Here’s How Taxes Are Harming Bitcoin’s Usefulness as a Payment Method
|
Bitcoin Magazine, 1/1/0001 12:00 AM PST While most of the early buzz around Bitcoin centered on it as a new, fast, cheap and permissionless method of online payment, the focus has moved from medium of exchange to store of value over the past few years. It’s clear that bitcoin is useful for censorship-resistant payments that may not otherwise be possible without this new technology, but much more of the recent hype has been around tracking the price more than anything else at this point. Although general activity on the Bitcoin network has continued to rise, a recent report from blockchain analytics firm Chainalysis shows that a growing percentage of this activity is related to trading on exchanges. There are a variety of reasons as to why the average person on the street is not interested in using bitcoin for payments. For example, the user interfaces are still hard for non-techies to use, network congestion leads to high fees, and price volatility is not something people are used to dealing with in their wallets (at least in most developed countries). On top of that, one other key issue is often overlooked: capital gains taxes. Who’s Reporting Capital Gains Taxes on Purchases Made via Bitcoin?In the United States and many other countries, capital gains taxes must be paid every time an individual uses some of their bitcoin stash to make a purchase, as long as the bitcoin price has gone up since those bitcoin were first acquired. For example, let’s say someone buys 1 bitcoin when the price is $1,000. This person simply holds that bitcoin for a couple of years, and then it is eventually worth $10,000. If this person goes to the store and purchases a television for $500, they’re effectively selling a portion of their bitcoin holdings at a profit. These gains are supposed to be taxed. When you imagine this person earning bitcoin on a regular basis and buying something as small as a meal or a coffee every day, it becomes easy to see how keeping track of everything would be quite cumbersome, especially when bitcoin wallets offer pretty much zero assistance in this area at this time. Even if the buyer and seller involved in a transaction are both bitcoin enthusiasts, it wouldn’t make much sense to make a deal denominated in bitcoin; the tax headache is not worth it. Instead, it makes much more sense for individuals in places like the United States to simply convert $1,000 or so worth of their bitcoin holdings to the local currency by way of a bitcoin debit card for spending every now and then. It’s unclear how many people have effectively become tax evaders by accident because they’re spending their bitcoin gains without reporting them. Obviously, those involved in illicit activities tend to be less concerned with the tax implications of using bitcoin for online payments because they’re already attempting to hide these transactions from the authorities anyway. The Cryptocurrency Fairness ActSo what’s the solution to the usability issues caused by capital gains taxes? One might be through a change in tax law, at least in the United States. The Cryptocurrency Tax Fairness Act introduced in Congress last year would exempt bitcoin transactions under $600 from capital gains taxation. This means bitcoin users would only have to calculate the tax implications of their bitcoin payments if they’re in amounts greater than $600. Notably, this is the same exemption that already applies to foreign currencies. The passage of this act would do wonders for the usability of bitcoin for payments by Americans. Hedging Options Could Also HelpAnother useful tool for avoiding tax-related usability issues with bitcoin may be hedging options in wallets. This is already available with Abra. The basic idea is that you hold bitcoin in a smart contract hedged to U.S. dollars or any other currency to avoid bitcoin’s price volatility. This setup would be useful for anyone who is interested in using bitcoin for payments but not necessarily gaining exposure to the price swings of the cryptoasset. If someone can hold bitcoins as U.S. dollars, they no longer have to worry about gains or losses whenever they make a transaction; however, they also lose access to the store-of-value properties of bitcoin in this situation. This article originally appeared on Bitcoin Magazine. |
Gemini Adds Block Trading to Reduce Impact of Large Orders on Bitcoin Price
|
CryptoCoins News, 1/1/0001 12:00 AM PST Gemini, the cryptocurrency exchange founded by the Winklevoss twins, has added a new feature that will reduce the impact that large buy and sell orders have on the Bitcoin price. Announced on Monday, Gemini Block Trading will allow cryptocurrency “whales” to execute large trades outside of the exchange’s continuously-updated order books, where a single trade The post Gemini Adds Block Trading to Reduce Impact of Large Orders on Bitcoin Price appeared first on CCN |
New “Know-Your-Transaction” Tool Enables Enhanced Blockchain Investigation
|
Bitcoin Magazine, 1/1/0001 12:00 AM PST Cryptocurrency investigation enterprise Chainalysis is releasing a product called Know Your Transaction (KYT) designed to help businesses track customers that may be involved in illicit cryptocurrency-related activity. The company’s clientele includes the Federal Bureau of Investigation (FBI), the Drug Enforcement Administration (DEA) and Europol. Per a recent blog post, Chainalysis stated that it holds a lot of faith in both cryptocurrencies and blockchain technology: “Blockchains create new ways for people to build trust among themselves and transact using cryptocurrencies. Cryptocurrencies have, in turn, inspired people to reimagine the financial machinery that powers world commerce. People are collecting land in virtual realities, conducting real-time payments for computation services, and buying collectible cats on the internet. This is just the beginning of worldwide access to financial instruments.” The venture’s primary goal is to get banks involved in the cryptocurrency scene and to create a world where financial institutions can offer their services to digital currency exchanges and ventures, but alleged fears of money-laundering make this somewhat tricky, which explains the reasoning behind the product’s release. Chainalysis’ KYT provides “real-time feedback” on transactions and fuels relevant information into what the company calls exchanges’ “transaction processing engines,” so executives can raise alerts regarding risky customers and monitor suspicious activity. The product has been in a testing phase amongst a small group of select customers, who reported seeing a “20X improvement in the speed of account reviews.” KYT will now be released to global cryptocurrency exchanges and financial institutions. In addition, the company is also introducing multi-currency support. Chainalysis will start with bitcoin cash for its law enforcement customers and is looking to expand to 10 cryptocurrencies by the end of 2018. Chainalysis recently landed approximately $16 million in series A funding from venture firm Benchmark, whose only other cryptocurrency-related investments include Pantera Capital and Xapo back in 2014. General partner Sarah Tavel, who led the deal with Chainalysis, explained that the move was a smart choice, and called Chainalysis a “meat and potatoes” company: “All these regulated institutions want to participate [in cryptocurrency transactions], but they need to understand with whom they are transacting and where their funds are originating. We’d solved these traditional compliance requirements in the fiat world.” Chainalysis was founded in 2014 by Oxford economist Jonathan Levin and Michael Granger, the former COO of San Francisco-based bitcoin exchange Kraken. The company employs over 75 people and boasts offices in New York, Washington D.C. and Copenhagen. Chainalysis rose to fame after it was selected to investigate Japan’s Mt. Gox debacle, which saw roughly half a billion dollars worth of cryptocurrency disappear practically overnight. The reported mastermind is an alleged Russian cybercrime suspect who was arrested in Greece last summer. Chainalysis isn’t alone in this space. London-based Elliptic, which also runs investigations relating to cryptocurrencies, has garnered over $7 million in funding from institutions like Banco Santander bank and Octopus Ventures to further expand its operations and product development team. This article originally appeared on Bitcoin Magazine. |
Police Officers Charged in $1.3 Million Bitcoin Extortion Scheme
|
CoinDesk, 1/1/0001 12:00 AM PST Ten Indian police officials have been charged with kidnapping and attempted extortion after allegedly forcing a victim to transfer 200 bitcoins. |
CRYPTO INSIDER: India and Pakistan are cracking down on cryptocurrencies
CRYPTO INSIDER: India and Pakistan are cracking down on cryptocurrencies
Nano Team Target of Cryptocurrency Class Action Lawsuit
|
Bitcoin Magazine, 1/1/0001 12:00 AM PST A class action lawsuit has been filed against Nano and key members of its core team for allegedly violating federal securities law. In February 2018, the Italian cryptocurrency exchange BitGrail lost $170 million worth of the Nano currency “XRB” due to a “hack” which has now led to a class action lawsuit represented by the Silver Miller law firm. The firm bills itself as a cryptocurrency investor law firm and currently has actions pending against the Coinbase, Kraken, BitConnect and Cryptsy exchanges as well as lawsuits against pre-functional token ICO promoters Monkey Capital and Giga Watt. Nano was originally known as RaiBlocks and changed their name to Nano in January 2018. The lawsuit alleges that, in their push to introduce XRB to a wide market of investors, Nano and key members of its core team recklessly directed investors to open accounts and place assets with the small and troubled BitGrail exchange, where the $170 million allegedly “disappeared” in February 2018. In the complaint, it is alleged that the Nano team engaged in an unregistered offering and sale of securities that violated Section 5, 12(a) and 15 of the Securities Act of 1933 and wrongly directed investors to BitGrail. The lawsuits request that the court rescind the plaintiff class’ investments in XRB and require Nano to “rescue fork” the missing XRB into a new cryptocurrency to compensate the victims for their losses. The action is being brought by Alex Brola through the law firm, the defendants named in the complaint are Nano the company as well as Colin LeMahieu, Mica Busch, Zack Shapiro and Troy Retzer. The complaint notes that, of the over 130 million XRB tokens that were generated, the defendants withheld millions, if not tens of millions for themselves, the bulk of which are owned by LeMahieu. It is asserted that the defendants promoted the use of and assisted customers in getting accounts at the BitGrail exchange, where the XRB/BTC trading pair resulted in over 80 percent of their trading volume. The defendants promoted BitGrail as a safe and reliable exchange for XRB holders. The defendants consistently and publicly endorsed and supported BitGrail, despite many complaints. Nano attracted investors with a feature set that was described as instant transactions with no fees and virtually limitless scalability. In addition, there would be no mining as all tokens already existed and no more would ever exist. The full 26-page complaint was filed in the Eastern District of New York and can be read here. This article originally appeared on Bitcoin Magazine. |
Op Ed: Tulip Myths and Modern Cryptocurrency Skepticism
|
Bitcoin Magazine, 1/1/0001 12:00 AM PST “Ever heard of tulips?” It’s a question anyone who is publically involved in the cryptocurrency space has been asked multiple times. With the enormous gains in value the industry has seen, many observers come to the same conclusion. It’s a bubble. The take is not a terrible one and many experienced cryptocurrency traders agree with the sentiment. Bubbles have come to be an expected occurrence in the space. The difference in opinion comes when deciding whether the “pop” will be a minor setback or the final conclusion in an exciting but short-lived ride. On one side are the supporters of cryptocurrency. Their motivations can be boiled down to two points: desire for profits and a belief that the technology will benefit humanity. They believe that bubbles are a natural phenomenon in price discovery and an inevitable part of the long-term upward trend in value that will occur as cryptocurrencies become more utilized. They also understand that, while bubbles can hurt some traders in the short term, they are a necessary evil in the development of a technology which stands to dramatically increase human financial freedom. Sometimes these motivations can seem at odds, but in general they coexist within the community. Get rich making the world a better place. It’s an attractive pitch. On the other side are the skeptics. Doubt in cryptocurrency has made strange bedfellows of a band of commentators as diverse as it is vocal. Nobel prize economists, billionaire bankers, goldbugs and central banks have all weighed in to signal their prediction of the industry’s inevitable demise. And with the spotlight of increasing coin valuations has come even more doubters. In the age of Twitter, it’s almost essential that you have an opinion on the matter and that you let the world know it. For detractors, the tulip meme often comes into play:
For skeptics as much as believers, there is a personal economic motivation. While they may not have cashed in on the extraordinary rise of cryptocurrencies, they think the game is rigged from the start. By keeping their hard earned cash out of the market, they are saving themselves from an “inevitable” crash to zero. But under this current of self-preservation is an ethical play opposite to that of cryptocurrency supporters. Many detractors believe that this technology is not just ridiculous but actually harmful to society. What drives this outlook? The true history of the tulip bubble can give us an interesting view of the motivations driving their sentiment. An Early ManiaTulip Mania is the go-to story whenever someone wants to talk about humanity’s penchant for irrational exuberance in financial markets. It’s the catchy name for the extraordinary rise in value, and subsequent crash, of Dutch tulip bulb valuations over a four month span from November 1636 to February 1637. This phenomenon had devastating effects on the Dutch economy and left many people in financial ruin. At least that’s how the story is told. But according to Anne Goldgar, Professor of Early Modern History at King’s College London and author of Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age, the popular story is mostly an exaggeration. The description of her book reads like this: “We have heard how these bulbs changed hands hundreds of times in a single day, and how some bulbs, sold and resold for thousands of guilders, never even existed. Tulipmania is seen as an example of the gullibility of crowds and the dangers of financial speculation. But it wasn’t like that … not one of these stories is true.” Goldgar uses extensive research to expose that, while there was a rise and crash of tulip prices, much of what we believe about the period is the product of historical exaggeration from a small number of writers. What drove this? According to Goldgar, it was a product of societal anxieties triggered by the immense riches of the Dutch Golden Age. As Lorraine Boissoneault writes in Smithsonian Magazine’s recent piece on the book, “All the outlandish stories of economic ruin, of an innocent sailor thrown in prison for eating a tulip bulb, of chimney sweeps wading into the market in hopes of striking it rich — those come from propaganda pamphlets published by Dutch Calvinists worried that the tulip-propelled consumerism boom would lead to societal decay.” English historian Simon Schama also writes of the period: “The prodigious quality of their [the Dutch] success went to their heads, but it also made them a bit queasy. Even their most uninhibited documents of self-congratulation are haunted by the threat of overvloed (abundance) ... a word heavy with warning as well as euphoria.” When looked at through the lens of this historic research, the legend of the tulip bubble becomes less about financial mania and more about the way that an economic memory can reflect a society’s collective mindset. The Dutch Golden Age represents a period during the 17th century when “Dutch trade, science, military, and art were among the most acclaimed in the world.” This transformation was termed the “Dutch Miracle” by historian K.W. Swart. But, while it is easy to look back now and realize this era was a huge stepping stone to the modern prosperity the Dutch people enjoy today, at the time the progress was not as apparent. Many of the Dutch found a hard time adjusting to a society where fortunes were being created overnight. Schama compares the mindset to one which was found by de Tocqueville in 19th century America: “that strange melancholy which often haunts the inhabitants of democratic countries in the midst of their abundance, and the disgust at life which sometimes seizes upon them in the midst of calm and easy circumstances.” While there was undoubtedly a run on Dutch Tulip prices, it seems there was an equal run on seizing the opportunity to find a negative aspect to extraordinary societal progress. Today, we are seeing the same mindset from cryptocurrency skeptics. Modern AnxietiesCryptocurrency has arrived at an uncomfortable moment in history. There is a wide debate surrounding whether or not technology is hurting human progress. Many argue that smartphones are making kids depressed and robots are taking our jobs. The thought is that technology which was supposed to make life better is instead causing us to become stupid, antisocial and unhealthy. On top of this, the freedom of speech made possible by the internet is being questioned for the alleged harm it can cause to democracy. It is in this atmosphere of negativity that critics have found their “tulip moment” in cryptocurrency. It is being latched onto as an lightning rod for these growing worries about a society that is becoming radically shaped by the digital age. Detractors consistently ignore any possible justification for cryptocurrency to be considered useful and instead focus on its most distasteful features:
Many cannot push their analysis past observations of price movements. Warren Buffett partner Charlie Munger has described the cryptocurrency scene as “total insanity” and recently told an audience at University of Michigan’s Ross School of Business, “I think it is perfectly asinine to even pause to think about them. It’s bad people, crazy bubble, bad idea, luring people into the concept of easy wealth without much insight or work.” Others, echoing popular sentiment questioning unbridled freedom of speech, are worried about a lack of governmental oversight. Back in 2013 author Charlie Stross wrote in Why I Want Bitcoin to Die in a Fire that “Bitcoin looks like it was designed as a weapon intended to damage central banking and money-issuing banks, with a Libertarian political agenda in mind — to damage states’ ability to collect tax and monitor their citizens’ financial transactions … late-period capitalism may suck, but replacing it with Bitcoin would be like swapping out a hangnail for Fournier's gangrene.” Economist Paul Krugman cited the article in his piece Bitcoin Is Evil, adding “Stross doesn’t like that agenda, and neither do I.” While Krugman did admit he was open to conversation on the topic, fellow economist, Joseph Stiglitz, has been less forgiving. Recently he told Bloomberg “Bitcoin is successful only because of its potential for circumvention, lack of oversight...So it seems to me it ought to be outlawed … It doesn’t serve any socially useful function.” The Progress ParadoxAre these arguments baseless? Not at all. Cryptocurrencies do in fact make many unsavory things possible. But, much like supporters believe bubbles are a necessary evil for price growth, they also believe that some illicit activities are a worthwhile trade-off for the ability to have a censorship-resistant, value-transfer system. They believe the win for personal freedom trumps all else. It looks as if this idea is spreading. Bitcoin alone has grown from roughly 6,000 transactions per day in January of 2011 to 240,000 transactions on January 1, 2018. With 1000+ other cryptocurrencies, each growing their own communities, this desire for this financial independence appears contagious. To the critics, these statistics do not matter. They will continue to focus on perceived faults. As the myth of the Tulip Bubble illustrates, this is rooted in human psychology. Some people are set on ignoring the progress around them. De Tocqueville observed: “In America I saw the freest and most enlightened men placed in the happiest circumstances that the world affords; it seemed to me as if a cloud habitually hung upon their brow, and I thought them serious and almost sad, even in their pleasures.” Over the last few centuries, technology has made our lives less nasty, brutish and short. But, for some of us, the natural reaction has been to question whether it was really worth it. Cryptocurrency now finds itself at the center of this larger debate over the morality of technology in a developing society. If supporters have their way, it holds the power to usher in a new era of human economic freedom. If critics have their way it will be regulated to death. Let’s hope one side ends up as forgotten as Calvinist pamphlet writers. This is a guest post by Kenny Spotz. Views expressed are his own and do not necessarily reflect those of Bitcoin Magazine or BTC Media. This article originally appeared on Bitcoin Magazine. |
Relief Rally Ahead? Oversold Ether Eyes Gains Against Bitcoin
|
CoinDesk, 1/1/0001 12:00 AM PST With a relief rally in the offing, ether could outperform bitcoin in the short-run, according to ETH/BTC technical charts. |
LATTICE80 pivots from fintech to blockchain in Singapore
|
Business Insider, 1/1/0001 12:00 AM PST
This story was delivered to BI Intelligence "Fintech Briefing" subscribers. To learn more and subscribe, please click here. LATTICE80, which claims to be the world’s biggest fintech hub, has announced the closure of its post in Singapore. In its place, it will establish a Crypto Hub, which will focus only on blockchain and crypto startups in the city-state. Its fintech hubs in other countries will remain active. This comes after LATTICE80 announced the launch of Altcoin futures and plans for an initial coin offering (ICO), two moves that already suggested a potential pivot toward blockchain technologies. The hub’s original plans included expanding its fintech hub in Singapore, but after careful consideration, it decided that the local fintech industry — which is now around 400 fintech startups strong — has “sufficient grounds to grow and scale.” It also said that, to balance the fintech ecosystem, a new hub solely focused on blockchain technologies is necessary. Here's what this pivot suggests about Singapore’s fintech industry:
We may see other hubs tailoring their support for a specific fintech segment. As fintech ecosystems around the world continue to mature, we may see other hubs taking a similar approach to LATTICE80 by focusing on those areas of fintech that are currently not getting the necessary support to grow. This will likely help to ensure that all fintech segments have the same opportunity to thrive, leading to a more stable and balanced industry globally. In a new report, Business Insider Intelligence takes a look at what DLTs are and why they hold so much promise for FS, the sectors in which DLTs are gaining the most traction and why, and the efforts underway to remove the obstacles preventing wider DLT adoption in finance. It also examines the few FIs close to unleashing their DLT projects, and how DLTs might transform the nature of FS if adoption truly takes off. Here are some of the key takeaways from the report:
In full, the report:
Subscribe to an All-Access membership to Business Insider Intelligence and gain immediate access to:
|
Dear Students, Everything In Bitcoin's Way Is Your $1 Billion Opportunity
|
CoinDesk, 1/1/0001 12:00 AM PST Blockchain luminaries descended on the University of Pennsylvania's business school in what seemed like a recruiting session for the crypto-ecosystem. |
Lightning Labs Chief: We’re Entering a ‘Bitcoin, not Blockchain’ World
|
CryptoCoins News, 1/1/0001 12:00 AM PST The tables have turned on bitcoin doomsayers. This according to Elizabeth Stark, co-founder of Lightning Labs in a conversation with Yahoo Finance The Final Round. In a turn of events, cryptocurrencies have begun to steal the show again away from blockchain. It’s a far cry from the San Francisco startup’s earlier days when Lightning decided The post Lightning Labs Chief: We’re Entering a ‘Bitcoin, not Blockchain’ World appeared first on CCN |
Bitcoin Teases Bullish Reversal with Rise Above $7K
|
CoinDesk, 1/1/0001 12:00 AM PST Bitcoin is on the rise, but only a move above $7,510 would confirm a bullish trend reversal |
Bitcoin Price Remains Above $7,100 as Cryptocurrency Market Gains $20 Billion
|
CryptoCoins News, 1/1/0001 12:00 AM PST After its corrective rally from $6,500 to $7,500 came to an end, bitcoin experienced a two-day slump. Over the past 24 hours, the bitcoin price has rebounded from the $6,500 level once again, rising back to $7,100. Bitcoin Trend For short-term recovery, the $7,700 to $7,800 range still remain as an important level for bitcoin The post Bitcoin Price Remains Above $7,100 as Cryptocurrency Market Gains $20 Billion appeared first on CCN |
Bitcoin Forks and Livestock Law? Tax Day 2018 Is a Different Animal
|
CoinDesk, 1/1/0001 12:00 AM PST U.S. income tax treatment of forks is unclear. A conservative approach would be to treat the receipt of new cryptocurrency as taxable ordinary income. |