(Cameron Spencer/Getty Images)

The Internal Revenue Service weighed in last week to say that the online currency Bitcoin should be treated as property, not like money. The decision pits those who favor more regulation against those who want a more freewheeling market for Bitcoin. We discuss what it means for Bitcoin owners, investment firms, startups and the market for cryptocurrency.

Guests:
Robert McMillan, senior writer at WIRED magazine who frequently writes about cryptocurrencies
Nicholas Weaver, senior researcher in networking and security at the International Computer Science Institute at UC Berkeley.
Patrick Murck, general counsel, the Bitcoin Foundation

  • Guest

    .

    • Underwun

      Truth is this decision kills Bitcoin in the US. With Dimon and other vested interests the near term doors not bode well for fluid payments. This decision opens the door for UCC Article 9 and that means any Bitcoin could come with a liability.

  • Bill_Woods

    This policy works for people who want to buy and sell bitcoins. It won’t work for people who want to *use* bitcoins, to buy and sell stuff.
    Suppose I get paid a bitcoin a week, and then spend them on rent, food, gas, etc. Am I really supposed to keep a log of each fraction of a coin in my possesion, with the dollar values when I got it and when I passed it on?

    • Robert Thomas

      Yes. It would be the same as if you were paid entirely in stock shares.

    • chrisnfolsom

      This of course will be automatically taken care of by a software app which in a way could help as doing taxes would be a button press rather then the craziness it is today for most of us.

  • Robert Thomas

    This discussion makes this issue seem more complicated than it is.

    Bitcoin exists for two reasons:

    1) a libertarian gimmick to avoid transaction taxes and fees and

    2) a mechanism to facilitate illicit transactions.

    The decision to recognize the reality of Bitcoin as an asset makes sense; it also makes it difficult to use as a pseudo-currency.

    Honestly, WHO CARES whether treating Bitcoin as an asset renders it “less interesting” for a “senior writer at WIRED“?

    During the nineteenth century (especially in the wake of the Civil War), HUGE convulsions were suffered in the United States economy that were exacerbated by the proliferation of state scrip and private bank scrip. Loss of control of currency by any state is a sign of weakness not just of the state, but affecting as it does the smallest transactions of the people, also of the society that underlies the state. Continuing to treat Bitcoin as anything other than a kind of security might satisfy a certain brand of juvenile libertarian (“juvenile libertarian” being something of a redundant phrase) but it doesn’t serve the people or the nation.

  • Chuck

    How did the IRS track the transactions of the guy operating out of the SF Library [Silk Road?]

  • Robert Thomas

    Billions of people in Asia are never going to want to wear Bitcoin as jewelry.

    What a bizarre set of utterly unsupportable assertions are thrown about, here.

  • William – SF

    What am I not understanding?

    Bitcoin is backed by nothing.
    The dollar is backed by the US government.

    Paypal is significantly better and different than bitcoin because it transacts in dollars.

    Where do I line up to withdrawal my bitcoins when the Wamu equivalent happens?

  • Minka

    Why anyone would trust a currency controlled by a private company more than one controlled by a state is beyond me. Democratic control on the Fed may be minimal, but at least it exists.

    • chrisnfolsom

      You are being biased the U.S. dollar is the standard int he world, but many countries are not allowed to use dollars and their currency is even more speculative then Bitcoin… Imagine being in Angola, or other vary volotile areas – would you want your money in Angolan Kwanza’s vs Bitcoins? Which are easier to convert or use online?

  • Robert Thomas

    Listening to this conversation is like one’s experience sitting with those clumps of software engineers who move together, like herds of prey animals, to the long tables they shove together at cafeterias across silicon valley every noontime.

    The chatter of intelligent, well considered, ignorant know-nothingism one will observe can be striking.

  • chrisnfolsom

    Will Bitcoin help with micro-payments? I believe the future for services, information and the web is with micro-payment – .0001 cents to view a page and such. This is like the system in Earth by David Brin in which he talks about a poem going “viral” (25 years ago) and a poor poet in India becoming a millionaire due to 6 billion accesses. That makes sense, but we don’t really have a payment model set up for such a thing.

  • Anne

    Does this mean that Starbucks will have to send the IRS and bitcoin users 1099 forms?

  • chrisnfolsom

    I am concerned that our “mature” regulation and entrenched business interests will leave us behind as early adopters, smaller countries with much less to loose (and much to gain) will use this and other technologies to leap frog us – such as the goat herder with a cell phones, or many smaller countries with cheaper and much faster internet access.

  • hwn

    re the reporting requirement: since all transactions are part of a public leger and mechanistic, one imagines the requirements could be easily, and automagically, handled by supplementary software….and one would be surprised if the bitcoin crowd doesn’t have such already in the works.

  • hwn

    re the escrow argument: the “release payment when [carrier] marks shipment
    delivered” is by no means foolproof: i have a usps tracking number, marked
    “delivered”, and my local postal person agrees that it was nearly
    mis-delivered and brought back to usps (by the carrier who received the
    mis-sort) somewhere 3 months ago….never to be seen again.

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