I did sell my motorcycle back in a days for bitcoins. I posted that ad for two reasons: it was fun and my ad was getting more attention. I converted immediately to dollars, since I was looking for new bike. But still, transaction itself happened with a bitcoins, laptops running linux and console on 'em. :)
Pfft that is nothing. There is enough market depth that selling $400k of BTC would barely make the market dip from $72 to $68 (which was the market rate twelve hours ago)... http://bitcoincharts.com/markets/mtgoxUSD_depth.html
Edit: oh, you mean for him it would be bad if the market fell.
There was a 7% drop today, and a 5% drop yesterday, and so on and so on, though so far the price has recovered after each one.
I think you'd have to be crazy to be either the buyer or the seller of this, unless you were doing it for the publicity. I also wonder if they'd agree on the bitcoin price in advance, or if they would pin it to the dollar value up to transfer.
Either way, imagine being the buyer, taking up a loan, maybe buying the bitcoins, and then suddenly not having enough money because the price has gone up/down.
Welcome to the wonderful world of currency exchange risk! This is a problem common to international business acquisitions, wherein changing exchange rates usually changes the effective purchase/sales price (depending on your POV). For this reason, acquisition agreements fix the price as of a certain date, and the parties bear the risk of loss, or the fortune of gain, arising from changes to the exchange rate after the deal is signed but before payment is effectuated.
Haha, that's a horrifying situation. To be safe, it's gotta be best to agree on the house's price IN BITCOINS before sale, regardless of future price fluctuations.
if more and more people/businesses start accepting bitcoin as payment due to the rise in value, it might get propped up due to the general usage (as opposed to speculation, whcih is what is propping up its value right now).
People seem to love talking about shorting Bitcoin, and a crash wouldn't surprise me all, but given Bitcoin's meteoric rise recently you'd have to be insane to actually do it.
Also, psychologically I would personally find it hard to accept the idea of my $400k property being worth 26k BTC in say Dec (@15) and 5k (@70) in March. We're not in the 10k BTC pizza days anymore, but still...
Unfortunately, Canada has laws against shipping alcohol across provincial borders. You would need to deal with all the import/export stuff to make that work. Yup, Canada has really messed up liquor laws.
I'd love it if I could get Alberta liquor stores to ship to Ontario or Quebec, but every one I've checked online won't do it. The same tends to be true for US dealers. There isn't an easy way to get around the price-gouging by the provincial monopolies.
assuming this is even a peak - the economics of bitcoin are ideal for the price to just keep on rising. That's probably what the seller here's banking on - that the 6-figure dollar-equivalent bitcoins he now holds will be worth 8 figures in a few years.
The recent spike in price is due to a recent drop in supply. The amount of BTC awarded from successfully mining was recently cut in half from 50 to 25BTC, and the difficulty rate has been rising as better mining hardware has been getting out into (a few) people's hands.
It's harder to get your hands on BTC now than it used to be.
There's a growth in both supply and demand, let's call them ds and dd. ds is relatively constant, though every 4 years it halves. dd is stochastic and gets influenced by how many ways there are to use bitcoins as a store of wealth, speculative opinions on its future conversion to dollars, and how many actors will accept bitcoins as a transfer of wealth.
Most of the pressure on dd has directed it to grow, so demand is going up, and it goes up faster over time. ds is a designed feature of the currency, and is designed to shrink quasi-deterministically.
The supply of bitcoins is not growing in proportion to the growth of demand for bitcoins, thus the price goes up. So it's probably most fair to say that the demand is growing significantly faster than the suppply. However, the most recent halving day has significantly altered the differential between ds and dd.
I completely agree that the current spike will be largely speculative, driven most likely by Reddit and Mega accepting bitcoins now (a PR ploy no doubt).
However, the inherent cap on the quantity of coins available means that if a market fit is found for bitcoin, and that market grows, the only way is up.
Actually it is, in my opinion. I know by your tone that you're going to disagree with everything I say here, but I'm going to say it anyway.
Money is most useful as a medium of exchange. As such its value should be stable on the micro (day to day) level. Slow decrease in value over time ensures that it is not a very attractive store of value, meaning that cash is invested, recirculated and used rather than simply hoarded.
Additionally, a central bank can (and should) act to stabilise the value further. When there are financial crises there are a variety of powers that can be used by a central bank to try and mitigate problems that could be exacerbated in a currency without this feature. Having a central bank with a variety of monetary powers is therefore a positive.
With a fixed supply and an ever-increasing value, bitcoin discourages any investment (why bother with risk? I'm getting richer just sitting here). More than this it massively rewards people who have bitcoin over those just coming into the game, using the economic output of those that are actually productive (be they workers, business owners, entrepreneurs, whoever) to enrich those that just sit idly on a hoard of coins.
This is why I think the fundamental parameters of the Bitcoin currency are unsuitable for large-scale or society-wide deployment.
> Additionally, a central bank can (and should) act to stabilise the value further. When there are financial crises there are a variety of powers that can be used by a central bank to try and mitigate problems that could be exacerbated in a currency without this feature. Having a central bank with a variety of monetary powers is therefore a positive.
Right up until that central bank wipes out the middle class when 40 years worth of bills (i.e. inflation) finally come due.
Right up until that central bank wipes out the middle class...
I do love a good bit of hyperbole!
I'm not really sure that's happened, has it? In fact it looks to me like the central banks of the world have tried their darnedest not to let their respective currencies collapse, and mostly to good effect.
I certainly wouldn't argue that every fiscal decision made by the powers that be is a good one, or even that they're overall doing a great job. I still prefer them over a currency where there is no ability to do this.
Investment by the current banking industry may well be driven/enabled in part by the deposits they have on the books.
Keeping BTC in a wallet is very much more like just stuffing dollars in a shoebox, the money is dead and removed from the system. It's not driving anything.
I like how it says "But it has yet to catch on more broadly partly because of concerns around security — bitcoin exchanges are regularly hacked" Which is defiantly not true.
The same way they're handled now. If you make a capital gain at the time you realize the sale, then you better report the gain on your taxes. You can't pay the taxes due in bitcoin, so you better have some real currency on hand.
They aren't. You pay taxes in the currency of whatever nation you owe taxes to. This will necessitate converting bitcoin-denominated transactions to that local currency. (The timing of when the bitcoin transactions may be converted varies from country to country.)
Failure to report and pay taxes on bitcoin-denominated transactions is income tax evasion. One consequence of this is that your tax years never "close," so the IRS has until the end of time (or practically speaking, your death) to audit you and go after the unpaid taxes (in contrast to the normal 3 and 6 year periods for IRS audits).
Can you please tell me why think there would be a Secret Service raid? I could sell you my house for 4 chickens and no one would care.
The bigger issue is that if you're making a capital gain when selling, then you better damn well report that on your taxes. And note that the realization is at the time of the sale, not when you sell the bitcoins.
In the United States, financial transactions must be done in US currency. If you report it on your taxes in US currency equivalent, you might be ok. But I bet it would set up a red flag. You can't even own a bank account in a foreign currency here.
Huh? I know lots of people who have bank accounts in other currencies. Any taxes due on them obviously have to be paid in USD but there's no inherent law against it afaik.
Offhand, HSBC and the Royal Bank of Canada in Canadian currency. Pretty sure you can open an investment account with Interactive Brokers in multiple currencies although that's not a true bank account.
You might have to go to one of their foreign branches to do it though. I don't know if you can just show up at a branch in Iowa (for example) and they would know how/be able to open an account denominated in another currency.
Financial transactions may be conducted in any currency. If they must be reported on your income tax return, they must be reported in both the currency used and USD (if different). You can own a bank account in a foreign currency; there is simply more paperwork involved for the customer and the bank.
I still have no idea where the Secret Service fits into this. I will admit there is a tax issue about what the realized gain or loss is by trying to attach a value to the bitcoins, but that's an IRS issue and no one is going to come and raid your house.
We need a phrase for bizarro-LMGTFY situations where someone googles a few words and links to unrelated content simply because they were in the first page of results.
I think that eventually, the government will learn to love BitCoin. Just think of what the states could do to tax law. During an audit, they could require your BitCoin wallet ID to verify that you paid the voluntary sales tax accurately. (Not to mention it would probably be easy to write a program to automatically calculate this from a BitCoin wallet ID for the tax payer when doing their taxes)
Doubtful. The 'state' is 10 years, or more, behind. Bitcoin is the beginning of the end for the nation-state. The city-state will regain importance and we will see the rise of the virtual replacement of the 'state', which is happening now.
No, it's not. Bitcoin is simply another currency. Governments have been dealing with that for hundreds of years.
Bitcoin's fatal flaw is that it is not anonymous. It's even less anonymous than cash. Given enough justification, governments can and will develop systems for tracking bitcoin flows, the same way they already have systems for tracking the flow of paper cash.
