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Ask Slashdot: How Does One Freely Use Bitcoin In the Land of the Free?
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.
If you want privacy use cash with people who don't know you.
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.
Is it really as surprise that a scheme designed to facilitate money laundering is not allowed without a paper trail in the US?
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.
Architectural plans are like computer source code with a couple of differences: You only compile once.
Your question boils down to, "How do I avoid capital gains taxes on my Bitcoin earnings?" That's problematic, as you can imagine.
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.
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.
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Concur.
Bitcoin as a financial system is made impractical in the long term by the fact that it is limited in the total number that can be issued. After the last one is issued, the intent is for the value of them to simply go up. It was proposed as an in-built method to combat inflation, however what it really is is a way for the inventor to pad his own pockets by owning a significant fraction of the total number of bitcoins that can ever be produced. In a best-case scenario, this means he now owns a fraction of the world wealth (assuming the dystopian future where everyone uses bitcoins).
The fact that it is really a huge piece of social engineering is what disinclines most governments from being too terribly thrilled about its adoption. Ironically, this may be what the inventor was counting on to promote it's adoption, reasoning that the more that governments resisted it, the more that certain groups would promote it as a form of protest/defiance.
So, if you want to adopt bitcoins, by all means, be part of a piece of social engineering malware. Bitcoin transactions are not what you want for privacy anyway. If you want to maintain private money transactions, cash is always an option.
I think people matter.
If enough people use BTC as money, then it's money.
"Trump!!", the new Godwin.
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.
I browse on +1 so AC's need not respond, I won't see it.
"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?
All money is made-up bullshit.
Yes, but the US dollar is backed with the US banking system, the US government, and the US military. Bitcoin is backed by the fact that the exchange you use maybe doesn't want to rip you off today.
Seven puppies were harmed during the making of this post.
Works well enough for Satoshi, no one seems to know his secret identity
There's so much wrong with the thinking behind your post that people have dedicated essays to it. I'll go with the overly simplified version:
If you treat Bitcoins as currency, you spend them. Thus, you're not holding on to them long enough for them to accrue value. If you treat them as an investment, you're not spending them, and there's no Bitcoin economy to make them worth anything.
That's why Bitcoin trading is pure speculation. There's absolutely nothing behind them except the willingness of the next idiot to buy some. They're different from Beanie Babies only in that when Bitcoin finally peters out you won't be left with something you can put on a shelf somewhere or give to a little kid.
If you could magically time markets, Bitcoin is probably one of the last things you'd try it with since it's a lot easier to trade in other financial instruments with far less risk of fraud.
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.
Bitcoin is classify as money in: - Europe (Except France) http://curia.europa.eu/jcms/up... - Japan http://asia.nikkei.com/Politic... - Mexico https://sppld.sat.gob.mx/pld/i... - Afghanistan http://www.coindesk.com/how-bi... - Czech Republic http://www.rozhlas.cz/zpravy/e... - South Africa http://www.treasury.gov.za/com... I don' have links but I heard it's also consided a currency in - Russia, Switzerland and Nigera
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. Devrtm can then enjoy a U.S. personal income tax deduction 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.
That's because the only BTC Satoshi is known to have has never been Spent.... that includes the 50 BTC award for the genesis Block 0 and the next few blocks. Because of how the code was written, however, Block 0's reward is unspendable,
and the other early blocks have never been spent.
It's possible that Satoshi's secret identity would became known if coins from Block #1 get spent.
If Satoshi was smart, he could keep his ID hidden by leaving those in cold storage forever, and engaging in other mining activity later after the network was larger.
Let me know when any of these countries will accept it for tax payments.
Architectural plans are like computer source code with a couple of differences: You only compile once.
If you treat Bitcoins as currency, you spend them. Thus, you're not holding on to them long enough for them to accrue value. If you treat them as an investment, you're not spending them, and there's no Bitcoin economy to make them worth anything.
That's why Bitcoin trading is pure speculation.
There are two good reasons to "invest" in a currency:
1) Utility: It's a "safe, convenient, and easy to use" currency. For most people in countries with relatively stable currencies, their country's fiat currency fits this bill. I for one keep at least a month's worth of expenses "in cash" in a bank account, knowing I will lose very little to inflation, that I have a very low risk of the money suddenly becoming temporarily inaccessible, and knowing that I can pay any domestic debt with it without having to pay a middleman to convert it.
2) Hedge: If I know I'm going to need a certain amount of Euros, Yen, or BTC six months from now but I'm not willing to accept the risk of currency flucutations, I can "lock in" the price now, either by buying a futures contract or by buying the actual Euros, Yen, or BTC.
But I agree with you, buying BCT, or for that matter, any currency that isn't known to be very stable (low inflation now and for the forseeable future) as an "investment" is pretty speculative.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
Bitcoin is fundamentally impractical. It limps along ...
and it occasionally makes dazzling leaps into the air and then trips over itself, falls down and just lies there.
The Fed is NOT part of the USG. It's just a cartel of European banks. They don't answer to US taxpayers and they don't answer to congress. They are beholden only to themselves and they care only to continue their monopoly on banking where every USD automatically comes with a 6% debt that is paid back to the FED. Woodrow Wilson signed them into power, at night, in secret, on an island and then immediately and publicly regretted it and said he'd made the worst mistake that could have been made against US. Now we have our own mint and can make our own money but, every dollar we print ourselves for ourselves
The US Federal Reserve is a privately owned institution.
The non-profit Fed is "owned" by nobody. The leaders of the Fed are confirmed appointees of the US Federal Government. It is a "government institution" by all measures.
Learn to love Alaska
Concur.
Bitcoin as a financial system is made impractical in the long term by the fact that it is limited in the total number that can be issued. After the last one is issued, the intent is for the value of them to simply go up.
A Bitcoin is the solution to a hashing problem for which the ease in calculating a solution goes up with the size of the search space. In a very large search space it's easy to generate a solution, but as the search space becomes smaller you have to spend more time hunting around for a correct solution.
As more solutions are found, the people behind bitcoin validate that 'coin and then shorten the length in bits needed for a valid solution. They have a fixed number in mind that they want to base the currency on, and as the number of solutions found approach that number, they have been shortening the length so that they will eventually have exactly the number they want, and finding new solutions will take an astronomically long time.
There's nothing preventing them from increasing the valid length of solutions and letting people find more. They have explained countless times that this is how they can have actual inflation in their currency.
Countless times of explaining this to the public, and yet people continue to repeat bullshit they've heard "somewhere on the internet" that matches their woldview.
It's no wonder they're having trouble - they're concentrating on their project, but losing the war against propaganda.
That's a totally inaccurate means of explaining this.
The difficulty of finding a solution scales as the network grows, it has nothing to do with the amount of currency in it. Mining continues once the full amount has been released, because mining is about transactions, not block rewards. Once the total amount of the currency exists, then mining is rewarded by transaction fees as there is no more block reward.
The nameless "They" cannot increase the money supply. The entire network would have to vote to fork the code onto a new system to change the monetary limit. There is no "they" that have any control over the network, the only people who control the network are 51%+ of the miners.
I do not read or respond to AC's. If you want a discussion, log in. Otherwise, don't waste your time.
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.
world was created 5 seconds before this post as it is.
I hadn't thought of it that way. Heaven is a communist dictatorship. And presumably you can't get pregnant in Heaven (since you have to die to get in), so if there is sex then it would be purely for pleasure and not procreation.
It looks like there might be a lot of fundamentalists who are in for a bit of a shock when they die. That is, unless they find that there is no afterlife and so they would be in for no shock at all.
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.
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
Seems like we are on a path toward no anonymity financial transactions. Cash is slowly being squeezed with some of the 1% of the 1% talking of phasing it out. Lots of talk of getting rid of big bills because of the possibility of negative interest rates, crime (which is real, the world money supply of $100 bills has gone up massively over the last 20 years and its nearly all off-shore and is sourced through banks along the internal edges of the U.S. border). I would argue keeping our ability to have private transaction - however the world seems racing towards a place where anonymity is exterminated. Nice article regarding the trouble you can get into when withdrawing large amounts of cash in the U.S.:
http://www.cnbc.com/2015/05/29...
The intrinsically worthless currency drives the world economy. Bitcoin is driving up the net wealth of the early adopters and ripping off the latecomers, because it's incredibly deflationary. It also can't scale in the number of transactions per second high enough to meet a significant portion of the world's financial needs: Bitcoin protocol is capped at 10 per second, banks handle thousands per second. While the concept is novel, in practice it's just a new variation of pyramid scheme. The founder may not even have intended for that to be the result, but that's what happened. The people who bought or mined when it was $3 per BTC are millionaires preying on the late investors.
Now if someone invents a crypto-currency that's anonymous, scales to an unlimited number of concurrent transactions, and manages to neither be deflationary (which screws late adopters) or inflationary (which screws early adopters), the world will start paying attention. But for now, the only way to stabilize a currency so it neither inflates nor deflates too rapidly is having it backed by a government that can adjust the supply.