Slashdot Mirror
Paypal Jumps Into Bitcoin With Both Feet
retroworks (652802) writes The BBC, the Wall Street Journal, Bloomberg, Forbes and several other business sites are buzzing with Paypal's incorporation of Bitcoin transactions. According to Wired, Paypal will be "the best thing ever to happen to Bitcoin." Paypal-owned Braintree not only brings 150 million active users in close contact with Bitcoin, it signals "mainstreaming" similar to cell phone app banking, perceived as experimental just a few years ago.
I'm not exactly a guru of bitcoin, but I'll summarize as somebody who's tried it recently out of curiosity.
Getting into it is surprisingly difficult. Purchasing bitcoins right now (or before paypal maybe) is pretty hard. Near impossible to find a site that will let you buy with a credit card, because sellers get screwed over with chargebacks.
Mining bitcoin at this point isn't worth it. At all. A high end GPU working 24/7 would get you $10 per month while costing more in power. At this point mining is only profitable to people willing spend a lot of money on very specialized hardware.
Once you have some, it's easy enough to use. But it's an unregulated system, so there is some danger and no safety net. If you're ever going to put serious money into it, be very, very careful. Danger comes both from things like getting hacked, and from that the value fluctuates without any central control.
Tax-wise it seems tricky. It seems (you're nuts if you take advice from a random stranger on this) that it's considered an asset, and if bitcoin gains in value you have to pay tax on that. Up to you to figure out how to keep track of it and do it properly.
As far as working, it does. You can buy stuff with it fine, and the USD/BTC exchange rate is stable enough. If you have cash to spare it might be worth to get some, just in case it increases a lot in value (I doubt paypal would get into it without consulting a bunch of lawyers), but you'd be nuts to put your life savings into it.
You buy 10 shares GOOG at $500. Later you buy 20 share of GOOGs at $550. Later you buy 20 share of GOOG at $560.
If you pay 30 shares to somebody
So, you wait a month, now GOOG is at $570, and you sell 5 shares.
Your cost base is ( $500 * 10 + $550 * 20 + $560 * 20) / 50 = 544
When you paid someone that 30 shares, the price at that instant was $560, so you made a capital gain of (560-544)*30 = $480
When you sold 5 shares at $570, you made a capital gain of (570-544)*30 = $130
I really don't see what's so confusing about this.
Though technically right it is not complete.
#1) You can create a new public key for each and every transaction which makes linking a key to a person hard.
#2) You can transfer them across Tor net and then linking them to an address is hard if not impossible.
#3) You can set up any number of clients on a private network and transfer coins between the clients.
#4) You can use tumblers and coin exchanges to disconnect a given key from you and a transaction.
So although bitcoin itself is not anonymous you can make it anonymous. Just as e-mail and browsing the web is not anonymous but you can take steps to make it anonymous.