Can BitCoin, the First Open Source Currency, Threaten the Dollar? | Hacker News Reader

Can BitCoin, the First Open Source Currency, Threaten the Dollar?

deathandtaxesmag.com

16 pointsTuxPirate20 comments

I have BitCoins, so this only is of benefit to me; but I have the feeling that stories about BitCoins are being promoted on HN, not only for the community's interest in BitCoin, but in an effort to pump the exposure to increase awareness and value of their stock.

I don't mind the effect too much, as I personally find the Bitcoin phenomenon to be endlessly interesting, but I feel compelled to point out what might be a small elephant in this room.

The relentless promotion campaign that is conducted here and similar places makes it very hard to not interpret the whole phenomenon as a type of penny stock style pump and dump scheme, regardless of the technical merits at the core of the system. One would think that anyone who thought of themselves as not of part of a speculative frenzy would realize that promoting such a bubble, and not caring about giving people the impression that they are, would be bad for its mid to long term success.

It's certainly over-the-top. I tried to flag this post down, as it has nothing to do anymore with Bitcoin as open source project and thus hacking. But there's just too much incentive to get it on the front page, I guess...

I like the idea of cryptocurrencies very much but can we stop the overhyping? Nothing good can come of it.

Small problem, he says "They cannot be taxed, which would remove yet another source of power the state has over individuals."

I hate to inform everyone, but Bitcoins CAN be taxed. Anything that is normally taxable in USD transactions are also taxable as a BTC transaction.

Remember people, pay your damned taxes.

"They cannot be taxed"

The only possible explanation for such a bizarre statement that I can think of is that the author has never had any experience of paying taxes (in any form).

Moreover, they'll be taxed in the United States based on USD value. So if you are a bitcoin-millionaire in December, you had better hope that the market hasn't imploded when you do your taxes in March.

Why does everyone miss the point that once you cash out your BTC you're paying USD taxes.

The idea is that you never need to 'cash them out', because it is meant to be used as a currency not as a casino game. If you do your transactions in them you don't need to go back to dollars.

Nope, not at all. Ask a certified accounted. This is no different than US companies doing business in foreign currencies... you keep your books in USD equivalent values indexed to an exchange rate that is regularly updated.

As in, daily, weekly, quarterly. Gaming that also raises eyebrows at the IRS.

Yeah I believe you. I don't live in the US so I know nothing about your tax system. I just wanted to make clear that the goal is to get a worldwide (micro-)economy running in BTC, not to bubble and 'cash out' to other currencies. Though it looks that way at the moment...

Because they are dreamily thinking that they will spend BTC directly, and never convert to USD.

No conversion to dollar necessary. An American citizen say lives on the US Canada border and has a job just across the line and gets paid in Canadian dollars they are still expected to pay income tax. If an American citizen lives and works in France for a decade they are expected to file income taxes in the US every year. Income tax is just that, tax on income it applies to every citizen of the US no matter where they live or what currency they get paid in. BTC is no different.

I am no expert on american taxes (eh, IANEOAT?) but I believe there is a treaty between France and USA preventing double taxation. You might or might not be forced to file the papers but if you're already paying taxes from the income in France (as would be the case - since the employer would just deduct it) you wouldn't have to pay the US taxes.

Sorry for the OT

Even if they never convert it to USD, taxes has to be paid on all revenues, regardless of currency.

The fact the transactions can be pretty anonymous makes them think they will be able to hide them.

LOL ok, good luck trying to pay your bills in Bitcoin haha.

Bitcoin uses a distributed timestamping server. The paper literally states that "new transactions are broadcast to all nodes". This effectively means that they need a global broadcast to the majority of nodes for every bit coin transfer.

This doesn't scale in terms of number of nodes, and it doesn't scale in number of transactions. They can not compensate for an increase in the number of transactions by adding more nodes because instead of distributing the work load over the nodes, they are in fact replicating it.

The rationale seems to be that as long as you have more honest nodes than malicious ones the system will not be hijacked. Of course, the chance that a Russian botnet has more CPU power than you do is quite real. They go on to say that if an attacker has more computational power than everyone else they would do better to use it mining coins than to break the system, and they seem to leave it at that. Counting on the rational behavior of potential attackers does not seem like a good strategy to me.

Maybe I'm missing something here, but I'm pretty sure this thing will simply not scale. It reminds me of Gnutella, which implemented search through scoped flooding and somehow promised both scalability and coverage. I have the same feeling here. Scalability _and_ security in a peer-to-peer network? Surely you jest.

When something sounds too good to be true it probably is.

edit: link to the paper: http://www.bitcoin.org/bitcoin.pdf

Governments aren't governments because they control currency. They control currency because the people gave them to power to do so. They were already governments before that.

Answer: No.

Bitcoin will change the world; end of story.

no it wont.

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