync can take days, the ledger requires over ten gigabytes of data to be downloaded and stored (and this data is only growing!)
    – People are responsible for storing the private key securely, it can easily be stolen by anyone with access the computer, if left unencrypted.
    – User mistakes (such as wrong addresses or accidental deletion of the private key) can lead to permanent loss of some or all bitcoins owned.
    – Confirming a transaction properly takes upwards of half an hour.

    All these issues have existed from day one and will continue to exist. Furthermore, the network is not designed to scale to transaction volume that is comparable to that of, say, credit cards.

    It has thus been evident for years that any service that is aimed bringing Bitcoin usage to mainstream payment must be an abstraction layer provided by a trusted and reliable third party. Users of such services could not be considered to “own” the Bitcoins that are used in the backend for transactions and thus would not be subject to property tax.

    Lack of reliability and trust regarding such service providers are today the major issue, indeed the news regarding Bitcoin are centered almost exclusively around them. However, these problems are by and large solvable.

    The true scientific innovation behind the public ledger system that the Bitcoin protocol provides will prove a tremendous benefit to innovators of the future. Don’t be misled by the ups and downs of the current Bitcoin ledger. Its valuation will remain highly speculative in the foreseeable future.


  5. Benton H Marder says:

    My own attitude toward BitCoin is that it is a created currency, hardly different from the created currency of the Fed. BitCoin may have had its uses, but the feds and other governments will always try to counter it as an enemy to their own bumfodder and magnetism. I rely upon John Pierpont Morgan’s plain statements: “Only gold is money. Any paper is credit, to be rated by the integrity of the debtor or issuer.” Nowadays, we might include silver in the same category as gold. Real is real, fake is fake.


  6. Tony says:

    Nice ruling, IRS, now try to enforce it.

    For many years, at the direction of the post office, there was a limit of 32 characters to computer text message exchanges. I suspect that law is still on the books.

    If you cannot track bit coins, how in heck are you gonna tax them?



  7. TapDogsDad says:

    There are three obvious alternatives:
    1. Simply comply and pay taxes on gains.
    2. Ignore the IRS and take y0ur chances.
    3. Become an active supporter of HR-25/S-122 (the Fair Tax bill – which would abolish the IRS and go to a National Sales Tax)
    And, of course the fourth – don’t buy bitcoins. I like #3!


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