Author Topic: Dan Larimer - Your thoughts on what's happening to Bitcoin right now  (Read 15389 times)

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Offline Riverhead

What about the wash rule? How does that compete with 1031? Or are loses a whole different bag?

Offline tonyk

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If BTC went up x 10 I bet a ton of traders would hedge against it crashing by buying bitassets such as bitUSD, that way they wouldn't have to pay capital gains tax like they would if they went into fiat as no gain would have been realised.

That reminds me that I have to research that personally... For other assets you must buy substantially the same asset to avoid paying the tax in that particular year... and IRS is not known to give easy exemption benefiting the taxpayer...

Buy BitBTC.... substantially the same....

If you trade Apple Shares vs Google Shares then no capital gains tax is due (like kind exchange).
If you trade a house on the beach for a house in the mountains then no capital gains tax is due.
If you trade crypto vs crypto then no capital gains tax is due.

I am not a tax lawyer... but I play one on TV.   ie: I could wrong.

OK, you tax experts, here's a thought experiment:

I buy a bunch of BTSX.
I fiddle with the internal settings* to make that bunch of BTSX look like some mix of bitAssets.
I fiddle with the internal settings* to make that mix of bitAssets look like some other mix of bitAssets.
I fiddle with the internal settings* to make that mix of bitAssets look like some other other mix of bitAssets.
I fiddle with the internal settings* to make that mix of bitAssets look like a new bunch of BTSX.
I sell that new bunch of absolutely substantially the same BTSX.
I pay capital gains on the difference.

*internal settings = portfolio of bitAssets held in the internal market.

The asset I am holding is always BTSX (with its internal settings programmed to behave like an arbitrary basket of other assets).  Thus BTSX can be viewed as just one asset with programmable behavior.  Changing that behavior as often as you like, the taxable event is when you sell the BTSX, not when you "reprogram" the BTSX you are holding to track outside assets.

"What happens in Vegas stays in Vegas?"

I am not a tax lawyer... but I play one on TV.   ie: I could wrong.
LOL, so Dan got his sense of humor from you...

On the main issue I do  not think IRS are ready with the answer to this question either.

[edit] surprisingly, thinking about it a bit more, you should be fine!
« Last Edit: September 25, 2014, 01:07:03 am by tonyk »
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline Stan

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If BTC went up x 10 I bet a ton of traders would hedge against it crashing by buying bitassets such as bitUSD, that way they wouldn't have to pay capital gains tax like they would if they went into fiat as no gain would have been realised.

That reminds me that I have to research that personally... For other assets you must buy substantially the same asset to avoid paying the tax in that particular year... and IRS is not known to give easy exemption benefiting the taxpayer...

Buy BitBTC.... substantially the same....

If you trade Apple Shares vs Google Shares then no capital gains tax is due (like kind exchange).
If you trade a house on the beach for a house in the mountains then no capital gains tax is due.
If you trade crypto vs crypto then no capital gains tax is due.

I am not a tax lawyer... but I play one on TV.   ie: I could wrong.

OK, you tax experts, here's a thought experiment:

I buy a bunch of BTSX.
I fiddle with the internal settings* to make that bunch of BTSX look like some mix of bitAssets.
I fiddle with the internal settings* to make that mix of bitAssets look like some other mix of bitAssets.
I fiddle with the internal settings* to make that mix of bitAssets look like some other other mix of bitAssets.
I fiddle with the internal settings* to make that mix of bitAssets look like a new bunch of BTSX.
I sell that new bunch of absolutely substantially the same BTSX.
I pay capital gains on the difference.

*internal settings = portfolio of bitAssets held in the internal market.

The asset I am holding is always BTSX (with its internal settings programmed to behave like an arbitrary basket of other assets).  Thus BTSX can be viewed as just one asset with programmable behavior.  Changing that behavior as often as you like, the taxable event is when you sell the BTSX, not when you "reprogram" the BTSX you are holding to track outside assets.

"What happens in Vegas stays in Vegas?"

I am not a tax lawyer... but I play one on TV.   ie: I could wrong.



Anything said on these forums does not constitute an intent to create a legal obligation or contract of any kind.   These are merely my opinions which I reserve the right to change at any time.

Offline tonyk

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If BTC went up x 10 I bet a ton of traders would hedge against it crashing by buying bitassets such as bitUSD, that way they wouldn't have to pay capital gains tax like they would if they went into fiat as no gain would have been realised.

That reminds me that I have to research that personally... For other assets you must buy substantially the same asset to avoid paying the tax in that particular year... and IRS is not known to give easy exemption benefiting the taxpayer...

Buy BitBTC.... substantially the same....

If you trade Apple Shares vs Google Shares then no capital gains tax is due (like kind exchange).
If you trade a house on the beach for a house in the mountains then no capital gains tax is due.
If you trade crypto vs crypto then no capital gains tax is due.

I am not a tax lawyer... but I play one on TV.   ie: I could wrong.

and @donkeypong
I do think you are both stretching the 'appropriate' interpretation according to IRS.  BTC to bitBTC is the one that should be ok, btw.  :)

As for the Like-Kind Exchange, I am well aware of that rule... have several houses flipped with no capital gain taxes as of yet...
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.


Offline bytemaster

If BTC went up x 10 I bet a ton of traders would hedge against it crashing by buying bitassets such as bitUSD, that way they wouldn't have to pay capital gains tax like they would if they went into fiat as no gain would have been realised.

That reminds me that I have to research that personally... For other assets you must buy substantially the same asset to avoid paying the tax in that particular year... and IRS is not known to give easy exemption benefiting the taxpayer...

Buy BitBTC.... substantially the same....

If you trade Apple Shares vs Google Shares then no capital gains tax is due (like kind exchange).
If you trade a house on the beach for a house in the mountains then no capital gains tax is due.
If you trade crypto vs crypto then no capital gains tax is due.

I am not a tax lawyer... but I play one on TV.   ie: I could wrong.

For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline tonyk

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If BTC went up x 10 I bet a ton of traders would hedge against it crashing by buying bitassets such as bitUSD, that way they wouldn't have to pay capital gains tax like they would if they went into fiat as no gain would have been realised.

That reminds me that I have to research that personally... For other assets you must buy substantially the same asset to avoid paying the tax in that particular year... and IRS is not known to give easy exemption benefiting the taxpayer...
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline matt608

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I also don't think bitcoin will crash and burn causing bitshares to immediately take its place. I think it will be more of a slow progression where bitshares takes litecoin's place as number 2 and slowly starts to catch bitcoin eventually surpassing it. And I think the mainstream doesn't even know enough about bitcoin to realize what just happened. They will just think it got renamed or something.

Agreed.  First we need to take the #2 spot, which will get us a LOT of attention.  (Will ripple update its supply to 100B to stay ahead then?  Hehe). 

I think we could see a scenario where Bitcoin goes into another bubble and goes up 10x.  And Bitshares goes up 100x.  It would still only be 10% the size of bitcoin at that point.

If BTC went up x 10 I bet a ton of traders would hedge against it crashing by buying bitassets such as bitUSD, that way they wouldn't have to pay capital gains tax like they would if they went into fiat as no gain would have been realised.

Offline Ander

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I also don't think bitcoin will crash and burn causing bitshares to immediately take its place. I think it will be more of a slow progression where bitshares takes litecoin's place as number 2 and slowly starts to catch bitcoin eventually surpassing it. And I think the mainstream doesn't even know enough about bitcoin to realize what just happened. They will just think it got renamed or something.

Agreed.  First we need to take the #2 spot, which will get us a LOT of attention.  (Will ripple update its supply to 100B to stay ahead then?  Hehe). 

I think we could see a scenario where Bitcoin goes into another bubble and goes up 10x.  And Bitshares goes up 100x.  It would still only be 10% the size of bitcoin at that point.
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Offline Mysto

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At this point I think we need bitcoin to turn around and start heading up again.  Once bitcoin starts to get a lot of positive buzz and new buyers, then its easy to get them interested in bitshares as well.   (The name similarity works in our favor as well.  What do you do with your bitcoins?  You buy bitshares and get dividends!)
Yea I actually think the name similarity will help a lot more then people think.

I also don't think bitcoin will crash and burn causing bitshares to immediately take its place. I think it will be more of a slow progression where bitshares takes litecoin's place as number 2 and slowly starts to catch bitcoin eventually surpassing it. And I think the mainstream doesn't even know enough about bitcoin to realize what just happened. They will just think it got renamed or something.

Offline Ander

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At this point I think we need bitcoin to turn around and start heading up again.  Once bitcoin starts to get a lot of positive buzz and new buyers, then its easy to get them interested in bitshares as well.   (The name similarity works in our favor as well.  What do you do with your bitcoins?  You buy bitshares and get dividends!)
https://metaexchange.info | Bitcoin<->Altcoin exchange | Instant | Safe | Low spreads

Offline matt608

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There's very likely one huge pump coming.

Thereafter it is very likely a 2.0 platform will address the adoption/sustainability/regulatory issues and much of the crypto-value will dump BTC and head for the next big thing.

Say, something like Bitshares...

I agree, although a big pump could propell bitcoin onwards by getting it a ton of media attention around the world and result in more attention from big banks and it would stimulate the bitcoin ecosystem, moving it forward in many other ways.  I actually expect bitcoin to survive and grow for many years, and that bitshares-x will too as it can do many more things.

Offline oldman

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There have been many negative predictions regarding Bitcoin's demise so I don't expect to be taken seriously but here's my take.

Three fundamental factors are in play:

Firstly people are realising virtually no one is using Bitcoin for payments and likely will not, why would they given the hoops they jumped through to buy it.

Secondly without a valid payment example, cryptos don't have consumer support and consequently investors have tacitly recognised that no one other than the crypto community gives a damn about regulations.

Finally and most importantly PoW, once seen as a pure solution, is increasingly seen as flawed as there is now a credible alternative, something that Dan and DPoS can take some pride in revealing.

In summary the fanaticism that kept Bitcoin alive has simply run out of air.

In my view Bitcoin it's simply kept alive by a tight Chinese business model stemming from the need of the cadres to discreetly move money out of China.

As this reality sinks in a vacuum is being created, one that the Bitshares platform can fill but only if we see it associated with a currency that is 'used' by consumers and adopted by the existing Bitcoin infrastructure.

I see you, and raise you one Wall Street Pump.

All your points have merit, are quite reasonable and I am agreeable on the whole.

However, I am not sure any of it matters at this point.

Remember what WS did with mutual funds?

Bitcoin is orders of magnitude more profitable to fleece Main Street with.

The finance/banking complex is accumulating off-market while depressing price on-market.

A bit tin-foil, but it's pretty hard not connect the news from GABI/SM/Charlie Shrem to the rather well-timed/high slippage market sells that have been going on (why sell hundreds/thousands at once on one exchange over and over? Why not sell off-market or use a bot to drip sell?).

This will continue until off-market supply begins to dry up and buy pressure moves to exchanges.

Then the marketing pump will start - buy recommendations, ETF's going live, media coverage, perhaps a few pension/sovereign funds.

Does BTC need to be adopted, regulated and sustainable for the big money to make a big profit? Nope.

So I would not count BTC as down and out just yet. There's very likely one huge pump coming.

Thereafter it is very likely a 2.0 platform will address the adoption/sustainability/regulatory issues and much of the crypto-value will dump BTC and head for the next big thing.

Say, something like Bitshares...

Offline xeroc

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makes sense :D

it's just way to easy to misinterpret forum posts :|

Offline Frodo03

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Lol yea sorry I've been having trouble with my comp. I felt like a schoolteacher writing that.

Dare to translate this in plain(er) English?

Insults are not worth much if not understood, is what I mean.

Ahahah my apologies- no insult intended at all! In the USA, schoolteachers usually write their responses or corrections in red ink. What I meant was that while I was writing so much of my responses in red, I started to feel like a schoolteacher.