There's only two possibilities here. Either the IRS is intent on destroying bitcoin or they are so completely incompetence and they presume their capacity to introduce policy in the face of their own complete and utter ignorance of the facts. Nor would it seem that even a modicum of research is necessary for the big pant-loads at the IRS to screw up other people's lives. Well done you clowns!
The recent IRS decision that bitcoin is property, not a legitimate currency, means that now every book, or coffee, or beer, or keyboard, anyone buys using bitcoin, they have to pay capital gains tax. Brilliant! The transactions costs with which bitcoin is thereby burdened is utterly debilitating for it as a currency. Which, call me a conspiracy nut if you like, I suspect was the intention. After all, we have gold as a template. It's for this same reason, this same tax policy, which gold cannot compete with the U.S. dollar as a currency of choice. Which, I guess is good news for bitcoin promoters: the government is as scared of bitcoin as of gold - all in about half a decade. Now that's progress.
That's about the shape of things. In a world where governments suppress and make a mockery of free markets through their coercive enforcement of fiat currency, nothing less should have been expected.
What does this mean for bitcoin? Well, the whole situation just got much more interesting. I'm amused by those in the bitcoin community I hear talking up the need to lobby the IRS for a policy change. Such an attitude strikes me as peculiarly blind to the realities of why nation states are so determined to exclude competitors with their fiat currency.
For me, the writing has always been on the wall for some time (and I've been perplexed by those who can't or won't read it). Bitcoin can only thrive as a competitor to fiat currencies. It can only provide such competition, however, outside the good graces of the 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 people freely engaging in voluntary exchange which does not trespass on the life or liberty of anyone else, but which the wise overlords of the state determine is unacceptable? Well, maybe.
But of course as anyone knows, who bothers to give the matter even a moment's thought, among the real criminals, the organized gangs of human traffickers, extortionists and murderers, the currency of choice has always been the U.S. dollar. Oh, and thanks to this policy, the savings of those real criminals just increased in value compared to bitcoin. Typical stand-up job you boys down at the IRS!
No, this is all just about criminalizing people who want to choose their own currency. I would say "shame on you IRS", but you can't shame conscienceless thugs, can you? And it's with just such people that we are dealing.
The recent IRS decision that bitcoin is property, not a legitimate currency, means that now every book, or coffee, or beer, or keyboard, anyone buys using bitcoin, they have to pay capital gains tax. Brilliant! The transactions costs with which bitcoin is thereby burdened is utterly debilitating for it as a currency. Which, call me a conspiracy nut if you like, I suspect was the intention. After all, we have gold as a template. It's for this same reason, this same tax policy, which gold cannot compete with the U.S. dollar as a currency of choice. Which, I guess is good news for bitcoin promoters: the government is as scared of bitcoin as of gold - all in about half a decade. Now that's progress.
That's about the shape of things. In a world where governments suppress and make a mockery of free markets through their coercive enforcement of fiat currency, nothing less should have been expected.
What does this mean for bitcoin? Well, the whole situation just got much more interesting. I'm amused by those in the bitcoin community I hear talking up the need to lobby the IRS for a policy change. Such an attitude strikes me as peculiarly blind to the realities of why nation states are so determined to exclude competitors with their fiat currency.
For me, the writing has always been on the wall for some time (and I've been perplexed by those who can't or won't read it). Bitcoin can only thrive as a competitor to fiat currencies. It can only provide such competition, however, outside the good graces of the 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 people freely engaging in voluntary exchange which does not trespass on the life or liberty of anyone else, but which the wise overlords of the state determine is unacceptable? Well, maybe.
But of course as anyone knows, who bothers to give the matter even a moment's thought, among the real criminals, the organized gangs of human traffickers, extortionists and murderers, the currency of choice has always been the U.S. dollar. Oh, and thanks to this policy, the savings of those real criminals just increased in value compared to bitcoin. Typical stand-up job you boys down at the IRS!
No, this is all just about criminalizing people who want to choose their own currency. I would say "shame on you IRS", but you can't shame conscienceless thugs, can you? And it's with just such people that we are dealing.
About the Author:
Wallace Eddington is a leading writer on financial and monetary events and a regular contributor to the Bitcoin Profit Calculator site, where he's gotten the scoop on the Mt. Gox fiasco and other hot bitcoin topics. See also his hard hitting piece on inflation at the Fiat Currency Review.
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