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Comment by ed25519FUUU | Hacker News Reader

> “It is kind of like credit card payments, with the bonus that there are no returned payments,” Polis said.

If the Bitcoin was stolen or used fraudulently aren’t you still required to return it?

Like cash, paying with Bitcoin doesn't make anything illegal legal. But unlike a check, wire transfer, or credit-card payment, there is no intermediary like a bank that might autonomously decide to reverse a transaction.

If you steal Bitcoin and use it to pay your Colorado state taxes, you remain liable (1) to the government for your theft, and (2) to the person you stole from for "conversion" of their Bitcoin. The first is a criminal issue (government comes after you); the second is a civil one (person comes after you). But Colorado's revenue agency doesn't care; they got paid and they get to keep it.

If you make up a fake credit-card number and use it to pay your Colorado state taxes, then the bank will eventually figure out what happened and reverse the transaction. Then the Colorado Department of Revenue will come after you for unpaid taxes (as well as for other misdeeds you have committed).

Note that Colorado isn't receiving Bitcoin directly, but rather is using a digital-currency payment processor. That company might decide to reverse iffy transactions. The problem is that the company can't reverse the Bitcoin transaction. They might decide, as part of their business model, to absorb the costs of fraudulent/illegal transactions and pass the (negative) savings onto the customer through fees. But they can't reverse Bitcoin transactions, any more than someone can command cash to fly out of the recipient's pocket and back into their own.

> Like cash, paying with Bitcoin doesn't make anything illegal legal. But unlike a check, wire transfer, or credit-card payment, there is no intermediary like a bank that might autonomously decide to reverse a transaction.

Unlike cash, but like any other stolen asset, if you unknowingly receive stolen bitcoin, you could still be legally required to return those bitcoins to the original owner.

> But they can't reverse Bitcoin transactions, any more than someone can command cash to fly out of the recipient's pocket and back into their own.

If "they" is a court, they absolutely can command you to take cash out of your pocket or to reverse a transaction you received.

The difference is that they aren’t involved: remember how one of the selling points for cryptocurrency is that there’s no recourse for fraud built in to the system? If someone pays the state of Colorado with a credit card without the owner’s consent, the state of Colorado has to eat the chargeback cost and other expenses for that transaction.

If someone uses Bitcoin, all they have to do is tell the victim “code is law, try suing them”. The appeal is obvious.

> If someone uses Bitcoin, all they have to do is tell the victim “code is law, try suing them”. The appeal is obvious.

This is really naïve. The cops show up and tell you to return stolen goods all of the time. You either do it or go to jail.

That’s the point: if you use a credit card, the tax agency gets the chargeback cost immediately and they’re always paying an overhead fee based on that risk (low but non-zero). With cryptocurrency, that cost is shifted to the victims and other departments and they don’t have to give the money back until a judge orders it.

I'm guessing the payment processor has to swallow the losses in that case. It's clear from the FB post that Colorado is getting USD, not BTC.

Probably yes, but unlike a credit/debit card or a check, there's no administrative process to do so. Which means you'd need to go through courts and the expense of courts will dissuade many from filing claims.

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