Two credible possibilities present themselves. What do you think: is the IRS intending to crush bitcoin or are they just mind bogglingly incompetent? My money is on the former, but I suppose history would suggest that we can't rule out the latter entirely.
They have ruled bitcoin is not a currency, but only property. The upshot of this ruling is that now every time I use my bitcoin, to purchase a meal, a beer or a new keyboard, I have to pay capital gains tax. So, lucky bitcoin, it's made it to the heady heights of gold: stigmatized as a currency competitor too scary to be allowed to compete on a level playing field with the pathetic U.S. dollar.
That's about the shape of things. If you needed any further evidence that the U.S government, and national governments, in general, hold free markets in contempt, there you go. Really though if you're surprised by these developments, you haven't been paying attention.
What does this mean for bitcoin? Things start getting interesting. Many have been talking about lobbying for a change of policy. That seems strangely myopic in its blindness over the necessity of national governments to not allow competitors with their currency.
IF you've been paying any attention, you should already know the skinny on this. The only way for bitcoin to succeed is as a competitor to fiat currency. Furthermore, the only way to be such a competitor is going to be outside the blessings of nation states.
Does that mean, some will ask, that it is condemned to fulfil the silly accusations of the mass media that it is the currency of criminals? Depends what you mean by criminals.
If by "criminals" you mean free people, voluntarily engaging in mutual exchange, trespassing upon the life or liberty of no one else. If that's your definition of "criminal": well, maybe.
Of course what such accusations about bitcoin almost always ignore is that for real criminals, who assault, torture, murder, rape and steal from others, the U.S. dollar is the currency of choice. So the real criminals' savings in U.S. dollars just went up in value compared to bitcoin. Well done IRS. You're so smart.
Have no illusions. This ridiculous ruling is about criminalizing people who want to choose their own currency. After all, what can be scarier than that for the fraudsters and bureaucrats who run our government-banking complex?
They have ruled bitcoin is not a currency, but only property. The upshot of this ruling is that now every time I use my bitcoin, to purchase a meal, a beer or a new keyboard, I have to pay capital gains tax. So, lucky bitcoin, it's made it to the heady heights of gold: stigmatized as a currency competitor too scary to be allowed to compete on a level playing field with the pathetic U.S. dollar.
That's about the shape of things. If you needed any further evidence that the U.S government, and national governments, in general, hold free markets in contempt, there you go. Really though if you're surprised by these developments, you haven't been paying attention.
What does this mean for bitcoin? Things start getting interesting. Many have been talking about lobbying for a change of policy. That seems strangely myopic in its blindness over the necessity of national governments to not allow competitors with their currency.
IF you've been paying any attention, you should already know the skinny on this. The only way for bitcoin to succeed is as a competitor to fiat currency. Furthermore, the only way to be such a competitor is going to be outside the blessings of nation states.
Does that mean, some will ask, that it is condemned to fulfil the silly accusations of the mass media that it is the currency of criminals? Depends what you mean by criminals.
If by "criminals" you mean free people, voluntarily engaging in mutual exchange, trespassing upon the life or liberty of no one else. If that's your definition of "criminal": well, maybe.
Of course what such accusations about bitcoin almost always ignore is that for real criminals, who assault, torture, murder, rape and steal from others, the U.S. dollar is the currency of choice. So the real criminals' savings in U.S. dollars just went up in value compared to bitcoin. Well done IRS. You're so smart.
Have no illusions. This ridiculous ruling is about criminalizing people who want to choose their own currency. After all, what can be scarier than that for the fraudsters and bureaucrats who run our government-banking complex?
About the Author:
Wallace Eddington is a leading writer on financial and monetary news and a regular contributor to the Bitcoin Profit Calculator blog, where he's written about the Mt. Gox fiasco and other hot bitcoin issues. Check out his hard hitting piece on inflation at the Fiat Currency Review.
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