

Bitcoin is now a declared currency in Texas. - nRike
http://techcrunch.com/2013/08/07/bitcoin-clampdown-continues-as-federal-judge-says-its-a-currency/

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natrius
_" Bitcoin creator Satoshi Nakamoto probably didn’t think that even the U.S.
government would treat it as a currency and try to regulate it."_

Citation needed.

From the opinion: _" The question currently before the Court is whether the
BTCST investments in this case are securities as defined by Federal Securities
Laws."_

This case was about whether a dude who was _accepting deposits_ of Bitcoins
and _paying interest_ on them was in the securities business. Of course he
was.

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GuiA
Does that mean that playing Satoshi dice if you're a US citizen under 21 is
illegal?

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peteretep
This article is so confused, I don't even...

> The ruling represents yet another attempt to regulate Bitcoin transactions

Frickin' awesome. Finally they're going to get acceptance from the mainstream,
and my investments will be worth something...

> Bitcoin was born on the idea that nobody could regulate it.

Really? I always thought it was born on the idea of making its creator rich.
Either way, its value comes from the inability for players to unilaterally
(and meaningfully) increase the money supply.

> The only real value of a Bitcoin comes from its users

Kinda like every other currency, then?

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M4v3R
Declaring Bitcoins as currency is one thing. The other thing is how do people
prove to the court that they don't own Bitcoins anymore because they've sent
them to BTCST (the famous pirateat40 hedge fund), and even if judge accepts a
blockchain transaction as actual evidence - that the receiving address
actually belonged to BTCST. That will be fun to watch.

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thinkloop
The security of currencies come from their underlying demand. Gold is used as
a currency, first and foremost, because it has strong intrinsic value, and
second because it has physical properties that make it convenient to divide
and store. If gold had no independent demand it wouldn't be considered for a
currency.

The US dollar has even more demand. All Americans are required by law to
purchase it and own it for the purpose of paying their taxes. If they do not,
the most powerful police and military will lock them in prison. This is the
base upon which the rest of the system is built.

Bitcoin, to its good fortune, is also backed by independent demand: crime.
Because of crime, and its adeptness at enforcing agreements, BitCoin has a
strong tangible base upon which it can grow its ecosystem. The biggest threat
to BitCoin is not a sudden loss of interest by the masses, but a competing
currency that better serves crime and takes BitCoin's market share.

~~~
Gormo
Government-issed currencies offer far, far more utility for criminals than
Bitcoin does.

Every Bitcoin transaction is a matter of public record. There's no anonymity -
everything you do with Bitcoin leaves a paper trail. Criminals using Bitcoin
expose themselves to a much greater risk of detection than they'd face by
using a briefcase full of dollars. There are ways to mitigate the traceability
of Bitcoin transactions, but these typically involve trusting middlemen, and
so come with their own set of risks.

The value of Bitcoin originates in the inability of the government to
manipulate the money supply, but I suspect that criminals are probably less
impacted by inflation than the typical non-criminal is.

It's honest businesspeople and not criminals who stand to benefit from
Bitcoin.

~~~
thinkloop
BitCoin signatures are traceable, but the link between signatures and human
beings is only traceable from outside the BitCoin system. If you are already
dealing with briefcases of cash, it is a simple matter to buy BitCoin using
one of those briefcases anonymously. Throw Tor in the mix, and you'd have to
be the next Bin Laden for the world to dedicate the resources necessary to
uncover your dealings. These are people who built 200meter+ tunnels
underground to transport drugs between the US and Mexico:
[http://www.huffingtonpost.com/2012/07/14/drug-
tunnels_n_1673...](http://www.huffingtonpost.com/2012/07/14/drug-
tunnels_n_1673317.html)

Cash is a terrible currency for big time crime. It is very difficult to store,
being susceptible to mites and fungus. It is very difficult to exchange large
quantities, think pallets instead of briefcases for millions/billions of
dollars (which is the primary reason they don't make a $1000 bill). It is
nearly impossible to exchange any meaningful amount cross-border. It is
difficult to count and keep track of. It is easier to counterfeit and get bad
cash. Cash has serial numbers, fingerprints, and DNA all over them (I'm
surprised we don't hear more about cash forensics, or bugged cash with
tracking chips in them).

Cash will still be used for the last mile, for the street-level "retail"
transactions. But when those get gathered up and need to be sent back to
headquarters, or between organizations, or to other nations, the backhaul, by
necessity, needs to run on something more sophisticated. Today, that seems to
be Bitcoin, even though I agree with you that it is far from perfect. Its
first-mover advantage is allowing it to build a robust ecosystem of services
that is making it that much harder for an incumbent to take its place. But
when that super currency does come, and crime shifts to using it, I predict a
relatively straight decline in BitCoin value.

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Sealy
I wouldn't really call it a 'clampdown' as the word has negative implication.
I would call it a 'legitimization'.

Federal judges have acknowledged that Bitcoin has the underpinnings that
constitutes it as a currency. This is HUGELY exciting.

Disclosure: I work in financial regulatory reporting and am bullish on
bitcoin.

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hahame
declaring Bitcoin as currency is too narrow. FYI there's dozens of other
digital currencies, collectively termed altcoins, such as litecoin and
ripplecoin. See
[http://www.cryptocoincharts.info](http://www.cryptocoincharts.info). Anyone
is also able to create their own blockchain.

~~~
dragonwriter
> declaring Bitcoin as currency is too narrow.

Courts deal with the issues in the cases before them. The relevant issue in
this case was whether an investment sold for bitcoin involved a transaction of
"money" for purposes of the Exchange Act of 1934, making it subject to various
securities-related rules.

The status of other altcoins (or even bitcoin's status as "currency" in any
sense _other_ than the specific context of the Exchange Act) was not an issue
before the court.

------
joelg236
What does this mean in practicality?

~~~
spc476
That you have to declare bitcoins received as income to the IRS?

~~~
rayiner
You have to declare anything of value received as income. E.g. if you get paid
in shoes, it's still income.

~~~
unimpressive
Hypothetically if you _were_ payed in shoes, how would you pay the IRS? Sell
the shoes for enough money to pay taxes?

~~~
rayiner
This is actually a problem for some people. E.g. they receive some property
(usually a family farm) but can't pay taxes on the value received. There are
various complicates and work-arounds in the tax code to deal with this
situation, but sometimes they just end up selling the farm.

~~~
bratsche
There was a bit on NPR a few months ago about someone who inherited some
artwork from a parent who died. There was an extremely valuable piece of art
which was made from some something like elephant tusk or something that is
banned now, but wasn't when the art was created, and so now it is illegal to
sell the piece.

The IRS wanted to be paid for the value of the piece, but the people who
inherited it were trying to argue that since they're not allowed to sell it it
has no value. And I don't think they could just afford out of pocket whatever
the IRS was claiming was owed.

~~~
Fuzzwah
I was interested in learning more about this but my googling couldn't turn up
anything from NPR.

The piece couldn't be sold because it features a stuffed bald eagle (of which
sale and even ownership of is prohibited by the 1940 Bald and Golden Eagle
Protection Act and the 1918 Migratory Bird Treaty Act).

I did dig up these:

[http://www.nytimes.com/2012/07/22/arts/design/a-catch-22-of-...](http://www.nytimes.com/2012/07/22/arts/design/a-catch-22-of-
art-and-taxes-starring-a-stuffed-eagle.html)

[http://www.forbes.com/sites/janetnovack/2012/07/22/the-
irs-a...](http://www.forbes.com/sites/janetnovack/2012/07/22/the-irs-art-
advisory-panel-has-its-head-inthe-clouds/)

[http://dontmesswithtaxes.typepad.com/dont_mess_with_taxes/20...](http://dontmesswithtaxes.typepad.com/dont_mess_with_taxes/2012/11/irs-
deal-provides-museum-home-for-art-work-no-tax-bill-for-former-owners.html)

The outcome was that they donated to the MoMa, but weren't allowed to claim a
tax deduction for the donation. So yeah... kind of screwed.

