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 needed any further evidence that the U.S government, and national governments, in general, hold free markets in contempt, there you go. Really though if you're surprised by these developments, you haven't been paying attention.
What does this mean for bitcoin? Well, the whole situation just got much more interesting. I'm amused by those in the bitcoin community I hear talking up the need to lobby the IRS for a policy change. Such an attitude strikes me as peculiarly blind to the realities of why nation states are so determined to exclude competitors with their fiat currency.
It seems to me that we're back to what has always been the inescapable fact. The only way for bitcoin to thrive is as a competitor to fiat currency. And the only way it can function as such a competitor is outside the legitimized sphere of the state.
Is the trite mass media condemnation of bitcoin as currency of criminals destined to be come true? 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?
Have no illusions. This ridiculous ruling is about criminalizing people who want to choose their own currency. After all, what can be scarier than that 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 needed any further evidence that the U.S government, and national governments, in general, hold free markets in contempt, there you go. Really though if you're surprised by these developments, you haven't been paying attention.
What does this mean for bitcoin? Well, the whole situation just got much more interesting. I'm amused by those in the bitcoin community I hear talking up the need to lobby the IRS for a policy change. Such an attitude strikes me as peculiarly blind to the realities of why nation states are so determined to exclude competitors with their fiat currency.
It seems to me that we're back to what has always been the inescapable fact. The only way for bitcoin to thrive is as a competitor to fiat currency. And the only way it can function as such a competitor is outside the legitimized sphere of the state.
Is the trite mass media condemnation of bitcoin as currency of criminals destined to be come true? 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?
Have no illusions. This ridiculous ruling is about criminalizing people who want to choose their own currency. After all, what can be scarier than that for the fraudsters and bureaucrats who run our government-banking complex?
About the Author:
Wallace Eddington is a major commentator on financial and monetary news and a regular contributor to the Bitcoin Profit Calculator blog, where he's written about the Mt. Gox fiasco and other hot bitcoin topics. Check out his hard hitting piece on inflation at the Fiat Currency Review.
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