Other than that I like the idea. Although, the only reason I can think of why a developer would use btcworkers rather than your USD counterparts would be for anonymity (read: avoid paying income tax). What are the other benefits to being paid in bitcoins?
I think you know this, but perhaps not all readers do: you still are actually required to pay tax on earnings in BTC - just not declaring the income is illegal (and the authorities _are_ likely to notice if you're making a large amount of it and converting it back to your home currency to spend).
i.e. - I build a fence for a farmer, and he gives me 7 goats.
What do I owe the IRS?
The IRS does not accept payment in goats. They could secure a court order requiring you to sell the goat, or allowing them to sell the goat to satisfy your tax liability (with the excess returned to you).
> The Internal Revenue Code is not a mechanism for enforcing other codes of law, such as criminal law.  A person’s taxable income will generally be subject to the same Federal income tax rules, regardless of whether the income was obtained legally or illegally.
Also, Yale Law has a PDF entitled "Taxing Income from Unlawful Activities" (1974):
> When income from unlawful activities is reported, the taxpayer often supplies his name, address, and net income (usually in round figures, with such laconic labels as "miscellaneous income" or "income from various sources") and leaves the rest of the return blank.
The whole PDF is actually a very interesting historical study of the ins and outs of taxing ill-gotten gains.
I emailed the contact address for the site to complain about it.
Actually the whole story is not about taxation. Local government wants to control and supervise all people's money. For example, for each incoming payment (wire transfer) they require a piece of paper with ink seal of the sender, date, amount, and account numbers of both parties. If any of these attributes does not match bank transaction data, then you've got a fine. Every local law in this area is made in such way that local workforce is isolated from global market, underpayed, underemployed and kept politically loyal.
So, bitcoins are a like breath of fresh air here. They bypass traditional banking system, controlled by corrupt local authorities.
You also not need to read and agree to new terms of service every few months (how many people actually read them?). No need to worry you're account will be blocked, that the payment service will stop working and so on.
People keep forgetting that the overwhelming majority of all eBay payments are done using Paypal.
I opened a new account in a new country because paypal wouldn't allow me to change my address and a site wouldn't deliver to an address other than the paypal address.
I am not an accountant, always check with yours first!
Every sale you make with bitcoins should in theory be subject to sales tax, and any work you do should be subject to income tax. I suppose you might even be subject to capital gains tax if the value of your bitcoins goes up (although I'm not sure if capital gains has even been tested for digital currency, gains in foreign currency values are taxed).
The only way bitcoins can enable you to not pay tax is through lying to the IRS (i.e. tax evasion, which is illegal). And, given that anonymity with bitcoins is harder than it seems, there's a good chance that you will eventually be caught if bitcoins become popular, even if the IRS is not aggressively looking at bitcoin transactions currently.
If you suddenly start making all of your income in bitcoins and don't report it to the IRS, the IRS may very well audit you, wondering how you are supporting your lifestyle without any income.
Although the creators of laws don't always have in mind what happens online (often because they were created before the internet), most laws are broad enough that they cover new creations like bitcoins.
People & businesses have often tried to avoid paying tax by "swapping services" (e.g. accountant does developers accounts in return for a web site, and vice-versa), so the tax laws are deliberately broad to cover all "novel" non-monetary forms of payment.
Of course, you can only be found guilty of tax evasion if you are caught...
However the taxman has a useful trick, in that she can tax based on the (monetary) market value of the thing being "bought". So if you have sex with me in return for me developing your (£xxxx worth) iOS app, and the taxman finds out (during audit : "who developed that app, and how much did you pay?") she'll WILL come knocking on my door for payment (in cash, unfortunately, the Queen doesn't accept nookie). In the UK the taxman has a long history of investigating and taxing non-monetary transactions.
Casual transactions between the public will probably slip under the radar, but try earning any significant "sex and music" as a business or self employed, and you run a reasonable risk of getting caught out.
Though thinking about it, as a non-musical nerd I'd probably starve pretty quickly.
Some people may intend to use them for that, but it seems to me the primary purpose of the creators of bitcoin was to create a currency that was not under the control of a government and subject to arbitrary currency manipulation as a result.
Creating a currency to merely avoid taxes would be a lot simpler, really. Step one is just not to not pay taxes, after all...
Also, consult your accountant/tax attorney, but AFAIK the US has very similar provisions to what RobAley is describing. Transactions not conducted in dollars occur all the time and the IRS is not left stymied by them. In that sense there's nothing particularly special about bitcoins.
if you sell/exchange them for cash on localbitcoins.com there is no record and no tax to be paid.
> and no tax to be paid
There is tax to be paid, legally speaking, its just a question of whether or not you get caught for not paying it. Just like the tax man investigates people selling stuff on ebay, when sites like localbitcoins become more popular they will start investigating them as well. You may just find that the person you're meeting to sell your bitcoins to turns out to be a tax investigator.
AS with all criminal enterprises (a harsh label, but that's what tax avoidance is), you may get away with it. Or you may not.
as for meeting someone who turns out to be a tax investigator so what, localbitcoins.com and sites like it require no registration or even adding any personal details, unless I give the taxman my details he will not know who I am. Plus localbitcoins.com is not even necessary any forum could be used to arrange to meet and trade/sell BTC.
I guess what i am saying i that BTC allows people to avoid the taxman entirely. In your example of a company buying services, they are unlikely to use a BTC site to hire a feelancer, preferring to stay within the remit of fiat currencies and the taxman, however for individuals it is much more appropriate and much less interesting to the taxman,.
This article however is about business/freelance type work. And at least here in the UK, the taxman is just as interested in individuals doing business deals as it is with corps. If you think that you don't run the risk of getting caught, bear in mind that anonymous off-the-books cash transactions, including international deals, have been happening since time immemorial, and the taxman regularly collars offenders.
With regards to localbitcoin, the moment you hand over your btc in return for their cash, (here in the UK at least) a taxable transaction has occurred and they can compel (via arrest if necessary) you to provide your identity.
If you avoid public forums and launder your btc with only trusted friends/contacts, you may get away with it. But you're limiting your market and reducing the exchange rate you'll get.
And if you start pulling in larger amounts and converting that to cash successfully anonymously, you start having the same problems drug dealers do when laundering their money that came from untaxed sources. Here in the UK, you won't be able to use bank accounts as money laundering regs mean larger deposits have to be explained and notified, and of course bank records are just that, records. Likewise if you go to purchase that shiny new car in cash, money laundering regs kick in again.
So for small amounts you will probably get away with it, but the taxman doesn't care too much about those, and such transactions already exist as "cash-in-hand" work without btc. Bigger transactions are just as problematic as cash, unless everything you want to buy is available from sellers who accept btc and delete their shipping records (or provide the product digitally).
Sites without floors tend towards high-volume, low-quality projects listed. I am not saying you should have market prices, but having some reasonable floors will give the site better quality.
What do you mean by quality of the offers? Maybe you just want to eliminate cheap competition which has better quality/price ratio?
There may be demand for cheap services in developing countries and there may be people willing to work for such money there. Wouldn't you want to receive cheap service yourself? Cheap doesn't always need to mean poor quality.
If someone wants quality work done he is probably aware he won't get it for 1 BTC, but maybe it would be enough for him.
Bitcoin was created for freedom of exchange and any limitations would hurt the market.
If bit coin keeps gaining traction, where will it spread to first? Here are some of my thoughts:
Markets where chargebacks are a big problem: (1)easily resalable physical goods (ipods, supplements), (2)Gambling.
International ecommerce: (1) This already involves more than one currency. (2)Fraud is a bigger problem (3)transaction fees are higher (4) transaction times are higher.
International ecommerce - problematic markets: (1) high fraud markets that CCs/Paypal don't serve. (2)restricted currency markets(
P-2-P Markets: (1)mutual fraud concerns. (2) no "customer" that needs figure out bitcoin.
Avoid official detection: (1)drugs/illegal markets (2) bitcoin tax haven.(3)money laundering & other criminal banking needs.
*I notice a theme in my thinking: bitcoin as a credit card replacement.
They are a problem and annoyance for merchants, yes; but a great benefit for consumers. Can you imagine buying ipods of randomer on the internet and once you send the money, it's gone. They can send you a box of sand instead and there's nothing you can do. That's a disadvantage to consumers.
Economically, if you don't build in buyer protection, they may stay away entirely.
To minimize fraud merchants will often refuse risky business like international orders or orders where the billing and deliver addresses don't match.
There are several interacting "margins" limiting ecommerce. Merchants not skilled enough in fraud protection. Market to fraud prone. Low margin markets where 2.5% processing fees + 2.5% fraud + 2.5% fraud prevention make it unserviceable. Move any of the boundaries and you will allow more merchants to exist.
Are they great for consumers? There are invisible effects that ultimately hurt consumers. A site may refuse to deliver to you. It may hold back shipments until the fraud checks are done. You may be paying more. A site may not exist at all because they were unable to deal with chargebacks.
Each chargeback costs the merchant about $30 and then after so many chargebacks your credit card billing rates change. Too many chargebacks and you lose your ability to take credit cards all together.
My question is: is there something about Bitcoin that I am missing that would entice people to work for such low rates? If someone came up to me and asked me to do any of those jobs for those EUR rates, I would decline unless they are either very good customers of mine or I really fancied them.
This is a serious question, not criticism. I'd like to know whether there is an allure to Bitcoin that I'm completely missing that would make people agree to work for less "real" (i.e. not-Bitcoin) money.
Given that though, yes there is an allure to bitcoin. Many people believe they will be worth more in future, so may willing to work for lower rates in order to get some and participate in the "bitcoin economy".
That's what made me curious, but your answer makes a point, but then it means people are taking a punt on the Bitcoin.
I would create a big button that says "CREATE LISTING" like StackOverflow has for asking a question
Also, is there a way to add a category/request that one be added? There's no "Ruby" section and I was looking to post a listing.
Two years ago a guy bought two pizzas for 10,000 BTC when it was 1 BTC ~ $0.004 USD, and many people thought the fact it had any real dollar value at all was pretty out there. Now, people are already talking about using mBTC or uBTC by default if the value goes up a lot more. Just because $10 / BTC feels high doesn't mean it isn't still extremely early in the life of Bitcoin.
You can be long or short Bitcoin, but I think that if it does end up working, it has a long way up to go.
One of the main problems with Bitcoin from my perspective is that nothing backs its value; the value is unregulated and purely arbitrary and thus subject to all kinds of manipulation and confidence tricks. The current price depends entirely on confidence. It's an interesting experiment but I wouldn't want to store value in such a currency, and if you can't reliably store value or reliably price goods in it vis a vis other currencies, it's more like a payment method than a currency.
Pretty much every fact you name in that sentence is part of why I'm storing some of my value in bitcoin. I wouldn't count on the long-term stability of the US.
One of the main problems with Bitcoin from my perspective is that nothing backs its value
Nothing backs the value of gold, either. Come to think of it, I'm not sure the whole "backing" concept is really valid. I mean, yes, saying currency X is backed by metal Y is giving you useful info, but metal Y is always just a commodity.
the value is unregulated and purely arbitrary and thus subject to all kinds of manipulation and confidence tricks.
That's somewhat the case now becuase the market is pretty illiquid (bitcoin is only used by geeks). If/when the market is really liquid and the total value stored in bitcoin is enormous, that won't be the case anymore.
The current price depends entirely on confidence.
That bothers me too. But, ultimately, there will always be a demand to store value, and bitcoin is a good candidate, since there is a fixed number of them. If bitcoin were to become really big, whenever there were a price dip, speculators would jump in and bring it up again. And I think we've already reached that point to a large degree. It seems like there really is a floor on the value of bitcoin (and this will be increasingly true, and the floor will get increasingly higher, as bitcoin becomes more popular). You just aren't gonna see gold go down to $500/oz in current USD; nor are you going to see bitcoin go down to $3 (if it does, I and a ton of other people will be snapping it up as fast as possible... which is why it won't get there in the first place).
Actually, it could go down to (say) $3 if a big holder of bitcoins dumped them all suddenly and irraionally, since the market isn't that liquid, but there would be an immediate price correction, so it would just be a temporary blip.
Please fix that so I can sell my services!
1. Download the client from bitcoin.org.
2. Launch it and let it sync with the network. (Unfortunately this takes a long time upfront.)
3. Use the "Send Coins" and "Receive Coins" tabs to send and receive coins.
If you wanted to go with a hosted service instead of running the Bitcoin client on your own computer, there are many available. A few include:
- https://www.coinbase.com (YCS12)
It also generates new addresses deterministically from an initial seed, which you can write down and keep securely or remember in your brain, allowing you to recover your entire wallet if you lose access to your computer.
Looks like a downside worth keeping in mind with Electrum.
There are several stratum servers however, and you can disconnect from one and check with another. I think the plan is to eventually connect to multiple and make sure that they agree. This doesn't prevent a possible man in the middle though if all your communication is being tapped.
Personally I think this slight risk is worth it for the instant start times and the deterministic wallet. And it's still considerably more secure than the online hosted wallets, where you are not in control of your coins at all.
The attack described is a serious one. If someone compromises (or colludes with) the server, they could “buy” 100 BTC worth of stuff from you without really paying. You send the stuff, and you're 100 BTC poorer. In the end it's as if you'd been robbed. Same result.
With an online hosting service, like Coinbase, I think it's rather obvious you're trusting them, just as you would trust PayPal or a bank. You can make an informed decision whether you trust them (and their security) based on reputation.
The Electrum website, in contrast, hides the fact that I'm trusting a third party and makes no mention of who that third party is or why they deserve my trust. IMHO, they should disclose exactly what's going on very prominently. But they don't. As a person new to Bitcoin, based on what I know so far, I would sooner go with Coinbase than Electrum.
Cool site. Good luck!