Bitcoins/Litecoins/Virtual Currencies

Izo_sl said:

All true. Except the parts that are not. Youcanmine and provide value. Some e-currencies are also premined and instead you provide clock cycles to help a science project, some nobler than others - clean water, protein folding, etc.

Boinc is a good example - Ripple payout. Also Ripple used to have Computing for Good (phased out 2014).

https://boinc.berkeley.edu/

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If a cryptological currency occurs I really hope it has a dual use. I really hate the idea of future currencies being built upon massive datacenters using electricity for a computational circle jerk. It's like the machine version of finance companies hiring top mathematicians and computer scientists to create trading algorithms.

bitcoinity.org/markets

0.417 now. TO THE MOON!

(I have no idea why it's going up, possibly:Barry Silbert on Twitter:?)

So just a heads up for people dealing in virtual currencies. I'm pretty knowledgeable on the subject as I have a big business in several 3d grids including second life, and have a CPA locally who assists me.

The IRS isreallycracking down on (mainly) bitcoins but also virtual currencies (henceforth "VC") in general to ensure they are reported properly and at the right time. If you make decent money using VCs, and live in the USA, you need to follow general tax laws on the matter. While VCs are not "currencies" per se, they are still property and as such have to be reported if received in certain manners, and certainly should be when converted to US Dollars no matter the currency.

For example, if you are someone who pays an employee in part by VC, you need to report the fair market value of the transactions (based on when they occured) on their W-2.Source.Virtual currency. Notice 2014-21 describes the treatment of virtual currency for federal tax purposes. Bitcoin is an example of virtual currency. The fair market value of virtual currency (such as Bitcoin) paid as wages is subject to federal income tax withholding, Federal Insurance Contributions Act (FICA) tax, and Federal Unemployment Tax Act (FUTA) tax and must be reported on Form W-2, Wage and Tax Statement.

In case you never saw this notice 2014-21, it'shere.

In my business, I take for example Second Life currency (L$) and trade it on the exchange to other users who pay me USD. At that moment, that is pure income that I have to report and pay taxes on. Sadly, expenses for this business (Which are handled in L$ but are not things like employees - for example purchasing textures, etc) are not business deductions because that was not a "real world transaction" in the scope of the notice 2014-21.

Make sure you guys follow the laws here, especially if you've got decent income coming in.

OneofOne_sl said:

I'm assuming (I have no idea the scope of your business) that you at least have business expenses like the home office deduction, office supplies, game purchases/subs, etc?

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Yes, I use the home office deduction, deduct a portion of my utility bills, 80% of my internet bill (justifiable since its an internet-based business), office supplies, mileage for trips to the CPA, etc.. but not game subs .

That's all fine though as that is from me converting the VC into USD. I don't use VC to pay for any of that stuff. But like, if I was mining my own BTC, and used said BTC to buy something in a real world transaction (like something from newegg for example) that is a nightmare for tax purposes. Basically (as i understand it - could be wrong) you have full income on the BTC you mined based upon it's value the date you actually received the BTC, and then your expense is the BTC value on the day you paid out (not the value of the product you bought although it should be similar).

However, if I hire an in-world texture artist, for example, and I pay them in the VC, there is no record keeping, tax issues, or anything to deal with. However if I hired some artist on Fiverr and paid them in BTC, you must keep records, and you have tax issues to deal with, especially if you buy more than $600 worth in services from them. I've had to W-8 and W-8BEN so many people that I contract hire . It only takes effect if its areal-world transaction. Transactions that take place within the virtual world are not counted.

It's just really something to be aware of, especially if you're on the receiving end of such transactions.

No idea. This article is hyping it as a slow increase in the fundamentals behind using BTC as a deflationary currency:
https://sato.sh/note/11128

But I don't really buy it.

There is also more and more talk about how BTC is easily stressed under continued load because of the way the block chain works. Maybe BTC will be able to evolve into a more extensible system that doesn't break down under high usage, or maybe a new tech will need to be made that makes BTC obsolete. I don't want to rehash the same arguments that have already been made in this thread but the more usage I see of BTC the more I think that cryptocurrency is here to stay and BTC is just the horse-drawn buggy we'll leave behind.

I know a few guys from old school Second Life gambling days who now run a bitcoin opensim making a fucking killing atm especially since they are fine with casinos, etc. A good friend of mine who I also worked with in SL in the past has made over 10,000 BTC in the last year from it. Completely unregulated rapeness.

Good times.

New all time high.

I feel like I'm going to go cash in my 1 bitcoin one day to find out I've been robbed somehow and the system makes it inherently impossible to get your money back.