Germany: Bitcoin Is "Private Money" 223
hypnosec writes "Germany has declared Bitcoin as a 'unit of account', which makes the virtual currency a kind of 'private money' and the process of Bitcoin mining has been deemed 'private money creation.' The recognition as 'unit of account' makes Bitcoin eligible for use in "multilateral clearing circles" and because of this citizens are liable to pay capital gains tax, if they profit from the crypto-currency by sale or purchase within a period of one year – the same as they would have to in case they profit by selling stock, bonds or other form of security. The question here is how the finance ministry would come to know of a person's Bitcoin holding as it is a decentralized currency with no governing body to keep count on the number of Bitcoins a person has. The German government expects that citizens declare their Bitcoin while filing their annual tax return."
Same as any other potential fraud. (Score:5, Insightful)
Honor system, but if you do anything to get on their shitlist they'll eventually find it out when you try and get it converted into salable assets.
Undocumented income may be frowned upon, but UNDECLARED income is worse if you get caught.
Remember Al Capone after all :)
Re:Same as any other potential fraud. (Score:5, Insightful)
Exactly.
The question here is how the finance ministry would come to know of a person's Bitcoin holding as it is a decentralized currency with no governing body to keep count on the number of Bitcoins a person has. The German government expects that citizens declare their Bitcoin while filing their annual tax return."
...just like cash.
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"You do not have a moral or legal right to do absolutely anything you want."
Yes, you do... as long as you aren't harming others in the process.
Re:Same as any other potential fraud. (Score:5, Interesting)
Yes, you do... as long as you aren't harming others in the process.
Where it gets sticky is in the definition of what constitutes "harming others". For example, some argue that self-abuse (e.g. chronic drug use, or suicide) counts as harming others, in that by removing yourself from society, the other people in the society lose the benefits of your productivity/friendship/support/expertise/etc.
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For example, some argue that self-abuse (e.g. chronic drug use, or suicide) counts as harming others, in that by removing yourself from society, the other people in the society lose the benefits of your productivity/friendship/support/expertise/etc.
As if those "others" have any right to those benefits.
But apparently many think so, and they want to keep you around, like a milk cow, to be milked of your labor. Prohibition of suicide is in most (all?) major religions for this very reason. A good slave mus
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while I'm mostly agreeing that the "globalization" (increased interdependence from a complex system with the room of buttons placed far away the single citizen) makes us slaves in essence, I think society has a little right to frown upon people removing themselves from it, unless they made up for the effort society made in bringing them up. Your own family's effort is especially difficult to be offset.
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I think society has a little right to frown upon people removing themselves from it, unless they made up for the effort society made in bringing them up. Your own family's effort is especially difficult to be offset.
This suggests that there is a social contract that you can be entered without your approval, and that contract imposes duties upon you. I say hell no, there is no such contract until I review it and agree to it. The society does not have to raise children. It does that anyhow, at the risk tha
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, I think society has a little right to frown upon people removing themselves from it, unless they made up for the effort society made in bringing them up.
I suggest giving everyone a high quality dildo at their birth, replaceable whenever it wears out, is lost or stolen, so that when they have this feeling to act on non-existent "little rights", they can go fuck themselves without those other peoples' assistance or presence which supposedly is so needed.
The thing you don't get is that there is no obligation to return something which has been freely given. If you don't like that, then don't give it.
Suicide is the ultimate opt-out of society. If you claim
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Yes, a slave running away DOES hurt the master.
Wow. You're really trying stake this out as a moral stand? Seriously?
No, he's stating a fact, which is independent of moral interpretation. This is why people who are not libertarians realise that it's a question of balance. Most people today would realise that the harm of being a slave is greater than the harm of depriving a slave owner of his or her property.
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I would like to think that most people today realize that a human being is not property, and so the slave owner was actually the one doing harm all along.
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Actually a great many American libertarians while claiming to hate slavery and indeed claiming their entire philosophy is built on preventing it- fully support indentured servitude, because apparently if you are truly free you should be free to be allowed to become a slave.
Which is why they oppose any and all regulation or worker-protection laws... you know the only difference BETWEEN most jobs and indentured servitude.
Us more leftist anarchist look at this and wonder how anybody can fail to see that a job
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I am having trouble putting this in the context of a conversation as to who is harmed when individuals exercise their rights. It seems to me that why a person may or may not choose to die, and the conditions that may lead to that are orthogonal to whether or not it is their right to do so.
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This was a response to the mentions about libertarianism and slavery in that conversation. That I also mentioned suicide in it was an example of how small the difference between "employed" and "enslaved" has become for many people - when suicide is actually more attractive than resignation.
As for my position on the main topic:
Personally - I don't believe suicide should be illegal per se - but then I also believe that providing those who attempted it with appropriate psychiatric care is a valid burden on soc
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It is only sticky if you accept these excuses to dismiss the rights of others to legitimize involuntary involvement in others lives.
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I don't agree, public health care is not the drug a users fault, if you refuse to allow him or her to die because you and the rest of society feel bad for them instead of leaving the to suffer the consequences of their choices, well that's your choice. The drug abuser has now power over you to demand anything the harm comes from your actions not theirs. The argument society is harmed by the loss of a worker is silly, there are already to many humans on the planet there are plenty of unemployed folks who
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I would say that self-drug-abuse then requiring public health care counts as harming others.
So what? Society could have opted not to give that public health care. As I see it, society waived any such right by providing the health care in the first place.
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So then perhaps we should be fair about this:
- no health care for drug related issue from recreational drugs
That means
- No support for diabetics who became diabetic from excess alcohol
- No support for people who drink their liver away
- No ER life support for overdoses
But, why stop there? Why not all self abuse?
- No treatment for diabetics who became it from excess sugar
- No treatment for the overweight unless there is a bona-fide underlying condition
- No treatment for runners knees or tennis elbow; You want
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Freedom is a complicated issue... there is a constant back and forth between 'right to' and 'right from', and of course balancin
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Freedom is a complicated issue... there is a constant back and forth between 'right to' and 'right from', and of course balancing the more systemic issues where individual actions, spread out across a large population, have population level effects.
Freedom is only "complicated" in this regard when you are trying to force others to give or do things you want.
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That's pretty much my point, as the key word is "absolutely". For any particular freedom, there are exceptions, limitations, and caveats.
It's mostly in reference to the morons who assume that "free speech" means that any idea can be expressed anywhere at any time without consequences, but the sentiment applies to any right that is claimed without a full understanding of the legal background involved.
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Except cash doesn't come with a full history of whose hands it's passed through.
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I propose an experiment in conciseness. Let's strip the text of the fillers and only leave single instances of all the key words and phrases and see what we get:
BitCoin, Hackers, Anonymous, Bankers, Wall Street, Alien Technology, Jesus, Ancient Faces on Mars, Singularity, Mayan Calendar, Planet X, Prophecy, Truth, Invasion, Flying Saucers, Space Travel, Physical Vibration, Energy Vibration, Reptilians, Signals, Attack, Unknown Origin, The Internet, Illuminati, Skynet, Sumerians, Nibiru, Anunnaki, Geneticall
Re: Same as any other potential fraud. (Score:2)
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You just went full time cube, man.
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Since BitCoin is entirely Open Source, it indeed doesn't matter who created it. All the information you need to judge its technical trustworthiness is on the table. Trust in the creator is only needed if you are not able or not willing to either check the code yourself, or have a third party you trust check the code.
Besides the trust in the BitCoin technology, there's the trust in the BitCoin value. But that
Re:Same as any other potential fraud. (Score:5, Insightful)
But, now they're watching you (Score:4, Interesting)
Of course, now that the NSA and Germany's equivalent can reach deep into your private online data, perhaps they *will* know exactly how much Bitcoin you have, and exactly how much you sold.
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Yes, but they'll only mention it if you do something uncouth like criticize the Glorious Leader
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Call it the "Aristocracy of Pull" Tax.
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They don't have to, the block chain is public by design. You have to make great efforts to not link your identity to your bitcoin addresses - and if you at any time bought bitcoins at a public exchange, or used them to buy legal services (such as web hosting) the cat's out of the bag.
Re:Same as any other potential fraud. (Score:5, Interesting)
Honor system, but if you do anything to get on their shitlist they'll eventually find it out when you try and get it converted into salable assets.
And bitcoin's design matchess the 'well, we don't really have any way of knowing; but you are in serious trouble if we find out' enforcement model pretty well. Watching the block chain [blockexplorer.com] is already a thing in suitably interested hobbyist circles, and doing so doesn't require any blackhat wizard-fu, it's a protocol feature. For the moment, the transaction history is also relatively small.
None of that helps them connect a person to one or more wallet addresses; but if they do, by other means (probably if you try to cash out, possibly by surveillance of improperly anonymized use), they get a full transaction history automatically.
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Careful by what you mean by "get a full transaction history", because in the most useful sense, that doesn't hold true.
The Bitcoin client, by default, creates a new address for every single transaction you make. Identifying yourself in one of them has no impact on any other transactions in which you may have participated.
Each ident
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he quoted the price in euros.. and there's no 1500 euros cash max limit in anywhere where euros are used... if some shop enforces such a rule then it's their choice, so that they don't have to hold large amounts of cash.
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There is a limit in the UK of €15,000 before a company has to register as a "high value dealer" with HMRC. They then must ask for id, report anything suspicious, and keep records. There are presumably similar rules across the EU, otherwise the British regulation would be in pounds.
A friend worked for one of the very expensive hotels in London for a while. In the summer, rich Arab men would stay, and liked to flaunt their cash. They'd walk to the bank, bring about £100,000 in cash (and the ban
Comment removed (Score:3, Interesting)
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Yeah I hate how much influence the IRS has in Germany these days.
Re:I'm out. Thank God (Score:5, Informative)
http://www.dispatch.com/content/stories/national_world/2013/07/06/Germany-strikes-deal-to-help-U-S-catch-tax-evaders.html [dispatch.com]
It could be same hold as the IRS has over the Swiss banks?
http://finance.fortune.cnn.com/2013/05/30/swiss-bank-accounts-irs/ [cnn.com]
http://www.forbes.com/sites/robertwood/2013/07/09/swiss-banks-reveal-americans-u-k-deal-sputters-and-germany-embraces-fatca/ [forbes.com]
Re:I'm out. Thank God (Score:4, Interesting)
Here in Europe thanks to the Euro crisis there is a big crackdown on tax evasion. This includes the German government doing grey area stuff like buying leaked confidential lists of clients of Swiss banks. So it stands to reason that they strike deals to help others catch free loading scum as well.
Personally I am proud that I pay my fair share to improve the society that I live in and have no time for people who don't. It also helps me feel that righteous anger when I suspect that "my" money is wasted which is a favourite pastime of many internet commenters including me.
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Once you are in debt hell, you are factually a slave.
And then the Man can thumb his nose at you.
Cosmic Balance restored.
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If I may paraphrase:
Way back when, I considered speculating in a monetary exchange, but now I'm realizing how many legal headaches are involved in securities trading, even in markets where none of the major investment brokers are willing to play. I'm glad I backed out before I had to deal with all of this stuff myself.
BitCoins are not special. They're legally just like any other investment, only since the big banks aren't involved, the big banks aren't there to make the traders' lives easier. There are no regulation-compliant statements, no audit records, and no breakdown of where your money went and how it came in. To properly report your income to the authorities, you'll have to track those numbers yourself. The same applies if you take an interest in speculating on any other unusual commodity, like
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In the US, if it's less than $600 in profits, I'm sure nothing applies to you. Regarding NSA and Bitcoins, a year ago I would have modded you a troll...
In Germany, the distinction is between professional and non-professional, and between speculative gains and non-speculative gains.
If you trade bitcoins professionally then you pay tax, but your cost is tax deductible. Whether you are doing it professionally is determined by what you are actually doing, not by what you claim you are doing. Speculative gains is simple: If you buy and sell within less than a year, that's speculative gains and is taxed. If you keep it for more than a year, that's just good l
Re:I'm out. Thank God (Score:4, Informative)
Way back when, I placed a pre-order on a small BitCoin miner from Butterfly Labs. Later they sent me an e-mail wanting to know if I wanted to continue with the order, or get a refund back to my PayPal account. I chose the refund. Thank God!
Good move. Butterfly Labs has a large number of angry customers on the Bitcoin forums. They deliver months late or not at all. The Bitcoin "difficulty" level is now increasing so fast that late hardware is unprofitable when delivered.
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The Bitcoin "difficulty" level is now increasing so fast that late hardware is unprofitable when delivered.
I am not an expert on BTC, but as I understand the miners are an essential part of the network. What happens to BTC if all miners take their hardware and unplug it? ("It was a good racket while it lasted, but not anymore.")
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Then the value of already-mined coins skyrockets. At some point, they might even be valuable enough to make it worthwhile to turn those mining machines back on. Why, it's almost like a free market!
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On the plus side you can pick up high end graphics cards cheap on eBay now.
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Well yes, but so am I. It's very easy since all transactions are public forever.
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I don't know anything at all about German tax law but assuming it's even moderately like the UK then I don't understand why any of this is a surprise.
In the UK you are potentially liable for tax for all gains. Usually it will either be income tax or capital gains tax and as a general rule of thumb, if you buy something at one price with the intention of selling it at a different price it will be CGT while if you "earn" it it will be IT.
Bitcoin mining is an oddity because you don't buy the coins but produce
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Now, I'm not going to touch Bitcoin mining (though the marginal increase in moderate electricity usage is free for me), but my point is that it can be a profitable activity and yet BFL could still be making rational and honest decisions (note: can be != is
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So why is it that companies that sell gold mining equipment typically haven't ever bothered with gold mining?
You're retarded. Plugging in a BitCoin miner requires almost no work, you only need access to electricity. Mining gold requires you to find where it's likely to be, buy/steal the land, acquire mining rights, acquire the equipment, hire workers, wait until the miners actually find something, etc. It's completely different.
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Gold mining is very risky. Selling shovels is mundane but presents a consistent, although lower profit. Those who want consistent profits aren't also the types who want a rollercoaster ride of high profit and high losses.
A well-balanced portfolio would include a bit of both.
Re: I'm out. Thank God (Score:2)
Mining gold vs mining bitcoins , the Most ronpaul debate ever lol
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You forgot to add "end the Fed."
The Same Way They Know About Your Paper Money (Score:2, Insightful)
Paper money and coins are just as anonymous, and we've been working with them fairly well for a thousand years.
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Paper money and coins are just as anonymous, and we've been working with them fairly well for a thousand years.
One difference is that physical currency tends to make moving large sums a bit awkward. It's doable, especially if nobody pats you down or you have an uninspected cargo container to work with; but the sheer inconvenience and risk discourages very large scale movements of physical currency (though, given currency's role in 'informal economy' arrangements, there are a lot of people moving small amounts of it).
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>but the sheer inconvenience and risk discourages very large scale movements of physical currency
I disagree - it discourages medium-sized movements, but if you have truly large quantities (like say a shipping containers worth) to move then purchasing the proper customs officials, diplomats, or other well-placed individuals is probably a minor business expense.
One of the places where Bitcoin opens an interesting door is the democratization of money laundering, international purchasing, and other such real
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One of the places where Bitcoin opens an interesting door is the democratization of money laundering, international purchasing, and other such realms where knowing the right people and being able to afford their services have traditionally been a gatekeeper that keeps out the riffraff.
They aren't necessarily in a position to actually use it (at least until somebody hacks together a bitcoin system that can be run over SMS (maybe Java ME, though it wouldn't surprise me to see crap Android handsets push basic feature phones out of most of the market before that 'platform' becomes something you can actually target across a nontrivial range of devices...); but the ability to cheaply transfer them would theoretically make bitcoins popular with the immigrant-diasporas-remitting-to-home-country
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On a personal level, cash is quite dense. A million dollars would fit in a (heavy) suitcase, no problem.
Conveniently, despite the heavy US use of imperial measures, all our bills weigh ~1 gram each, which makes sizing your money mules relatively easy. In 100s, it's only ten kilograms per million (though hundreds provoke suspicion, especially in quantity, at many points of use, so you might have to go with the 'hit the gym and carry 50kg of 20s' strategy).
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500€ were removed from circulation (the money exchanges agreed to stop providing them) in the UK, as it was suspected that 90% of them were used for crime. The note weighs 1.1g (many -- maybe even most -- countries have different sizes for different notes).
http://en.wikipedia.org/wiki/500 [wikipedia.org]€#Crime
I once saw someone pay for a lot of drinks at a bar with a €200, and have once used a €100 (which was accepted in Germany), but I don't live in the Eurozone so I don't know how much these notes a
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Or, if 10 kg is too much (and your currency isn't an issue) you could convert to 500 Euro notes for a total of 1.65 kilograms or 3.63 pounds (500 euro notes weight 1.1 and there are 1.34 dollars to the euro, meaning 1 million USD equals 749,288 Euro).
And if you are feeling really lazy, you could convert to Singapore $100.000 notes [blogspot.com] (the worlds most highest value banknote). 1 million US equals 1,275,300 Singapore dollars, which means you'll only need 13 banknotes to carry one million USD (plus change). That'
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No, they're more anonymous. They're homogenous and they don't smell (except literally - don't sniff your coins). Neither are true for bitcoin.
But if you have a large amount of cash, you face problems when trying to use it, unless you can explain how you got your hands on it. Same with bitcoin - except that there, there is actually a lot of public information about how you got your hands on it.
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Paper money and coins are just as anonymous, and we were working with them fairly well for a thousand years.
There, fixed that for you. It gets harder and harder by the day to use real and anonymous money. In the USA, not using a credit card is at least suspicious. In Europe, governments and large organisations make it harder and harder to pay with the real national currency. Want to park in Rotterdam? You have to pay, but real money is not accepted. There are already shops that do not accept real money. Off course, digital money does not have to exist, so banks will push as many companies as they can toward cashl
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went to say in a hotel this weekend. They gave me all kinds of flack and charged me a FEE to use cash.
Law too slow to adap to technology? (Score:2, Interesting)
When a new story comes out about how the government has adapt the law because of some technology advancement, we can all see how slow they are achieveing anything at all. We can see this clearly with patents, copyrights, sexting and any other number of subjects.
But how about when it has to do with money and taxes? Oh boy, so now they understand perfectly?
I actually never thought governments would move this fast to regulate BitCoins. How I wish they would move this fast to address other more important thing
Re:Law too slow to adap to technology? (Score:4, Insightful)
But how about when it has to do with money and taxes? Oh boy, so now they understand perfectly?
I actually never thought governments would move this fast to regulate BitCoins.
I suspect it helps that, while they depend on a novel mechanism for preventing duplication and double spending, BitCoins aren't really conceptually much different, once they hit the market, from the assorted oddball synthetic commodities that people (albeit generally not the general public) have been trading for years, often decades.
This means that governments are both already familiar with similar things (so they probably have applicable laws or easily adapted laws on the books) and that governments are already familiar with the tendency to concoct and sell ever more creative synthetic assets (so they are probably already used to dealing with new asset flavors popping up, and either have a system for moving quickly or sufficiently broad definitions to catch what the investment bankers have been inventing).
That's the thing: bitcoins are architecturally somewhat novel; but as a commodity that people trade with each other (especially if they trade for currency or for securities with established market values) it really doesn't bring anything fundamentally new to the table. We already have 150+ currencies in circulation, and an unknown number of stocks, bonds, futures, and more exotic derivatives. The fact that bitcoins use a different anti-counterfeiting measure doesn't really make a whole lot of difference when trying to slot them into existing regulatory structures.
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I suspect it helps that, while they depend on a novel mechanism for preventing duplication and double spending, BitCoins aren't really conceptually much different...
There's your difference. According to Basel III, banks may spend each coin 19 times. With traceable money, a customer could ask his bank to show which coins were his. The entire Ponzi Scheme that our currency system is today could crumble if banks could all of a sudden be monitored and held responsible.
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"from the assorted oddball synthetic commodities that people (albeit generally not the general public) have been trading for years"
It is true that doing fractional reserve banking with bitcoins would be more difficult (though I suspect that a bank interested in doing so could simply create a promissory note "Good for one bitcoin, but not any particular one, to be transferred to the designated wallet upon request", which could then be fractionally-reserved as far as they thought they could get away with it..
Re:Law too slow to adap to technology? (Score:5, Insightful)
"we can all see how slow they are achieveing anything at all. We can see this clearly with patents, copyrights, sexting and any other number of subjects."
Not even. Not in regard to patents and copyrights, at any rate.
The government hasn't been "moving slowly" at all. It was changes made by the government within the last 2 decades that have CAUSED the problems. Both patents and copyrights worked just fine prior to that.
(No doubt some people would argue with me about the "fine" part, but it's pretty easy to demonstrate that they worked BETTER than they do now, under the current, changed laws.)
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Uhmm... good point. Maybe I picked the wrong examples.
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I don't think you understand the motivations behind regulations.
You seem to think patent reform comes slowly because government is lazy. Wrong. Patent reform comes not at all because the patent system isn't broken...for the large corporations who buy the politicians. Apple, Samsung, and HTC has no problem with the current patent situation. A few mil on lawyers to yell at each other in court? No problem. Just so long as everybody recognizes their big swingin' portfolios and no upstart tries to make a phone.
C
It's all cats (Score:4, Interesting)
These are the US rules today, bitcoin changes nothing.
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By that logic anything that can be traded is a currency, so the word is meaningless.
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Oh, and the "simple" answer is you give the cash value at the time of the trade. If it takes 5 BC to buy a car that would have cost $10,000 in cash, then the value of the coins is $2000 each, and you treat the "trade" (for tax purposes) as if you "sold" the BC f
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Yes, I know you were trying to be funny, but it's silly how this is all very settled law, and the supposedly smart "nerds" here can't figure out what the tax is on a capital gain or business income (depending on how you are "investing").
Why oh why oh why (Score:2)
Do we have regular bitcoin stories everytime they sneeze. I guarantee there are Bitcoin PR people planting stories here and they are goaled on how many stories they get out. It is like they are trying to make this ridiculous pseudo-currency scam into something real. Nothing to see here folks, just ignore bitcoin and it will go away.
Re:Why oh why oh why (Score:4, Insightful)
Do we have regular bitcoin stories everytime they sneeze. I guarantee there are Bitcoin PR people planting stories here and they are goaled on how many stories they get out.
There's no need to invoke a conspiracy. The fact is that BitCoin is catnip to several common type of nerd -- the wannabe cypherpunks who like to see computers change the world, and the libertarians who want to see the centralized government control marginalized in favor of individuals. Not to mention the programmer nerds (like myself) who are simply impressed by BitCoin as a p2p software design that has managed to avoid catastrophic implosion (so far) despite the obvious monetary incentive for people to attack it.
So yes, there are a lot of BitCoin stories on Slashdots, simply because many nerds find BitCoin interesting.
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I am sure these stories are planted by either bitcoin people directly or those who have lots of money invested in bitcoin and are trying to flog that dead horse.
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Heh, that's not how it works. How it works is that a lot of people bought bitcoin not to use as currency, but to use as speculation object. They expect it to rise in value, and plan to sell when it does.
Since there is a finite supply of bitcoin, if more people want it, it's going to increase in value. So anyone holding bitcoin has an interest in pushing it. No goaling necessary.
This deflationar
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agree this is what is happening. it is a false market, with the only real demand for the currency from drug dealers and criminals as well as speculators. Once the authorities close off the ability of drug dealers and criminals to use the currency then the demand will crash.
I.e. Barter? (Score:2)
Isn't this just a declaration of barter? Like trading chickens for other goods/services?
Excelent. (Score:4, Insightful)
So, if one's bitcoins are considered "Private Money" and instead of a profit, I take a huge loss, but my state sanctioned currency is in abundance, then I can sum the two values and pay little to no taxes.
I'll take it!
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Little to no capital gains tax, and little or no wealth tax. It won't help your income tax at all.
But do you really want that anyway? You have to actually lose money and be able to document it in order to get the pity tax rebate. Isn't it better to not lose the money?
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How is loss calculated on something like BitCoins? The exchange rate fluctuates wildly and the cost of mining them is increasing over time.
The Bitcoin slimeball problem (Score:4, Insightful)
Bitcoin would be useful if it weren't such a slimeball magnet. The basic feature of Bitcoins is irrevocable unidirectional funds transfer between anonymous remote parties. This is the scammer's dream. Scammers don't have to worry too much about the marks coming after them with cops or baseball bats. So just about every financial scheme known has been tried in the tiny Bitcoin world in the last two years.
Even the "legitimate" Bitcoin companies are flakes. Most of the "online wallet" companies turned out to be scams. Several of the "exchanges" turned out to be scams. The previous market leader, Mt. Gox, stopped paying out on US dollar withdrawals two months ago. (Whether they're broke, incompetent, or persecuted is a subject of active debate. They claim problems with their banking relationships that prevent withdrawals, but continue to accept deposits.)
Bitcoin could have been a useful petty cash system for the Internet. If you could buy song downloads or MMORPG game items with it, it would be convenient and widely used. But that's not happening. You can buy WordPress hosted blog upgrades with Bitcoins, but that's about the most mainstream thing you can do.
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Humble Bundles.
Just not useful or safe (Score:5, Insightful)
Bitcoin could have been a useful petty cash system for the Internet.
Not really. Despite the claims of proponents, bitcoin provides little tangible benefit over existing currencies in almost all circumstances. Bitcoin scratches an ideological itch for some geeks who have a poor grasp of economics and a worse grasp of risk. Bitcoin only is cheaper to use than existing currencies if you ignore the externalities [wikipedia.org], opportunity cost [wikipedia.org] and financial risk [wikipedia.org]. Outside of a few rare corner cases people have virtually nothing to gain by using bitcoin and stand to lose quite a lot. Bitcoin is at best an interesting (though flawed) academic exercise.
Other Income on tax return (Score:3)
The question here is how the finance ministry would come to know of a person's Bitcoin holding as it is a decentralized currency with no governing body to keep count on the number of Bitcoins a person has.
They might not know about it but that doesn't relieve the taxpayer of their legal obligations. If you get audited and it comes to light that you aren't declaring income then you can find yourself in deeeeeep trouble. They can send you to jail for tax evasion. I'm not familiar with how it works in Germany but in the US you would at minimum declare income from bitcoin related activities on line 21 of your 1040 [irs.gov] form under Other Income. The legality or source of this income is irrelevant to whether you are required to declare it. If you mine bitcoins then you are generating income (you have acquired an asset with a market value hence it counts as income) and you would be required to declare it as such on your tax return.
yes, you can and no, it wouldn't (Score:3)
Yes, you can still turn a profit if you're using the appropriate technology and managing power cost. No, it's not a profit if the revenue is less than expenses.
However, there are other ways to make a profit that are sustainable, useful, and fulfilling. With bitcoin, you need to buy new equipment every year or so. With carpentry, for example, your equipment lasts a decade or more. With carpentry, programming or most any other business activity, you end up producing something that's actually useful and ofte
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If you are using that kind of power, no it's not profit.
But have you not seen the ASIC miners that pay for themselves in a year, including electricity?
Running a general-purpose computer, even with a GPU, to mine is no longer feasible. Running a small, dedicated, embedded chip on a low-power board actually knocks it out of the park.
But, there, if the value of Bitcoin drops too much, then you may not end up paying back what it costs to buy them (some are $1000+). Which, of course, means it's not profit.
Like
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You mean like they do on cash transactions? Of course. Fiscally there is no difference between Bitcoins, goats, Dollars, Euros, gold bullion or tulip bulbs.
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Indeed. The same is true with bartering for services.
Technically, if you are a farmer and you bring a dozen eggs to the barber and trade them for a haircut, you are supposed to report the fair market value of the eggs as an expense and the fair market value of the haircut as income, the difference reported as a profit or loss and be taxed accordingly.
In practice, no one does this, so it's just felony crime #232432 you've committed this year that can be slapped on you if your betters think you're getting upp
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How many fucking Bitcoin stories do we have to read?
"The Cook Islands have declared that they are considering the legal status of Bitcoin"
"Senior government official admits to buying a pair of pants using Bitcoin"
"Bitcoin value decreases by 3% - is this the beginning of the end?"
Slashdot does not even accept Bitcoin.