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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.
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.
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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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.
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.
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.
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.
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.
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