Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan • Hacker News Board

Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#81

Post by notheguyouthink » Thu, Dec 21, 2017, 5:37 PM UTC

sixdimensional wrote: post #76

Can somebody explain something to me... I haven't been participating in the Bitcoin/cryptocurrency movement for better or worse, just following it from afar: I thought the premise of these currencies was to avoid government and banking oversight/control... but with both the SEC and IRS putting controls around virtual currency (which I think we all expected to happen), how does that change the original inspiration? Do…

I also wonder how this will deal with crypto coins that are specifically designed to avoid monitoring.

Seeing as it's insanely easy to set up an alternate address in any coin, and that whatever the US government knows of my coins could just be a tiny percentage.. how would they know how much to tax me on?

It seems so difficult as to be almost useless. Makes me think they'd be better off just considering it a foreign coin, and only tax what goes into and out of USD. I dunno, clearly I'm out of my element haha.

Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#82

Post by notheguyouthink » Thu, Dec 21, 2017, 5:39 PM UTC

CoryG89 wrote: post #78

sixdimensional wrote: post #76

Can somebody explain something to me... I haven't been participating in the Bitcoin/cryptocurrency movement for better or worse, just following it from afar: I thought the premise of these currencies was to avoid government and banking oversight/control... but with both the SEC and IRS putting controls around virtual currency (which I think we all expected to happen), how does that change the original inspiration? Do…

I don't think it was this change that put that to rest. I doubt Satoshi ever foresaw that BTC transaction times and fees would grow so large that you essentially cannot use it for everyday purchases. It is still not feasible to regulate BTC itself. They only really only regulating the exchanges.

I don't know how he didn't expect that. Isn't it designed in the system such that you can calculate the maximum transactions being handled?

I've seen some people blame the miners for the fees.. but when you have such a massive backlog, the variable fees are the only way it's even working at all right now. If not for that, it would be a lottery whose transactions actually got through.

Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#83

Post by sixdimensional » Thu, Dec 21, 2017, 5:39 PM UTC

CoryG89 wrote: post #78

sixdimensional wrote: post #76

Can somebody explain something to me... I haven't been participating in the Bitcoin/cryptocurrency movement for better or worse, just following it from afar: I thought the premise of these currencies was to avoid government and banking oversight/control... but with both the SEC and IRS putting controls around virtual currency (which I think we all expected to happen), how does that change the original inspiration? Do…

I don't think it was this change that put that to rest. I doubt Satoshi ever foresaw that BTC transaction times and fees would grow so large that you essentially cannot use it for everyday purchases. It is still not feasible to regulate BTC itself. They only really only regulating the exchanges.

I also have been a bit confused by the usability of BTC for ordinary people, due to the units of measurement. The fractional nature of BTC and cryptocurrency seems like it would not fit the necessary ease of use for most non-digital, day-to-day transactions. I think ordinary people would find it hard to buy bread if it cost 0.000127 BTC ($1.99 USD), for example.

Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#84

Post by jMyles » Thu, Dec 21, 2017, 5:40 PM UTC

uncletaco wrote: post #74

jMyles wrote: post #50

Earlier quoted context omitted.

...and what exactly will they do about it? The question is about decentralized exchanges. Countries may choose not to "tolerate" whatever they wish, but the internet is under no compulsion to tolerate shortsighted countries.

Regulate that ISPs block the protocols.

Honestly, that sounds like a dream scenario for creation of a new, better, fully distributed internet. This is my favorite timeline.

Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#85

Post by throwaway30yo » Thu, Dec 21, 2017, 5:40 PM UTC

uncletaco wrote: post #74

jMyles wrote: post #50

Earlier quoted context omitted.

...and what exactly will they do about it? The question is about decentralized exchanges. Countries may choose not to "tolerate" whatever they wish, but the internet is under no compulsion to tolerate shortsighted countries.

Regulate that ISPs block the protocols.

They would need to regulate every ISP in the country to block the protocols, and then go after every website just using those protocols under the hood (and most of these would not be in the USA).

I can't see that ever happening especially because these protocols would have non currency uses as well.

Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#86

Post by Spooky23 » Thu, Dec 21, 2017, 5:41 PM UTC

stakecounter wrote: post #20

chollida1 wrote: post #12

Earlier quoted context omitted.

It's driven off whats called your dollar cost average. So in your scenario Buy 1 ETH for say $500, your cost base is $500. If then trade the 1 ETH for bitcoin, it only depends on what ETH is worth at that moment. If 1 ETH is now worth $400, then you have a $100 loss, if ETH is worth $500 then no taxable gain or loss, if 1 ETH is wroth $600 then you owe tax on $100 of capital gains. What bitcoin is worth is irrelevant…

Thanks - given your comment it sounds like option 1 mentioned above where gains are calculated based off of USD value even if the currencies are traded directly. But as another commenter mentioned, I don’t see how this can work because the trade doesn’t involve USD at all, and the exchange rate for USD/ETH may vary widely between exchanges. And for more niche cryptocurrencies, a USD value may not even exist because t…

This is where the magic of crypto money starts falling down. Normal money is legal tender, commodities are not.

Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#87

Post by tw04 » Thu, Dec 21, 2017, 5:43 PM UTC

notheguyouthink wrote: post #81

sixdimensional wrote: post #76

Can somebody explain something to me... I haven't been participating in the Bitcoin/cryptocurrency movement for better or worse, just following it from afar: I thought the premise of these currencies was to avoid government and banking oversight/control... but with both the SEC and IRS putting controls around virtual currency (which I think we all expected to happen), how does that change the original inspiration? Do…

I also wonder how this will deal with crypto coins that are specifically designed to avoid monitoring. Seeing as it's insanely easy to set up an alternate address in any coin, and that whatever the US government knows of my coins could just be a tiny percentage.. how would they know how much to tax me on? It seems so difficult as to be almost useless. Makes me think they'd be better off just considering it a foreign…

What good is the coin if you can't ever spend it? Sure, you can hid it away somewhere the government can't find, and just sit on it... but then what? When you eventually want to spend it on SOMETHING, unless you're going completely black market, there's going to be a record. When the guy making $50k/year suddenly buys a $2.5 million house, the government is going to ask you where that money came from.

Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#88

Post by cinquemb » Thu, Dec 21, 2017, 5:43 PM UTC

uncletaco wrote: post #74

jMyles wrote: post #50

Earlier quoted context omitted.

...and what exactly will they do about it? The question is about decentralized exchanges. Countries may choose not to "tolerate" whatever they wish, but the internet is under no compulsion to tolerate shortsighted countries.

Regulate that ISPs block the protocols.

Regulate people using handcranks to power portable transmitters transmitting information at variable frequencies to be received and picked up by those who know of beamforming and antenna design.

Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#89

Post by sixdimensional » Thu, Dec 21, 2017, 5:44 PM UTC

nemild wrote: post #77

sixdimensional wrote: post #76

Can somebody explain something to me... I haven't been participating in the Bitcoin/cryptocurrency movement for better or worse, just following it from afar: I thought the premise of these currencies was to avoid government and banking oversight/control... but with both the SEC and IRS putting controls around virtual currency (which I think we all expected to happen), how does that change the original inspiration? Do…

There's lot here, but I'll make it short: - The fed does not exercise control over Bitcoin directly, so Bitcoin is still fundamentally different than fiat currencies - All fiat onramps into crypto are controlled by governments, which is one way to regulate it (KYC, AML) - You still have to follow the rules for your country, and if the government finds out you haven't, it can censure you; with crypto, it can be harder…

Fair enough, maybe this falls apart when we started talking about fiat currencies being exchanged directly for Bitcoin (i.e. when "real" money got involved). Prior to that really happening, it seemed like one could create new Bitcoin through mining, which was a conversion of computing power/electricity/time directly into crypto-currency value - not a direct conversion of fiat currency into crypto-currency value.

With mining now being cost prohibitive, it's not as reasonable of an avenue of gaining Bitcoin.. and "real" money has entered the game - and with that, comes regulation.

Re: Tax-Free Bitcoin-To-Ether Trading in US to End Under GOP Plan

#90

Post by mancerayder » Thu, Dec 21, 2017, 5:46 PM UTC

I don't mind being taxed at all.

What I find stressful is calculating - not just the 'what was the USD price at the time of the exchange' that has to be manually entered and looked up into the exported CSV spreadsheet... BUT tying that to the movement of coin from Coinbase to the exchange. It's a pain.

I regret using Bittrex, as there's almost no tooling for this available.