Germany: Bitcoin Is "Private Money"

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."

Comments

Same as any other potential fraud.

[Anonymous Coward]

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.

[Sarten-X]

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.

Re:Same as any other potential fraud.

[felixrising]

Most taxation systems are self reporting. You can lie but if you get caught any profits from your deception rapidly evaporate.

Re:Same as any other potential fraud.

[Anonymous Coward]

Yeah, Silk Road is cool. Whatever.

Got Doritos?

Re:Same as any other potential fraud.

[fuzzyfuzzyfungus]

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 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.

Re:Same as any other potential fraud.

[Jane Q. Public]

Admittedly off-topic:

"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.

[Jane Q. Public]

Doesn't matter. You can make a profit on Bitcoin, then do a little horse-trading with Bitcoin repositories, and if you did it right nobody would know that you made any profit at all... just that you now have X in Bitcoins.

Re:Same as any other potential fraud.

[Anonymous Coward]

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, Genetically Altered Homo Sapiens, Genetic Manipulation, Slaves, War, Genetic Codes, Genetic Program, Synthetic Substitute, Aspartame and Sugar, Fighting Us, Manipulated, Central Planner, 2012 Awakening of Earth, Rebels And Nonconformists, Personal Sovereignty, Light Warriors, Governments, Corporations, Banking Systems, Androids, Clones, Souls, Control, Highly Charged Particles, Revolution of Conciousness, Special Gifts, Angelic Human Path.

Just as I thought - we managed to cut down on the length of the post and it still makes as much sense as the original.

Re: Same as any other potential fraud.

[hawks5999]

You win the Internet!

Re:Same as any other potential fraud.

[Jeremi]

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.

Re:Same as any other potential fraud.

[tftp]

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 must remain alive, no matter what opinion he may have on the subject. Nothing changed since middle ages; a person cannot control his birth, and may not control his departure. Others need your labor, peasant!

Drug users harm the society simply by being dependent on the drug. I always was in favor of giving the drugs (which are cheap if made in an industrial process) to anyone who is stupid enough to take them. Advise people to not do that, just as you currently advise people to not jump off the tall buildings and not to lick high voltage wires. But if they do, it's their choice. They can have as much drug as they want (it will become worthless in the street.) Narcomafia crashes and burns. And the average IQ of the society increases.

Re:Same as any other potential fraud.

[Vintermann]

Except cash doesn't come with a full history of whose hands it's passed through.

Re:Same as any other potential fraud.

[Arancaytar]

You just went full time cube, man.

Re:Same as any other potential fraud.

[jcr]

Yes, some people argue that, and they're wrong. It's like claiming that a slave who runs away is harming his owner.

-jcr

Re:Same as any other potential fraud.

[Anonymous Coward]

I would say that self-drug-abuse then requiring public health care counts as harming others. If you're wealthy enough to pay your doctors in full every time you harm yourself with drugs, I would have no problem with you.

Re:Same as any other potential fraud.

[marcello_dl]

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.

Re:Same as any other potential fraud.

[tftp]

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 that some children will grow to be bad members of the society. At least that's what an enlightened society would do. Most societies on the planet are not enlightened; they make children just because it happens, and because women like to have them.

It does not matter why the family produced a child. Usually it's just because the parents "felt the need." (Hardly anyone can claim today that it was financial reasons, or support in old age, that prompted them to have children. If anything, children usually make you poorer.) You can say "your own family's effort is especially difficult to be offset," but someone can say that "your own family's effort is especially difficult to forgive." Making a decision on behalf of a sentient being is a huge responsibility. As a trivial example, imagine two slaves who are held in a cage for all their life. They one day produce a child - who, of course, will stay in the cage with them. Was the parents' decision wise? Can the child, who will never see anything but pain and suffering in his life, forgive his parents? If their decision was not wise, is there a nonarbitrary threshold past which we can say that a given level of comfort is sufficient? Remember, nobody escapes death. Teasing people with life and then taking it away is cruel in itself, regardless of all the philosophy that people invented to avoid talking about this issue.

Re:Same as any other potential fraud.

[DarkOx]

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 could be productive, actually the rest if us probably stand to gain in terms I'd decreased carbon footprint from every suicide, drug overdoses, and liver failure.

Which is why public healthcare is by its very nature unethical it effectively demands charity from others at gun point.

Re:Same as any other potential fraud.

[Anonymous Coward]

Never mind that nobody knows who the anonymous hacker jesus Satoshi Nokamoto is who created Bit Coin.

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's even less dependent on the creator, because whether you can or cannot trust the value entirely depends on the other participants.

And finally, there's the trust in the legality of the system. Which is completely independent of the creator, unless it turns out the creator and the legislator are one and the same. What we are talking about is essentially the German government declaring BitCoin legal. Which means as long as you deal with BitCoins only in Germany (and other countries who explicitly declared them legal), correctly declare them for your tax, and don't use them for illegal purposes, you know you've got nothing to fear from the legal side.

Re:Same as any other potential fraud.

[gl4ss]

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.

Re:Same as any other potential fraud.

[jythie]

Well, rights are not really a fundamental thing, they are a human construct, so the answer is whatever a culture says it is. Even within that though, the problem is what counts as 'harming others'. Very little that we do impacts one's self and only one's self, and once you throw in family and other connections even things that you would think are only 'self harm' impact others.

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.

Re:Same as any other potential fraud.

[khallow]

, 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 to have any sort of free society, you allow suicide whether you like it or not.

Re:Same as any other potential fraud.

[khallow]

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.

Re:Same as any other potential fraud.

[khallow]

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.

Re:Same as any other potential fraud.

[jcr]

Yes, a slave running away DOES hurt the master.

Wow. You're really trying stake this out as a moral stand? Seriously?

Get some professional help, dude. You are not well.

-jcr

Re:Same as any other potential fraud.

[Rude Turnip]

Either you've created the greatest compression algorithm ever, or you just condensed the entirety of Reddit into a single paragraph!

Re:Same as any other potential fraud.

[pla]

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.

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 identifiable transaction gives exactly two and a half points of useful metadata:
1) As much PII as the sender revealed,
2) The recipient's Bitcoin address, and
2.5) The transaction history FOR THE BTC SPENT (not for the sender or recipient).

The "full transaction history" that you refer to consists of that last point - Which I only count as half of a useful point, because in virtually all cases, it has no meaning - If you pay cash for your lunch today, and the vendor uses "your" $20 bill to buy crack later tonight, you have nothing to do with the subsequent crime.

So, in the sense that you can trace every single BTC back to its originating block, yes, you get a complete transaction history. In the sense of revealing information about any of your other transactions, then no, outing yourself for one transaction doesn't have any effect on the others.

Re:Same as any other potential fraud.

[Sarten-X]

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.

Re:Same as any other potential fraud.

[TheRaven64]

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.

Re:Same as any other potential fraud.

[xaxa]

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 bank would send a security guard to follow), then flaunt it about at reception to pay for their rooms (often a whole floor).

The receptionists would count it up, then take it straight back to the bank. ("If the prince would prefer, he may pay by cheque, debit card or electronic transfer.")

Re:Same as any other potential fraud.

[TheCarp]

It is only sticky if you accept these excuses to dismiss the rights of others to legitimize involuntary involvement in others lives.

Re:Same as any other potential fraud.

[TheCarp]

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.

Re:Same as any other potential fraud.

[TheCarp]

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 us to pay because you abused your joints for all those years?
- No treatment for people who swallow things they shouldn't

At that point, maybe we should just deny treatment for anyone so irresponsible that they would do dangerous things like...ride in a car, or walk near a road with cars. Why should we pay for these daredevils?

Re:Same as any other potential fraud.

[silentcoder]

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 you cannot AFFORD to resign from because the only alternative is to starve is no DIFFERENT from slavery on ANY practical level - and that this IS indentured servitude.
Indeed... this explains why Foxxcon's workers chose to commit suicide in such numbers that the company put safety nets around the buildings. This didn't solve ANY problems - the workers still hated their jobs so much that they would rather die and still chose a quick death by falling over a slow death by starving (aka - quitting their jobs) - they just couldn't do it on company premisses anymore...
Now in a world where business still had any shred of humanity left... if your company was having workers KILL themselves rather than work for you anymore (and genuinely felt that "better" work simply couldn't exist for them) - you would improve your working conditions - EVEN IF that meant making less money yourself.

Re:Same as any other potential fraud.

[TheCarp]

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.

Re:Same as any other potential fraud.

[silentcoder]

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 society (or if you are so inclined: a sensible investment as many of them could go back to being productive members of society with the right depression treatment) and currently the laws against it is the means by which this is achieved.
I think it could be achieved better but I would hesitate to scrap the current laws until this "better" version is already in place because we ARE talking about people dying in the meantime.

Re:Same as any other potential fraud.

[operagost]

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.

What a sick little world you dwell in.

Re:Same as any other potential fraud.

[RoknrolZombie]

Not sure why this is modded down - seems appropriate and correct to me...

Re:Same as any other potential fraud.

[Rhacman]

It's also like claiming that parents who spend all their money on drugs and get fired from their jobs are harming their kids. I totally agree that society should have no right to demand a certain degree of productivity out of people but productivity is hardly the only thing affected by addictive substances that skew your priorities and ability to think rationally.

Re:Same as any other potential fraud.

[TsuruchiBrian]

Most people realize that human beings *shouldn't* be property. This is a normative statement. This doesn't not mean a human being *can't* be property (a descriptive statement), as witnessed by history.

Slave owners can be harmed just like anyone else. Murderers can be harmed by being caught and put in jail. The question is not whether they are harmed, but whether this harm is a result of an unjust action.

You should be allowed to harm other people if your actions are not unjust. It is your right to cancel you're cable tv subscription even though it harms the cable company. This harm is not unjust.

Re:Same as any other potential fraud.

[TsuruchiBrian]

Most libertarians are stupid. Most leftists are stupid. Most people in general are stupid. You can't evaluate the merits of an ideology based on it's dumbest adherents.

There are lots of laws that supposedly exist to prevent indentured servitude. Depending on who you ask these laws are either essential or completely worthless since we already live in a society funded by wage slavery. As a libertarian I would argue that we can suspend those laws, assuming they work, if and only if we are able to also suspend the laws that give the powerful an unfair advantage.

The answer to the problem of the wealthy buying politicians to get preferential treatment is not poor people forming a coalition to collectively also buy politicians. The answer is to somehow prevent politicians from being bought. Rich people have more money, it's a losing game anyway.

Also, Foxconn's suicide rate is 0.020% which is lower than the rest of China. Yes the have a lot of suicides in absolute terms, but they are a large company. For comparison the suicide rate in the US is 0.012%.

Re:Same as any other potential fraud.

[maxwell demon]

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.

I see you didn't send me a million dollars. By not sending me a million dollars you are denying me the benefits of having that million dollars. Therefore you are harming me.

I urge you to do the only morally right thing and immediately send me a million dollars. ;-)

Re:Same as any other potential fraud.

[jythie]

The problem with that view of freedom is it overlooks all the things the individual takes from others or the community, or what that individual does to others or the community under some idea that only OTHER people are making them do things they do not want, but all of the things THEY are doing do not count because 'freedom'.

Re:Same as any other potential fraud.

[maxwell demon]

you're cable tv subscription

You're harming your readers.

Re:Same as any other potential fraud.

[tftp]

Sorry, sighs and handwaving are not enough. A philosopher has to explain his position and his reasons to believe that he is correct.

Re:Same as any other potential fraud.

[TsuruchiBrian]

What is the point of your life?

Re:Same as any other potential fraud.

[Patch86]

I don't think it's controversial to say that a slave escaping hurts the slaver. It's just that nobody minds that a slaver gets hurt, as slavers are immoral bastards.

Re:Same as any other potential fraud.

[jcr]

No, he's stating a fact,

Nonsense. People are not property. If you believe otherwise, then whoever tried to teach you right from wrong did a piss-poor job of it.

-jcr

Re:Same as any other potential fraud.

[TheRaven64]

Property is an abstract notion determined by society. I believe, as a moral judgement, that allowing humans to be property is an abhorrent notion. This does not alter the fact that many societies across history (and some today) do allow it. When you free the slaves, you harm their owners. This is a form of harm that I am totally fine with, and indeed would encourage. But saying that your moral judgements are absolute statements of fact is not only wrong, it is insulting to the people who struggled and, in many cases, died to make the societies that we live in today accept those beliefs as self-evident.

Re:Same as any other potential fraud.

[dacaldar]

Sigh, can't find anything good when I have mod points a few days ago, and now this.

Original sig is absolutely correct: (except possibly by a fringe standard of morality that someone might claim to have, but that would quickly not hold up to the scrutiny of just about anyone)
"You do not have a moral or legal right to do absolutely anything you want."
and it makes a good point. I rather like it.

Re:Same as any other potential fraud.

[jcr]

When you free the slaves, you harm their owners.

Bullshit.

When you free the slaves, you stop the owners from harming the slaves.

-jcr

Re:Same as any other potential fraud.

[TheRaven64]

Is everything in your world a false dichotomy? Yes, you stop the owners from harming the slaves. You also deprive the owners of their property. We, as a society, have decided that the harm of slave owning is so great that it warrants restrictions on property rights. We unfortunately reached that conclusion more for economic than moral reasons a couple of hundred years ago but now, thankfully, the moral argument is more widely accepted.

Re:Same as any other potential fraud.

[jcr]

You also deprive the owners of their property.

BZZZT! People aren't property. A criminal is not entitled to a victim. Depriving the criminal of the victim is not harming the criminal.

--jcr

Re:Same as any other potential fraud.

[TheRaven64]

You haven't actually read anything I've read in this entire thread, have you?

Re:Same as any other potential fraud.

[Jeremi]

I urge you to do the only morally right thing and immediately send me a million dollars. ;-)

Well, I can't argue with that, your logic is completely airtight.

Please email me your bank account information and I will wire you the million dollars immediately :^)

I'm out. Thank God

[DigiShaman]

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! Having to deal with all this IRS and other legal regulation shit is too much of a PITA. No doubt the NSA is tracking BitCoin transfers and users too at some level.

Re:I'm out. Thank God

[Anonymous Coward]

Yeah I hate how much influence the IRS has in Germany these days.

Re:I'm out. Thank God

[Sarten-X]

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 collections or heavy equipment. Yes, technically, any gains from selling your old baseball card collection must be declared and taxed.

Re:I'm out. Thank God

[AHuxley]

Re: Yeah I hate how much influence the IRS has in Germany these days.
http://www.dispatch.com/content/stories/national_world/2013/07/06/Germany-strikes-deal-to-help-U-S-catch-tax-evaders.html
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/
http://www.forbes.com/sites/robertwood/2013/07/09/swiss-banks-reveal-americans-u-k-deal-sputters-and-germany-embraces-fatca/

Re:I'm out. Thank God

[khallow]

If Bitcoin mining were more profitable than selling Bitcoin miners, then BFL wouldn't be selling the equipment. I wouldn't actually touch Bitcoin mining, but it is possible for it to make a profit and yet still be less attractive than selling the tools.

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).

Re:I'm out. Thank God

[cultiv8]

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...

Re:I'm out. Thank God

[Anonymous Coward]

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.

Re:I'm out. Thank God

[indeterminator]

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

[Animats]

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.

Re:I'm out. Thank God

[lxs]

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.

Re:I'm out. Thank God

[Vintermann]

No doubt the NSA is tracking BitCoin transfers and users too at some level.

Well yes, but so am I. It's very easy since all transactions are public forever.

Re:I'm out. Thank God

[elfprince13]

So what you're saying is....a year ago you didn't actually pay attention to current events? It's not like this hasn't been documentably been taking place since the warrant-less wiretapping + retroactive telecom immunity fiasco years ago (and then again with Thomas Drake's leaks).

Re: I'm out. Thank God

[lxs]

Once you are in debt hell, you are factually a slave.

And then the Man can thumb his nose at you.
Cosmic Balance restored.

Re:I'm out. Thank God

[tftp]

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.")

Re:I'm out. Thank God

[gnasher719]

Dealing with the IRS is no problem in Germany. Just put it into your tax return. You say what regular income you have, what tax deductions, and what over income. So you write "Profit from trading BitCoin: 365 Euros", and that's it. One line in your tax return.

Re:I'm out. Thank God

[gnasher719]

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 luck if the value climbs, and no tax. But remember that _first_ is the determination whether you do it professionally.

Re: I'm out. Thank God

[sg_oneill]

Mining gold vs mining bitcoins , the Most ronpaul debate ever lol

Re:I'm out. Thank God

[locofungus]

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 them and I don't know where it falls but I would guess CGT but electricity costs etc would be deductible from any profit before tax was due.

There's an additional 10K allowance per year for CGT and you don't have to report gains below this so most people buying and selling shares for example don't really have to think about it.

Your only or main home is a significant exception where no CGT is payable (nor losses claimable). There are other exceptions - wine, cars.

Also selling things you no longer need is exempt from CGT (again, both for profit and loss) so selling stuff on ebay when you're having a clear out does not involve HMRC but trading (i.e. buying stuff with the intention of selling it again) will do.

On the whole I'd say the UK taxation system is fair and predictable. There are anachronisms - for example, if you jointly own a house with someone who isn't your spouse then any rental income/loss can be apportioned to either party in any proportion (you must let the tax office know the proportion if it doesn't match the ownership proportion) while if you are married then it must be apportioned either 50/50 or in the same proportion as the ownership is shared. Transfers between husband and wife are not reportable for CGT because gains and losses are not crystalized at the point of transfer so the gain is still taxable once the asset is finally disposed of. Capital gains are payable when they are realized - so if you make a 100K gain once in ten years then you will pay tax on 90K in the year you make the gain while if you can crystalize 10K per year you will pay no CGT (i.e. unused CGT allowances cannot be rolled forward) but if you make a big loss in one year then you can roll that forward so that future profits are not taxed until you've made up the loss.

There's a certain amount of effort to harmonize EU tax rules between countries. I would be surprised if the tax laws in Germany were very different - apart from anything else, if they were significantly different I'd have expected to see news reports about people taking advantage of the tax differences between UK and DE.

IANAA (an accountant).

Re:I'm out. Thank God

[AmiMoJo]

On the plus side you can pick up high end graphics cards cheap on eBay now.

Re:I'm out. Thank God

[Sarten-X]

I'm pretty sure you just failed at reading comprehension.

Re: I'm out. Thank God

[meta-monkey]

You forgot to add "end the Fed."

Re:I'm out. Thank God

[meta-monkey]

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!

Re:I'm out. Thank God

[TheRaven64]

When was the Bitcoin protocol changed so that the difficulty was not a function that monotonically increased in difficulty?

Re:I'm out. Thank God

[Cederic]

Bitcoin mining is an oddity because you don't buy the coins but produce them and I don't know where it falls but I would guess CGT but electricity costs etc would be deductible from any profit before tax was due.

If you produce them, I'd guess income tax applies. If you buy them then sell at a profit, CGT.

Costs incurred would be deductible either way, and if you're mining significantly then operating as a business would probably lower your tax burden compared to straight income taxes.

I'd personally check with the Inland Revenue though, I don't fuck about with taxes. It's not worth it for the sums I earn.

Re:I'm out. Thank God

[Patch86]

A system with designed-in scarcity and chronic deflation? Where do I sign up?!

The Same Way They Know About Your Paper Money

[Anonymous Coward]

Paper money and coins are just as anonymous, and we've been working with them fairly well for a thousand years.

Re:The Same Way They Know About Your Paper Money

[fuzzyfuzzyfungus]

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).

Re:The Same Way They Know About Your Paper Money

[Immerman]

>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 realms where knowing the right people and being able to afford their services have traditionally been a gatekeeper that keeps out the riffraff.

Re:The Same Way They Know About Your Paper Money

[Vintermann]

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.

Re:The Same Way They Know About Your Paper Money

[Errol backfiring]

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 cashless systems.

Re:The Same Way They Know About Your Paper Money

[fuzzyfuzzyfungus]

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).

Re:The Same Way They Know About Your Paper Money

[fuzzyfuzzyfungus]

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 userbase: the lower on the totem pole you go, the crazier the fees for moving money around get. It would be nice to see Western Union feel the pinch a bit.

Re:The Same Way They Know About Your Paper Money

[Lumpy]

went to say in a hotel this weekend. They gave me all kinds of flack and charged me a FEE to use cash.

Re:The Same Way They Know About Your Paper Money

[xaxa]

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€#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 are used.

Re:The Same Way They Know About Your Paper Money

[ibwolf]

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 (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'll fit in you wallet!

Re:The Same Way They Know About Your Paper Money

[ibwolf]

Bleh, managed to add a zero to the Singapore dollar. That should be 10.000, so you'll need about 127 of them. Will still fit in your pocket.

Re:The Same Way They Know About Your Paper Money

[Cederic]

Cash machines in Europe almost always give me 50EUR notes, and occasionally (usually in airports) 100EUR ones.

Both are far higher denomination than I'm used to in the UK, but never had trouble spending either (except at small shops where the change for a 100EUR note wipes our their entire float).

Law too slow to adap to technology?

[Acapulco]

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 things...

Re:Law too slow to adap to technology?

[fuzzyfuzzyfungus]

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.

Re:Law too slow to adap to technology?

[Jane Q. Public]

"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.)

Re:Law too slow to adap to technology?

[Acapulco]

Uhmm... good point. Maybe I picked the wrong examples.

Re:Law too slow to adap to technology?

[Errol backfiring]

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.

Re:Law too slow to adap to technology?

[fuzzyfuzzyfungus]

"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...); but that isn't really relevant to my point, which was just that applying rules for capital gains to bitcoins is no more difficult (and really probably a great deal easier, since bitcoins were designed by currency purists, rather than risk-crazed investment bankers) than applying them to all the various other weirdo assets that get traded.

As a currency the built-in hostility to more or less any inflationary tendency is somewhat unusual; but that isn't a significant factor when assessing capital gains or losses from trading them.

Re:Law too slow to adap to technology?

[meta-monkey]

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.

Copyrights, as well. The current copyright system is fine just fine thankyouverymuch for the RIAA, MPAA, Disney et al. The only problem right now is they can't actually imprison and flay file sharers yet, but that'll come in time.

The purpose of government, law and regulation is to make sure the wealthy stay wealthy.

Copyright reform? Bad for business. No copyright reform.

Patent reform? Bad for business. No patent reform.

Currencies banks can't skim off of? Bad for business. Regulate them.

Can you really profit from bitcoin mining?

[jecowa]

Does mining bitcoins count as profit if you're spending much more money in electricity costs to run your mining rig?

Re:Can you really profit from bitcoin mining?

[ledow]

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 everything, it's all speculation for barter. If you buy a thousand toilet rolls expecting them to be worth more in the future they either 1) are, and thus you made a profit or 2) aren't, and thus you made a loss. Either way, you can claim it on taxes as the appropriate box. Just like anything else.

Tax mining discoveries?

[cold fjord]

I wonder if they will tax bitcoin mining discoveries? It is a means of value creation that would seem might attract attention for taxation.

On a related note, I wonder if they will try to force VAT (Value Added Tax) on bitcoin transactions?

Re:Tax mining discoveries?

[lxs]

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.

Re:Tax mining discoveries?

[meta-monkey]

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 uppity.

Re:Tax mining discoveries?

[KramberryKoncerto]

On a related note, I wonder if they will try to force VAT (Value Added Tax) on bitcoin transactions?

Once they place Bitcoin on an appropriate place in the law books, I don't see any reason they won't. It's mostly as easy as taxing "normal" transactions.

It's all cats

[AK Marc]

If I were to start a cat breeding business and buy/sell/trade cats as currency, making money on some, losing money on others, it's a currency. If I am stupid, I'll play dumb declare nothing, and the government will come after me eventually and measure my income against my stated non-cat income, and sentence me to Al Capone Prison. Smart is declare it a business. Write off everything I can, and count every sale as a sale of a stock or pork bellies or a cat. If it's a business, I pay taxes only on profit, not income.

These are the US rules today, bitcoin changes nothing.

Re:It's all cats

[AK Marc]

You calculate the value on trade the same way you would if you bought stocks with cash, then traded them with someone else for a car. I don't know how it's so complex. The rules are hundreds of years old, and bitcoin fits fine. It's nothing new.

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 for $2000 each, then, in a separate transaction, bought the car for $10,000. Oh, and if BC aren't going for about $2000 on the open market at the time of the trade, then be prepared for an audit. Selling for an exceptionally high or low value often sets off triggers for fraud.

Re:It's all cats

[Anonymous Coward]

Going to be very messy if you make a profit of 1 cat and the government try to take 20% of that as tax.

Re:It's all cats

[AK Marc]

Which is why the IRS only accepts USD. IF you make 100,000 Euros, you don't pay 20% in Euros, you pay 20% in USD. What's the market value of the cat? Pay 20% of that.

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").

Re:It's all cats

[Hognoxious]

If I were to start a cat breeding business and buy/sell/trade cats as currency, making money on some, losing money on others, it's a currency.

By that logic anything that can be traded is a currency, so the word is meaningless.

Re:It's all cats

[TheRealMindChild]

At this point, I *think* you would pay capital gains tax if you converted them to local currency, and be liable for sales tax on anything you bought with bitcoins

Re:It's all cats

[AK Marc]

Yes. Currency is anything that you can convince someone else to trade with you for that you don't intend to consume. Tulip bulbs were currency at one time. If plant seeds can be currency, anything can be currency (including cats). USD is not currency if you use it to heat your house.

That doesn't mean it is "meaningless". It is a word that means "medium of trade when not bartering". Though the change of meaning of "barter" to include "haggle using currency" does confuse things. As barter is very rare, and anything can be currency, currency means less now. Just like back when money was rare, everything was barter, so "barter" and "trade" and "sell" all had the same meaning (though before any of those words existed in English). There is nothing that *can't* be currency, but that still doesn't mean the word is meaningless. It just means you are unable or unwilling to understand the current definition.

yes, you can and no, it wouldn't

[raymorris]

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 often beautiful. With bitcoin, you end up producing a number, nothing useful and certainly nothing expressive.

Why oh why oh why

[able1234au]

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

[Jeremi]

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.

Re:Why oh why oh why

[able1234au]

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.

Re:Why oh why oh why

[Vintermann]

I guarantee there are Bitcoin PR people planting stories here and they are goaled on how many stories they get out.

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 deflationary structure is inherently bubble-prone. Any event that causes a hit to the bitcoin price risks sending it into a super-fast downward spiral, as holders realize that it will be a long time (if ever) that they can get as much for it as they can now.

Re:Why oh why oh why

[able1234au]

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.

But, now they're watching you

[popo]

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.

Re:But, now they're watching you

[Immerman]

Yes, but they'll only mention it if you do something uncouth like criticize the Glorious Leader

Re:But, now they're watching you

[Anonymous Coward]

You can criticize the Glorious Leader all you want. But do anything to actually threaten the real rulers and you get the Snowden treatment - compare how much trouble the USA and their friends go to extradite/catch murderers and real criminals to what they did to try to get Snowden.

The real rulers of the USA are unlikely to be subjected to pesky stuff such as term limits.

And who in their right mind wants to be a US president when 9% of all US presidents have been killed on duty.

Re:But, now they're watching you

[Vintermann]

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:But, now they're watching you

[smittyoneeach]

You can do whatever you want, so long as you're contributing to the campaigns of the powerful.
Call it the "Aristocracy of Pull" Tax.

I.e. Barter?

[edelbrp]

Isn't this just a declaration of barter? Like trading chickens for other goods/services?

Excelent.

[VortexCortex]

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!

Re:Excelent.

[Vintermann]

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?

Re:Excelent.

[AmiMoJo]

How is loss calculated on something like BitCoins? The exchange rate fluctuates wildly and the cost of mining them is increasing over time.

Re:Excelent.

[Kurast]

The exchange rate on the EUR/USD variates also, but you can calculate profits in euro holdings if you wish. The mining is irrelevant: you are doing some work,using some electricity and get paid in return. There is nothing new in this.

The Bitcoin slimeball problem

[Animats]

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.

Re:The Bitcoin slimeball problem

[ledow]

Humble Bundles.

Re:The Bitcoin slimeball problem

[Anonymous Coward]

So, the same state of Caveat Emptor as cash, then? Like wire transfers, BACS/FPS, bullion, barter, or any other sort of transaction that is not mediated by a third party.

Re:The Bitcoin slimeball problem

[DerekLyons]

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.

Not really. I already have dollars, so to pay in Bitcoins I first have to find a way to get Bitcoins. So I either incur a loss due to exchange fees or pay a whole heap of dollars upfront for a mining rig, or find something to do that other people will pay me Bitcoins for. All three of which are much more inconvenient or difficult than simply paying dollars in the first place. The same principle also applies to the people accepting Bitcoins - generally their expenses are off the 'net (rent, power, water, insurance) are paid in dollars (or whatever their local currency is), so they have to go to the extra expense and inconvenience of exchanging the Bitcoins they've been paid into dollars they can pay with. Not to mention the headache and expense of trying to keep accounts in two different currencies.)

Re:Exchange rate

[Golden Section]

The are exchange rates for Bitcoin. You can buy or sell at e.g. https://www.mtgox.com/

How many Bitcoin stories?

[Anonymous Coward]

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?"

Re:How many Bitcoin stories?

[elucido]

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.

Re:Does bitcoin matter anymore?

[Ash-Fox]

Where do I buy USB sticks that do Bitcoin mining?

Other Income on tax return

[sjbe]

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 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.

Just not useful or safe

[sjbe]

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, opportunity cost and financial risk. 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.

Re:Just not useful or safe

[dmbasso]

To be able to make electronic transactions without dependence on Visa / MasterCard / PayPal is benefit enough.

Re:Just not useful or safe

[Anonymous Coward]

Despite the claims of proponents, bitcoin provides little tangible benefit over existing currencies in almost all circumstances.

Interesting. So, you can, say, send $50k from someone in the USA to someone in Australia instantly, using existing currencies? How exactly would you do that?

One thing you really can't argue about bitcoin is that this ability is leaps and bounds ahead of existing monetary systems. If you want to directly send money to someone electronically, you have to go to the bank, fill out a ton of paperwork, and wait a minimum of 3 days for the funds to arrive. In comparison, bitcoin is effectively instantaneous and requires no paperwork and no hassle.

Say what you will about bitcoin, but this use case is absolutely a tangible benefit over existing currencies. As society becomes more globalized, the ability to instantly send and receive funds across borders becomes more and more useful.

Re:Just not useful or safe

[maxwell demon]

If you want to directly send money to someone electronically, you have to go to the bank, fill out a ton of paperwork, and wait a minimum of 3 days for the funds to arrive.

No. If I want to send someone money (assuming I know their account number and bank, but then, if I want to send them bitcoins, I need the bitcoin address of the recipient, too), I open my online banking account, select "Überweisung", enter the amount and where it shall go, then authorize the transaction with an appropriate TAN, and that's it. I don't even have to leave my room. Of course I need an internet connection, but I need that also for bitcoin. And unlike bitcoin, if I happen not to have an internet connection, I can still go to my bank and order the money transfer from there. Now imagine you forgot to pay your internet provider, and the provider cuts your internet connection until you paid up. How would you solve that problem with bitcoin?

Lots of ways to transfer money fast

[sjbe]

So, you can, say, send $50k from someone in the USA to someone in Australia instantly, using existing currencies?

Sure, via a wire transfer among other means. (Fedwire, Western Union, SWIFT, RTGS, etc) I've had jobs where I did that almost daily in amounts between $30-200K per transaction. (commodities trading) All you have to do is fill out a form and the money will be transferred to (almost) any account anywhere in the world.

One thing you really can't argue about bitcoin is that this ability is leaps and bounds ahead of existing monetary systems

Actually the reverse is true and the person receiving the money on the other end does not have the hassle of exchanging the bitcoins for an actually useful currency as well as then depositing that currency into their working capital account. By avoiding bitcoins one also endures *considerably* less exchange rate risk, market risk, liquidity risk and legal risk. You really aren't considering the entire transaction process.

If you want to directly send money to someone electronically, you have to go to the bank, fill out a ton of paperwork, and wait a minimum of 3 days for the funds to arrive.

I don't know where you got that information but you are quite mistaken. I've worked doing global sourcing (buying stuff from other countries) for years. I bought a several thousand dollar piece of production equipment for my plant from Switzerland last week. All I had to do was fill in a form with the account numbers of the recipient and their bank name and the money was delivered to their account that same day. If I needed to I could have had the money held in escrow pending delivery and if I needed to they could have had the money effectively instantly.

In comparison, bitcoin is effectively instantaneous and requires no paperwork and no hassle.

Bitcoin isn't instantaneous because you still need to convert currencies in most cases. Consider the ENTIRE transaction. Also the lack of paperwork isn't necessarily a benefit unless you really don't care about accounting for your money. What paperwork there is with traditional methods (which is pretty minimal) exists for VERY good reasons. As for hassle, bitcoin is an enormous hassle since virtually no one uses bitcoin. I would have to convince someone to utilize an illiquid and volatile currency that they probably have never heard of. Then I would have to convince them that somehow it is a good idea to accept payment in a virtual currency instead of the currency they actually want. You seriously think that is "no hassle"? If so I want to know what color the sky is on your planet. Bitcoin is only less hassle in situations where you are doing something that is probably illegal.

Re:Does bitcoin matter anymore?

[QuasiSteve]

If you google "Block erupter", I'm sure you'll find places selling them. Stick to reputable bitcointalk sellers if you know what's good for you.

Mind you, I have no idea why you would want one. Unless your electricy (and time spent in maintenance, etc.) comes free - they're certainly not financially profitable, and even the geek factor (over mining with your GPU, say) is pretty low.

Plenty of options but suit yourself

[sjbe]

To be able to make electronic transactions without dependence on Visa / MasterCard / PayPal is benefit enough.

Only if you are doing something pretty sketchy (read illegal) and have little knowledge about the options available. There are LOTS of ways to exchange money besides the few methods you mentioned. Wire transfers, Western Union, money orders, ACH payments, SWIFT, RTGS, etc. Apparently you have some sort of ideological problem with Visa/MC/Paypal. If you don't like those then use something else. Bitcoin is among the riskiest and worst options out there but suit yourself.

It's good news!

[indy]

Bitcoin creates so many innovative business opportunities. Knowing that your government is acknowledging it as a legal currency means there is a little bit less risk for running such a business. Which means that there is going to be more innovation.

Re: Drug dealers

[DanielRavenNest]

This is no longer a valid argument. The Silk Road online marketplace now represents less than 1% of all bitcoin transactions, and there are now over 7500 merchants using just one bitcoin processor (BitPay) to convert their sales to local currency.

The main reason for merchant adoption is they can save an average of 3% on bank card fraud and chargebacks + 2% on normal bank fees. 5% savings on sales is *huge*, it often is as much as their profit margin, so doubling your profit is a heck of an incentive.

Re:avoiding

[maxwell demon]

avoiding taxes is your own problem, and it's only stealing from yourself, you're not always going to be rich...

You think only the rich avoid taxes?

Re:Exchange rate

[maxwell demon]

AFAIU from the tax office's view the profits materialize at the time you spend or sell your bitcoins. In which case you can easily determine the value of the bitcoins from the value of the goods you got, or directly from what you sold them for.

Re:Does bitcoin matter anymore?

[Ash-Fox]

Mind you, I have no idea why you would want one. Unless your electricy (and time spent in maintenance, etc.) comes free - they're certainly not financially profitable, and even the geek factor (over mining with your GPU, say) is pretty low.

I assumed by "You can buy USB sticks which can mine Bitcoin relatively efficiently." meant that it would:

1) Pay for it self
2) Pay for the electricity it uses.

So, I wanted to find out more about this miracle Bitcoin product, because so far I haven't seen anything that does what it said on the tin.

My general problem with Bitcoin miners being sold is: Why would someone find it more profitable to sell Bitcoin miners instead of mining themselves if it does what it said on the tin?

taxing profits on short term investments

[dutchwhizzman]

What a good idea. They should make that happen everywhere and also for companies. Try ruining the economy with HFT if you have to pay taxes on all the money you make. Investments should be about believing in the company or product, not about gabling on sentiment and other peoples trading algorithms.

Your currency

[NewYork]

You're a wage slave as long as Fed has monopoly/hegemony over printing your money/currency http://www.lietaer.com/2010/03/the-worgl-experiment/

Re:Does bitcoin matter anymore?

[QuasiSteve]

1) A long time ago, they did.
2) A slightly longer time ago, they did.

The main problem is that the products do take so long to finally be delivered that difficulty has increased over time enough that they may never break even.

And yes, many people have asked that same question. Most of the answers are bullshit, and the more plausible ones are still pretty iffy.

Me, I think they probably do mine with them (some even admit to it) before delivering to customers, and either which way just think there's more profit in selling the miners than there is in mining, long-term. As it is, a lot of people recommend buying 'shares' in the companies that make them rather than buying their product.

You seem generally hostile toward Bitcoin, which I can certainly understand. But in terms of 'doing what it says on the tin', Bitcoin does most of these things. The problem is that there's a whole lot of mislabeled tins; e.g. 'anonymous' only applies if you treat it with the same glove as you would TrueCrypt's plausibly deniability. If you leave breadcrumbs, you're undermining the foundation. It's great for micropayments, but only if you don't mind waiting a very long time for confirmation. etc.