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Your Bitcoin Profit Calculator And The Ridiculous IRS

Posted on 21. May, 2014 by Wallace Eddington in Business

I’m mad as hell. And I have the IRS to thank for it. Either they are utterly incompetent or they are the worst kind of creeps and thugs. I’m inclined to think the latter, but I suppose we can give them the benefit of the doubt on the former.

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 have illusions about why nation states suppress and make a mockery of free markets through their coercive enforcement of their fiat currencies, surely these facts should disabuse you. In that context, really, nothing less should have been expected from the IRS.

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.

It seems to me that we’re back to what has always been the inescapable fact. The only way for bitcoin to thrive is as a competitor to fiat currency. And the only way it can function as such a competitor is outside the legitimized sphere of the state.

Does that mean that bitcoin is doomed to be the currency of criminals? Depends what you mean by criminals.

If by “criminals” you’re referring to peaceful people voluntarily exchanging goods and services among themselves, while causing no trespass upon the life or liberty of anyone else…if that’s what you mean by “criminals.” Yes, I guess so.

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.

Call me cynical, but as far as I’m concerned, this is about criminalizing people who just want to choose their own currency of exchange. But we can’t have that, can we? That would be just too scary for the fraudsters and bureaucrats who run our government-banking complex.

Wallace Eddington is a major writer on financial and monetary events and a regular contributor to the Bitcoin Profit Calculator site, where he’s written about the Mt. Gox fiasco and other hot bitcoin issues. See also his hard hitting piece on inflation at the Fiat Currency Review.

Wallace Eddington

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Tags: bitcoin, business, capital gains, fiat currency, finance, free markets, government, IRS, Money, taxes

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