Two credible possibilities present themselves. What do you think: is the IRS intending to crush bitcoin or are they just mind bogglingly incompetent? My money is on the former, but I suppose history would suggest that we can't rule out the latter entirely.
So, since they've decided that bitcoin is property, not a legitimate currency, every time one uses it as a consumer, every cup of coffee, restaurant meal, book, piece of computer hardware, you buy with it, you have to pay capital gains tax. In other words, bitcoin has been elevated to the prestigious position of gold: scary competitor to whom we will give no quarter.
That's about the shape of things. If you have illusions about why nation states suppress and make a mockery of free markets through their coercive enforcement of their fiat currencies, surely these facts should disabuse you. In that context, really, nothing less should have been expected from the IRS.
What does this mean for bitcoin? Things start getting interesting. Many have been talking about lobbying for a change of policy. That seems strangely myopic in its blindness over the necessity of national governments to not allow competitors with their currency.
IF you've been paying any attention, you should already know the skinny on this. The only way for bitcoin to succeed is as a competitor to fiat currency. Furthermore, the only way to be such a competitor is going to be outside the blessings of nation states.
Does that mean, some will ask, that it is condemned to fulfil the silly accusations of the mass media that it is the currency of criminals? Depends what you mean by criminals.
If by "criminals" you mean free people, voluntarily engaging in mutual exchange, trespassing upon the life or liberty of no one else. If that's your definition of "criminal": well, maybe.
Do remember though, that the real criminals, the ones who use violence and extortion to get their way - the narcotics cartels, the human traffickers, the professional murderers - have long used the U.S. dollar as their coin of the realm. Whose money is the real bank roll of gangsters?
Call me cynical, but as far as I'm concerned, this is about criminalizing people who just want to choose their own currency of exchange. But we can't have that, can we? That would be just too scary for the fraudsters and bureaucrats who run our government-banking complex.
So, since they've decided that bitcoin is property, not a legitimate currency, every time one uses it as a consumer, every cup of coffee, restaurant meal, book, piece of computer hardware, you buy with it, you have to pay capital gains tax. In other words, bitcoin has been elevated to the prestigious position of gold: scary competitor to whom we will give no quarter.
That's about the shape of things. If you have illusions about why nation states suppress and make a mockery of free markets through their coercive enforcement of their fiat currencies, surely these facts should disabuse you. In that context, really, nothing less should have been expected from the IRS.
What does this mean for bitcoin? Things start getting interesting. Many have been talking about lobbying for a change of policy. That seems strangely myopic in its blindness over the necessity of national governments to not allow competitors with their currency.
IF you've been paying any attention, you should already know the skinny on this. The only way for bitcoin to succeed is as a competitor to fiat currency. Furthermore, the only way to be such a competitor is going to be outside the blessings of nation states.
Does that mean, some will ask, that it is condemned to fulfil the silly accusations of the mass media that it is the currency of criminals? Depends what you mean by criminals.
If by "criminals" you mean free people, voluntarily engaging in mutual exchange, trespassing upon the life or liberty of no one else. If that's your definition of "criminal": well, maybe.
Do remember though, that the real criminals, the ones who use violence and extortion to get their way - the narcotics cartels, the human traffickers, the professional murderers - have long used the U.S. dollar as their coin of the realm. Whose money is the real bank roll of gangsters?
Call me cynical, but as far as I'm concerned, this is about criminalizing people who just want to choose their own currency of exchange. But we can't have that, can we? That would be just too scary for the fraudsters and bureaucrats who run our government-banking complex.
About the Author:
Wallace Eddington is a leading writer on financial and monetary events and a regular contributor to the Bitcoin Profit Calculator site, where he's written about the Mt. Gox fiasco and other hot bitcoin issues. See also his hard hitting piece on inflation at the Fiat Currency Review.
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