[ExI] Bitcoins Again

Gordon gts_2000 at yahoo.com
Wed May 15 16:13:49 UTC 2013

On Wed, May 15, 2013 at 07:37:43AM -0700, spike wrote:

> Using bitcoin will likely put you on the IRS's radar, and they have constitutionally unlimited powers.

I think we're a long way from the IRS having any real powers here. Brokerage firms are required to report the cost basis of many investments, making tax evasion on capital gains difficult, but bitcoin exchanges have no such requirement so far.

Regarding this action by the Department of Homeland Security that I reported last night: the market apparently took it as a shock, though not a terribly severe one. BTC dropped from about $120 to about $103 in a matter of an hour or two. This was a marked sell-off given the stability of the market over the last couple of weeks. The price is now recovering, one would hope, with the current market at about $113.

It is true that governments have little or no power to directly hurt Bitcoin, but I think they could in principle strangle the exchanges and make things difficult. In this case, DHS has apparently blocked a popular funding mechanism in Dwolla. Still not sure what is the legal justification. I hope (and believe) that it is not a general attempt by DHS to hurt the market for bitcoins.

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