Follow Slashdot blog updates by subscribing to our blog RSS feed

 



Forgot your password?
typodupeerror
Bitcoin United States Government The Almighty Buck Technology

Ask Slashdot: How Does One Freely Use Bitcoin In the Land of the Free? 270

New submitter devrtm writes: It appears that Bitcoin, a currency designed with anonymity in mind, can be effectively used almost anywhere in the world, except in a few countries where it is regulated, and in one country where you can only use it if you give up your privacy. That country is the United States. I have accumulated quite a few BTC from the currency's early days where block rewards were still at $50. There was a period of time where one could get a nearly anonymous debit card, or use BTC online with merchants. Nowadays, non-U.S. payment providers no longer issue debit cards to the U.S. residents and the U.S.-based merchants accepting BTC are nearly extinct. The only way to use BTC in the U.S. is to convert it to USD. Unfortunately, that conversion requires giving up your personal information to a U.S.-based BTC payment processor, and there are rumors that signing up for those services raises red flags with certain three letter acronym organizations. I have nothing to hide, but I do value my privacy. Can one freely and anonymously live off of their Bitcoin wallet in the U.S.? I am afraid the answer is no. Does anyone have an experience that proves me wrong? Please share.
This discussion has been archived. No new comments can be posted.

Ask Slashdot: How Does One Freely Use Bitcoin In the Land of the Free?

Comments Filter:
  • Cash (Score:4, Insightful)

    by Anonymous Coward on Monday March 20, 2017 @07:50PM (#54078775)

    If you want privacy use cash with people who don't know you.

    • Re:Cash (Score:5, Informative)

      by JoeMerchant ( 803320 ) on Monday March 20, 2017 @10:19PM (#54079469)

      To simplify the instructions: take your pile of BTC, convert it to cash as a single event, pay your taxes, and live off your BTC proceeds.

      20% capital gains isn't killing anyone. If you want US dollars, you'll need to pay US taxes on your BTC gains, or be a criminal. Your choice.

    • by gl4ss ( 559668 ) on Tuesday March 21, 2017 @02:51AM (#54080077) Homepage Journal

      oh but he is asking how to turn it into cash without paying taxes or having a record he has the cash.

      he probably totally ignores the fact that once he pays the tax on the investment he is free to do whatever he wants with the money without any of the agencies caring anything - UNLIKE if he just got magically a million dollars of cash and went buying expensive things which would put him on the hitlist of dea etc.

    • by DrYak ( 748999 ) on Tuesday March 21, 2017 @07:24AM (#54080673) Homepage

      And for the last time,
      bitcoin IS NOT DESIGNED with anonymity in mind.

      It is designed for being a distributed system with no central authority (in theory at least).
      And this system works by replacing any central authority with a consensus among all the nodes of the network.
      Which is achieved by all (full) nodes of the network having, by design, a local copy of the whole ledger (= the blockchain).

      That mean each of them can see any single transaction you did at any point of time.
      (Again, by design. That's how the bitcoin protocol can reach consensus and trust without needing any central authority to act as a reference).

      That means that no, you're not anonymous, I can see all the transaction you ever did inside the blockchain on my own locally run node.

      At best, bitcoin protocol provides pseudonymity.
      It's not Facebook require real names.
      Transaction aren't officially done in the name of your real identity, they are done in the name of some base64 encoded public key.
      And normal client are constantly shuffling sums around so there might be hundred of transaction between the time you received some amount of BTC and the time you spent them at an online shop where you order something to be mailed to you (and thus where some phyical world coordinates can be linked to your bitcoin identity).

      That mostly prevent casual/accidental snooping.
      But that's not beyond the capability of data-mining any government-level agent.
      If your neighbour want to spy on you, he can't do it easily.
      If any three-letter agency wants to track you, they just need to spend some of their tremendous computational power.

      Your are not anonymous on the bitcoin network (at least to to governments).
      And that's part of the design (it also help you trust the network without needing there to be a "Bitcoin Global Inc." to be held accountable).

      Also, because the lack of central authority, nobody can prevent you to spend or receive any BTC money.
      Government can see you and track you in the global ledger, but they can't prevent you.
      There's no PayPal, Visa, or any other company that can block transactions.
      Transaction can happen between any end-points as long as they conform to the bitcoin protocol.

      (And that is one of the big motivations behind the rise of bitcoin protocol : people getting fed up of their account getting frozen for any random reason.
      e.g.: see donations to WikiLeaks)

      If you want (Relative) lack of control AND total anonymity, as suggest above : USE CASH.

  • Pay your taxes (Score:5, Insightful)

    by roninmagus ( 721889 ) on Monday March 20, 2017 @07:51PM (#54078789)
    So you want to trade your BTC for goods and services but not pay taxes on the source of the income (aka "maintain privacy")? I don't think that will fly well in the US, which is why you don't see many outlets available.
    • by tommeke100 ( 755660 ) on Monday March 20, 2017 @09:15PM (#54079203)
      Are they seeing this a currency or stock? Because what they could (and probably do) tax is Capital Gain. You bought some bitcoins at 50$, they are now 1050$ (looks like some people cashed in from the 1280$ peak :-)), so that's 20-30% capital gain tax on 1000$/btc please.
      Since you did hold on to them more than a year that's long term capital gain tax which is a bit less, though
      But it may indeed be hard to prove where these come from. Did you mine them, did you buy them as an investment, was this some kind of payment, etc...
      • by Registered Coward v2 ( 447531 ) on Monday March 20, 2017 @09:51PM (#54079343)

        Are they seeing this a currency or stock? Because what they could (and probably do) tax is Capital Gain. You bought some bitcoins at 50$, they are now 1050$ (looks like some people cashed in from the 1280$ peak :-)), so that's 20-30% capital gain tax on 1000$/btc please. Since you did hold on to them more than a year that's long term capital gain tax which is a bit less, though But it may indeed be hard to prove where these come from. Did you mine them, did you buy them as an investment, was this some kind of payment, etc...

        How you got them is somewhat irrelevant. What counts is your cost vs what you sold them for so the delta is a taxable gain in the US. Unless you mined them you'd do well to record your deductible cost so as to verify the gain or loss like any other cost associated with production. If you mined them you probably could include the mining costs as to offset the gain but that cost would be negligible since the cost of the infrastructure probably could not be included and the actual electricity cost directly related to mining is small in comparison. Equipment would probably be a depreciable expense but unless you are selling in the same tax period you would have no revenue to be offset by the expense; in essence, is it an investment in which case the costs of equipment is not an expense or a business in which case it would. It all comes down to how the IRS would treat them.

        • by mysidia ( 191772 ) on Tuesday March 21, 2017 @12:02AM (#54079789)

          Unless you mined them you'd do well to record your deductible cost so as to verify the gain or loss like any other cost

          The guidance/recommended reporting is exactly the same deal if you mined the BTC, other than the fact a person who mined coins already had an obligation to report income and possibly have income and self-employment taxes due during the year they mined the coins. You had to have reported your ordinary income (Fair market Value of BTC earned minus Ammortized portions of the Fixed and Variable Costs which were Necessary and customary to earn the income) for the accounting period in which you mined the particular coins.

          And if you held your coins and didn't sell them immediately your capital gain or loss will be whatever cash you get from Selling those lots of BTC Minus your basis (The original value of those lots at the time you mined those coins which you already reported as income).

          If you mined and didn't report, then you best donate those BTC to a charity rather than selling them if the amount was substantial at the time you mined, b/c you could be in trouble. I don't believe selling and reporting a basis of $0 will dig you out of the hole, and I suspect getting a 1099 from a Bitcoin-related company may be an audit flag, so you want everything to be on the up and up, for sure.

    • Donate the Bitcoin (Score:5, Informative)

      by BBCWatcher ( 900486 ) on Monday March 20, 2017 @09:44PM (#54079321)
      Devrtm (the original poster) can donate his/her Bitcoin to any IRS 501(c)(3) tax exempt charity(ies) that accept(s) Bitcoin, for example the Electronic Frontier Foundation [eff.org]. Devrtm can then enjoy a U.S. personal income tax deduction [irs.gov] for the full, fair market value of his/her donation, with no capital gains tax owed. It may be possible to make the donation anonymously, but Devrtm must keep records of the donation in his/her personal files, to document the tax deduction in case there is a future IRS inquiry. The tax deduction will likely be worth substantially more than what Devrtm paid (if anything) to obtain the Bitcoin. If Devrtm is subject to state or local income tax then there may also be charitable deductions allowed in those tax returns.
    • by coofercat ( 719737 ) on Tuesday March 21, 2017 @09:36AM (#54081375) Homepage Journal

      Are gambling gains taxed in the US? If so, yeah, you're stuffed. If not, then one could argue that speculating on the value of BYC would be like speculating on the value of some magic beans, ie. gambling.

  • by pla ( 258480 ) on Monday March 20, 2017 @07:53PM (#54078799) Journal
    I've had no problem spending BTC. Just buy from abroad and have it imported (and as long as they call it a "promotional" item - They all do - it doesn't even cost you any more anyway).
  • by Anonymous Coward on Monday March 20, 2017 @07:53PM (#54078801)

    Is it really as surprise that a scheme designed to facilitate money laundering is not allowed without a paper trail in the US?

  • by Elfich47 ( 703900 ) on Monday March 20, 2017 @07:54PM (#54078817)
    While there are many people that are willing to exchange goods and services for BitCoin; it is not a recognized currency by anyone that actually matters (ie banks and governments). Make no mistake, just about everything is priced in a government back currency (dollars, Yen, Pounds, etc) and in addition banks and governments do not accept BitCoin as a way to cover debts and obligations.

    In addition BitCoin is slow, not entirely trust worthy (you can argue the fact that one farming group controls more than 50% of the computing power used to back bitcoin is a real problem), doesn't understand the basics of monetary policy (price fluctations anyone), let alone a way to implement it. These could all be contributing factors as to why large organizations are not willing to exchange goods and services for bitcoin.
  • by Anonymous Coward on Monday March 20, 2017 @07:58PM (#54078853)

    Your question boils down to, "How do I avoid capital gains taxes on my Bitcoin earnings?" That's problematic, as you can imagine.

  • by Frosty Piss ( 770223 ) * on Monday March 20, 2017 @07:59PM (#54078857)

    My how times change. "Back in the day", anyone voicing most of the opinions here so far would be modded into oblivion...

    • by Baron_Yam ( 643147 ) on Monday March 20, 2017 @08:03PM (#54078873)

      The thing about that is that the people invested in Bitcoin (emotionally, not necessarily financially) have a quasi-religious fervour and are willing to put proportionately far more time than anyone else into the subject.

      They must be down to an exceedingly small fraction of the social networking user population if they're no longer able to overpower discussions on social networking sites.

  • by guruevi ( 827432 ) <evi AT evcircuits DOT com> on Monday March 20, 2017 @08:11PM (#54078905) Homepage

    If you're a US resident you would have to pay income tax or at least declare it as an investment income regardless of how you convert it. You can go to any other country to cash out or convert it into goods, even if you could buy a car with it, you have to pay the tax man. And that's not unique to the US.

    The tax man however does not necessarily need to know where the money has been or currently is (how you are investing or realizing the profit is not recorded) as long as you don't use the money.

    Monetary transactions above a certain value also need to be recorded, again, not unique to the US. If you make any further investment (house or otherwise) with the money/value, the bank also wants to know where it came from for credit reasons (to make sure you didn't owe a loanshark).

    In none of those instances do you need to declare the full transaction history of your investments or profits. The "problem" with Bitcoin is that it explicitly does not offer anonymity (you can't launder bitcoins) and gives you a full transaction history regardless. To request anonymity from an explicitly public ledger is ludicrous. You can only hide the owner of a bitcoin through technical means as you can attempt to hide any transaction on the Internet but it's only incidental and also detrimental to the Bitcoin system.

  • by EvilSS ( 557649 ) on Monday March 20, 2017 @08:38PM (#54079031)
    So go on the "dark web" trade your bit-coin for drugs. Sell drugs to locals and take cash. Bingo! Really, this isn't a difficult situation at all.
    • by geekmux ( 1040042 ) on Monday March 20, 2017 @09:27PM (#54079261)

      So go on the "dark web" trade your bit-coin for drugs. Sell drugs to locals and take cash. Bingo! Really, this isn't a difficult situation at all.

      Perhaps Ross Ulbricht could enlighten you as to what a "difficult situation" is, since it fits so well here...

    • The topic is correct, comment about buying drugs is bad advice and was presumably not meant to be taken seriously.

      Spend your BC on something that's legal and whose transactions aren't of interest to any government, then sell what you bought.

      For people with less than a few thousand dollars (US) that they need to convert, this should be easy.

      From the sound of things, the original submitter has much more than that. His best bet is to not try to hide his money. He won't owe taxes on it until he sells it. If he doesn't need the money now and he's willing to carry the value-fluctuation risk until he dies, he can just leave the BC to his heirs in his will. When they sell it, the tax basis will be the value on the day he dies.

      Another option is that he can give the BC to charity. This works best if the person would have given USD to a charity anyway. He will get a tax write-off of the value of the donation on the day he makes it AND he will escape capital-gains taxes. While most charities won't accept BC as a donation, someone out there has probably started a 503(c) charity whose "reason for existence" is to take donations in any form - cars, stocks/bonds, artwork, BC, etc. - then convert them into USD then pass the proceeds - less a processing fee to cover costs - to the designated charity. You won't be able to maintain anonymity, but you'll still get your tax break and avoid capital-gains taxes.

  • by Anonymous Coward on Monday March 20, 2017 @08:41PM (#54079045)

    "It appears that Bitcoin, a currency designed with anonymity in mind..."

    FALSE.

    Bitcoin was NEVER meant to provide anonymity. Can we please stop with this misconception?

  • by Orgasmatron ( 8103 ) on Monday March 20, 2017 @08:49PM (#54079079)

    There are some online retailers that accept bitcoin. Since there isn't a credit card involved, there is no reason why you need to give them your real name. Checkout is a breeze too, relatively speaking.

    Depending on where you are, you might be able to do small cash transactions for people in your area that are looking to buy.

    If you need a lot of cash quickly, there is no practical way around it - you'll need to register with an exchange, under your real name. Depending on how large, you may need to go through the KYC stuff too. Not exactly a bitcoin-specific problem. You'll run into the same thing selling gold or silver to a dealer too.

    No matter what, you need to keep track and pay your taxes. Selling them for cash or buying goods or services with them is all the same. Any half-decent accountant will be able to handle this. If you got your coins from mining, tell your accountant to claim a zero basis. The value of bitcoins in the early days was negligible anyway, so you won't be overpaying your taxes by very much, and it is WAY easier than choosing a FIFO/LIFO policy, documenting it, and pulling historic price data for each purchase. If you have receipts for mining equipment, talk to your accountant about deducting them.

  • by gravewax ( 4772409 ) on Monday March 20, 2017 @09:12PM (#54079187)
    What seems to be what the real question he is asking is, "how do I use Bitcoin in a way that bypasses my legal obligations to pay tax on the money I have earned through the rise in bitcoin price.", incidentally this is not just a US situation, most countries of the world will consider your gain in price is a taxable asset.
    • by Drethon ( 1445051 ) on Tuesday March 21, 2017 @06:31AM (#54080503)

      The government may be crooked and bloated but if we don't pay for the government, those bitcoins would be worthless in the US anyway. This is the land of the free, as in the people are free to do as they wish (in theory) as long as it doesn't effect anyone else. Not a place where the land, or any other property, is free of any obligation.

  • by bill_mcgonigle ( 4333 ) * on Monday March 20, 2017 @09:33PM (#54079285) Homepage Journal

    There are usually people in populated areas who are looking to trade BTC for FRN's. Do you have thousands to offload?

  • by forevermore ( 582201 ) on Monday March 20, 2017 @11:18PM (#54079667) Homepage
    Here are two great charities that accept BTC payments, and I'm sure they're not the only ones: https://supporters.eff.org/don... [eff.org] https://www.heifer.org/gift-ca... [heifer.org]
  • You can easily freely use bitcoins in t he land of the free. It's the dollar you apparently cannot use so freely. Just don't use it. Problem solved. You're welcome.

  • by bradley13 ( 1118935 ) on Tuesday March 21, 2017 @05:13AM (#54080329) Homepage

    Most likely, the poster's real motivation is avoiding taxes on his BTC profits. The anarchist in me understands this: taxes are the government taking your property by force. On the other hand, few people would voluntarily pay the amount that governments consume, and we don't seem to be willing to dismantle our governments, so...there we are, taxes.

    If it's not about taxes, then cash out. If you register with a BTC exchange and cash in your BTC then, yes, the IRS will know who you are. So what? Just pay your taxes. It's not really about privacy, because you can then turn your US$ into cash, and spend that cash as anonymously as you like.

    Incidentally, parallel currencies are nothing new. As an example, there has been a parallel currency in Switzerland (WIR [wikipedia.org]) since 1934. It limps along for all of the same reasons that BTC limps along: it's an additional hassle for your average business, it complicates accounting and taxes, and it is an additional (exchange-rate) risk that most businesses don't want to deal with.

The game of life is a game of boomerangs. Our thoughts, deeds and words return to us sooner or later with astounding accuracy.

Working...