Coinbase and the IRS(medium.com) |
Coinbase and the IRS(medium.com) |
In tin hat mode, its possible that the subpoena is actually being driven by the justice department not the IRS. As you point out there are a number of less invasive ways of insuring tax compliance but there are not better ways for unwrapping large number of bitcoin transactions involved in ransomware or other extortion or criminal activity. We saw from the MtGox fiasco that when their entire transaction record for all clients was analyzed it identified not only internal corruption but a variety of schemes being used to manipulate or defraud.
Let's assume that Justice has the full transaction records for one or more of the non-US exchanges, by adding all of your records to the mix it would give them the visibility they need to unwind a lot of stuff.
As I understand it, when you make the motion to quash you can compel them to tell you exactly how they were going to use the data. Don't let them be evasive on that point.
It looks like, despite the shiny front and claims, they are still not a solid, trustworthy company, even though they play with a lot of others' money. In particular, the mechanics of their transactions are not obvious (e.g. long wait times), and their customer service is subpar, making some customers feel scammed, with no recourse.
There is an onus on the bitcoin community to get more people to accept bitcoin directly as payment. Companies like coinbase could help that process along in theory, but they'll have to keep walking this line while they grow.
Dubious. They might capture more of an existing niche market. Coinbase is aiming to expand the market significantly to people don't see Bitcoin's murkiness as a feature. That is, the rest of us.
Not saying the order is justified, merely that the people asking for it want it for actual reasons.
Does that mean you could write a program that created virtual currencies and transactions between them (along with their required 1099 forms) in order to troll the IRS by submitting TBs of data?
Imagine a world where this terrible waste weren't mandated by the men with guns. Imagine a world where cryptocurrency executives didn't try to spin this huge coerced waste as a positive.
This is the reason cryptocurrency was invented. Shapeshift is the right direction. Coinbase is the wrong one.
The first question was, what is Medium?
I had to explain that it was just this open-to-anybody blogging platform, and not a personal site of mine. Outside of the tech sphere, it's not so recognizable.
After evaluating this situation further, I felt further comfort in knowing there's an added level of authenticity to the post. They could have signed it with a GPG key which would've been nice, but not only would their core site have needed to have been comprised but also their medium account in order to deliver this news. Should this have been a security incident I would have been comforted by these additional ID confirmations.
There is a pro-blockstream agenda on reddit, and bitcointalk (theymos owns both). coin dance shows what % of users are running whatever fork, shows volume , transactions, node counts, etc. etc.
Why does that matter? You can see the truth (data) for yourself rather than what people are saying/censoring.
So it must be considered a signifcant source of taxable income to them.
But of course thats just one example of possible cash income...
A pyramid scheme involves selling a product - something like knives or energy drink. But the actual thing which is sold are licenses to sell the product. Each licensee passes some of their profits up to their licensor who is the licensee of someone else and passes along part of that and so on. Eventually the last round of licensees are stuck with product that they can't sell and the upstream licensors are getting rich from the "pyramid" of downstream licensor/licensees recruited into the scheme.
Well, there are no Bitcoin licenses - anyone can mine it, hoarde it, spend it, etc. So it is not a pyramid scheme (or multi-level marketing scheme). The value of Bitcoin will not collapse if everyone in the world is using it.
A ponzi scheme is quite different. You pretend to invest an initial investor's money. The returns to that investor are paid out of money coming in from later investors. There is no opaque "fund" making "investments" when it comes to Bitcoin.
So what makes something a currency? It is:
* Medium of exchange - 100s of 1000s of merchants accept Bitcoin for payment
* A store of value - Bitcoin has had a nonzero value for 5-10 years now so it can be reliably used for savings
* Unit of account - This is where things get fuzzy. Things tend to be denominated in US dollars or Euros with Bitcoin converted at the spot price when a transaction occurs. There is no reason why Bitcoin can't be used as a unit of account, but it still has a ways to go before it is popular enough that it is actually used that way.
The Washington Post article places a lot of emphasis on the greater fool aspect of buying/selling/hoarding Bitcoin. This applies to all investments, and especially to stocks. Are you going to claim that the stock market is also a Ponzi scheme or a pyramid scheme?
Of course there's completely no reason to feel bad, it's a risky bet and one could just as well think about what fantastic sports bets he could have done in the past years.
Plus, without thorough technical understanding, quite a lot of trust is involved in believing that it can actually work.
2) "It won't be possible for the government to enforce taxes or seize assets" is not a selling point outside the criminal, libertarian, and anarchist communities. Most people seem to feel that the rule of law is too weak in the financial realm, not too strong. HSBC's money laundering for the cartels, for example, is generally considered a bad thing. Billionaires minimizing their taxes through tricky schemes are seen as villainous, not smart, by a simple (though not electoral) majority in the US.
3) Inflation is not a problem Americans have or have had since, like, the Carter administration. Given how leveraged most households are, we'd probably like some more of it. "Inherently deflationary" and "no central bank" are not compelling arguments, and just further the anarchist/libertarian branding.
Harsh yes but sometime you just have to call it the way you see it.
I'm not sure what you mean by ordinary people lose a lot of money with it but ordinary people have surly lost more money in the stock market than they have in Bitcoin. Saying Bitcoin is inherently fraudulent is simply false.
On the topic of computer security. If you are serious about your Bitcoin's security there have been secure hardware wallets available for several years now that are easy to use and eliminate the chance of theft from hacking. They have come down in price to the point where they are very affordable.
The Ledger Nano S for example is $50. It's also super easy to use and never exposes your private key to your computer so it can't be stolen even if your computer is infested with Bitcoin stealing malware. Trezor and Keepkey are similar devices.
My question is: don't losses from unreported cash wages vastly outnumber losses from unreported virtual currencies and isn't that likely to remain the case for the forseeable future?
With this sort of action, is the IRS signaling a belief that virtual currencies will replace cash for average citizens in the near future?
[1] https://www.irs.gov/uac/newsroom/irs-virtual-currency-guidan...
There's two main forms of "cash wages" in the US. One being wait staff, the other being "under the counter pay" to workers, generally labor intensive. Wait staff who regularly under report their tips are easily identified by the IRS. In the second case, these generally aren't well paid jobs (thus wouldn't generate much, if any, tax revenue).
That said, you have to make a personal decision on what level is worth tracking, and the IRS has to decide how aggressively it wants to audit.