Crypto and HR 3684 - urgent attention needed from all!

[njdevilsfan87]

If cryptocurrency can't be exchanged for goods and services just like any other currency then it has no value and is... wait for it... a giant scam.

Again wrong. You are exchanging it for the service of using the network. The network that has value. Maybe not for someone such as yourself at this time, but for plenty of people it does. There are people now trying to build applications on top of them that will expose their value and utility (and just flat out upgrades of the traditional systems running in the background that you are not even aware of) to the average person. And this bill... stifles that. If you're pro other countries getting ahead in this technology, then support it.

 

[fskimospy]

Again wrong. You are exchanging it for the service of using the network. The network that has value.

So by your argument the purpose of bitcoin is to pay for access to a network using bitcoin, something you already have to pay real money to get ahold of either through buying it directly or mining costs, meaning you just invented Itchy and Scratchy money. lol.

Also I wonder if the many investors in bitcoin are aware of the idea that the intention is for them to never convert it into real world goods or services. I suspect they aren't! (scam)

 

[nakedfrog]

Again wrong. You are exchanging it for the service of using the network. The network that has value. Maybe not for someone such as yourself at this time, but for plenty of people it does. There are people now trying to build applications on top of them that will expose their value and utility (and just flat out upgrades of the traditional systems running in the background that you are not even aware of) to the average person. And this bill... stifles that. If you're pro other countries getting ahead in this technology, then support it.

And it stifles it by... requiring tax documents to be filed for transactions over $10k? Is it doing anything else to stifle it?

 

[Lost_in_the_HTTP]

This is my final statement on the matter.

I knew it was too good to be true.

 

[fskimospy]

And it stifles it by... requiring tax documents to be filed for transactions over $10k? Is it doing anything else to stifle it?

Look, if you can't use cryptocurrency to evade taxes (ie: commit crime) then people won't want to develop the currency.

Also apparently that 'currency' shouldn't be mistaken to mean 'something you can exchange for goods and services'.

 

[njdevilsfan87]

And it stifles it by... requiring tax documents to be filed for transactions over $10k? Is it doing anything else to stifle it?

It's not that black and white unfortunately. The guidelines are not for a singular transaction. You cannot take take 1 single $10K transaction and break it up into 2x$5K transactions to avoid reporting.

Any successful business processing either a large amount of small valued transactions, or just a few large ones... let's just say any successful business would be required to report information they cannot obtain. They can report the amount, but it is impossible to the who is on the other side of the smart-contract.

I'll give you an example of a potential business this could hurt:

Joe wants to make a living creating Indie video games. But he doesn't want to go through Steam to sell as Steam is attached with huge seller fees, potential licensing issues, etc. He decides to set up his own store and decides to use the Ethereum blockchain to facilitate his sales. And because Ethereum is the backend of his store, there are no licensing fees or other requirements that other comparable centralized e-commerce store solutions come with. Joe sells NFTs that provide undisputable proof-of-ownership of a copy of the video game he is selling. The NFT acts as the key to unlock the game - it is his built-in DRM. Additionally, the NFTs contain royalties so that any time someone decides to sell that NFT to another person - he gets some small cut of the transaction. Joe ends up with a successful business model. And although he is not making $10K/day, the value of transactions going through smart-contracts linked back to his wallet does exceed $10K. Joe must now report all of these transactions per IRS reporting guidelines. That is the who and where of everyone involved in these transactions, and how much. That is not possible.

You can take this example and apply to anyone wanting to sell any of their own productions - be it art, music, video games, etc. All of these free business models: DOA. They need go back to getting ripped off at iTunes, Steam, whatever services we have today.

Another example: if someone creates a game that runs on a blockchain, where the gold or in-game token/currency has real world value (think WoW gold, RuneScape gold, etc) - by IRS guidelines they will need to report everyone involved in those transactions as their game will be facilitating more than $10K worth of in-game currency tokens within a 24h period (or whatever reporting period is in the guidelines).

No serious developer or VC is going to take on development with the old IRS guideline trying to be applied to trustless smart-contract technology. Developments will run into that $10K limit very quickly - possibly just even during testing phases via burning Ethereum just to process transactions. And even if they could report the who and where of everyone involved in these transactions, the reporting and accounting of it all would be a nightmare for both the businesses and the IRS. Part of the point of trustless smart-contract technology is to remove the need for any of this.

I knew it was too good to be true.

Some people might actually want to be educated so they can avoid continuing to miss out on what is turning into the greatest wealth transfer in the history of humanity. I apologize for jumping the gun.

So by your argument the purpose of bitcoin is to pay for access to a network using bitcoin, something you already have to pay real money to get ahold of either through buying it directly or mining costs, meaning you just invented Itchy and Scratchy money. lol.

Every single cryptocurrency begins as itchy scratchy money. Bitcoin was no different in that regard. 99.9% of them remain that way (itchy scratchy money). But you again miss the points or don't understand why networks like Bitcoin and Ethereum have value and continue to gain value.

 

[TheVrolok]

BTW I found myself agreeing with s0me0ne earlier.

Happened to me the other day, too, makes you step back abx question your reality, doesn't it?

 

[Fanatical Meat]

It's not that black and white unfortunately. The guidelines are not for a singular transaction. You cannot take take 1 single $10K transaction and break it up into 2x$5K transactions to avoid reporting.

Any successful business processing either a large amount of small valued transactions, or just a few large ones... let's just say any successful business would be required to report information they cannot obtain. They can report the amount, but it is impossible to the who is on the other side of the smart-contract.

I'll give you an example of a potential business this could hurt:

Joe wants to make a living creating Indie video games. But he doesn't want to go through Steam to sell as Steam is attached with huge seller fees, potential licensing issues, etc. He decides to set up his own store and decides to use the Ethereum blockchain to facilitate his sales. And because Ethereum is the backend of his store, there are no licensing fees or other requirements that other comparable centralized e-commerce store solutions come with. Joe sells NFTs that provide undisputable proof-of-ownership of a copy of the video game he is selling. The NFT acts as the key to unlock the game. Additionally, the NFTs contain royalties so that any time someone decides to sell that NFT to another person - he gets some small cut of the transaction. Joe ends up with a successful business model. And although he is not making $10K/day, the value of transactions going through smart-contracts linked back to his wallet does exceed $10K. Joe must now report all of these transactions per IRS reporting guidelines. That is the who and where of everyone involved in these transactions, and how much. That is not possible.

You can take this example and apply to anyone wanting to sell any of their own productions - be it art, music, video games, etc. Or any companies wanting to sell any service to anyone through Ethereum, where something like a NFT acts the receipt.

Joe didn’t provide a complete solution so imo his business plan is half assed.
He needs to be able to track and report those transactions. That is exactly why a business like steam exists to do all the heavy repetitive lifting for guys like Joe.
Also sounds a lot like a pyramid business to me with Joe getting a kickback on coin thingys.
I’ve never heard of a long term pyramid business.
Maybe cutco but it isn’t exactly a model business.

I still don’t get what this proposal does for me.

 

[Fanatical Meat]

Happened to me the other day, too, makes you step back abx question your reality, doesn't it?

I just don’t get crypto and I fail to see any real world example of why it would be better than what we’ve got.

 

[nakedfrog]

It's not that black and white unfortunately. The guidelines are not for a singular transaction. You cannot take take 1 single $10K transaction and break it up into 2x$5K transactions to avoid reporting.

Any successful business processing either a large amount of small valued transactions, or just a few large ones... let's just say any successful business would be required to report information they cannot obtain. They can report the amount, but it is impossible to the who is on the other side of the smart-contract.

I'll give you an example of a potential business this could hurt:

Joe wants to make a living creating Indie video games. But he doesn't want to go through Steam to sell as Steam is attached with huge seller fees, potential licensing issues, etc. He decides to set up his own store and decides to use the Ethereum blockchain to facilitate his sales. And because Ethereum is the backend of his store, there are no licensing fees or other requirements that other comparable centralized e-commerce store solutions come with. Joe sells NFTs that provide undisputable proof-of-ownership of a copy of the video game he is selling. The NFT acts as the key to unlock the game. Additionally, the NFTs contain royalties so that any time someone decides to sell that NFT to another person - he gets some small cut of the transaction. Joe ends up with a successful business model. And although he is not making $10K/day, the value of transactions going through smart-contracts linked back to his wallet does exceed $10K. Joe must now report all of these transactions per IRS reporting guidelines. That is the who and where of everyone involved in these transactions, and how much. That is not possible.

You can take this example and apply to anyone wanting to sell any of their own productions - be it art, music, video games, etc.

Another example: if someone creates a game that runs on a blockchain, where the gold or in-game token/currency has real world value (think WoW gold, RuneScape gold, etc) - by IRS guidelines they will need to report everyone involved in those transactions as the game will be facilitating more than $10K worth of in-game currency tokens within a 24h period (or whatever reporting period is in the guidelines).

Well, I will give you credit that this is the best illustration you've provided.
I don't really see tech being stifled here though, just specific business applications of tech, and for good reason, because the last thing we need are more tax dodges.
I'm not convinced NFTs are actually a good thing either.

 

[Amol S.]

The good news is, Cipher Block Chaining is not listed under the new TLS 1.3 standards. Don't know if this bill affects CBC based cipher suits in anyway. Wonder if this was some sort of secret way to allow the FCC and NSA to use some backdoor in CBC_AES encryption to spy on communications.

 

[fskimospy]

I just don’t get crypto and I fail to see any real world example of why it would be better than what we’ve got.

If you're running a criminal enterprise it's a lot better!

There's a reason why the people who engage in ransomware attacks always ask for payment in bitcoin - it makes them a lot harder to track down. This is why the US should ban any financial institution from engaging in the buying or selling cryptocurrencies. Ransomware attacks would most likely go way down if it became almost impossible for them to be paid anonymously.

 

[njdevilsfan87]

Joe didn’t provide a complete solution so imo his business plan is half assed.
He needs to be able to track and report those transactions. That is exactly why a business like steam exists to do all the heavy repetitive lifting for guys like Joe.

Joe can report those transactions. He just cannot report all of the information the IRS requires. He can provide all the details of the contracts he interacted with, but he cannot report who is tied to those contracts other than himself. And because he cannot report the information in full, he is now performing an illegal activity. Steam does not have to report the information the IRS is requesting here. If they did, Steam would be asking for your SSN, or at the very least, doing some kind of basic identity verification upon registration (something that includes photos of government IDs). They may for sellers, but they certainly do not for the consumers which is probably 99% of their userbase.

Ransomware attacks would most likely go way down if it became almost impossible for them to be paid anonymously.

Yes, grandma will no longer be a target because attackers know she doesn't have a Bitcoin wallet on her computer. Bitcoin will not go away if it is banned in the US. You cannot turn it off at this point unless the entire power grid of the world goes out. And even if it did go out, it's likely to reboot and continue along when the power comes back on. Do you believe that banning Bitcoin the US will stop ransomware attacks from abroad (where most of them come from). Especially when the attackers know how simple it is to install a Bitcoin node, obtain (even if made illegal), and send it? So yeah, let's go ahead and ban it, understand it less while the rest of world starts to understand it more, and then be completely defenseless with no homegrown talent against all the ransomware attacks headed our way.

 

[Fanatical Meat]

Joe can report those transactions. He just cannot report all of the information the IRS requires. He can provide all the details of the contracts he interacted with, but he cannot report who is tied to those contracts other than himself. And because he cannot report the information in full, he is now performing an illegal activity. Steam does not have to report the information the IRS is requesting here. If they did, Steam would be asking for your SSN, or at the very least, doing some kind of basic identity verification upon registration (something that includes photos of government IDs). They may for sellers, but they certainly do not for the consumers which is probably 99% of their userbase.



Yes, grandma will no longer be a target because attackers know she doesn't have a Bitcoin wallet on her computer. Bitcoin will not go away if it is banned in the US. You cannot turn it off at this point unless the entire power grid of the world goes out. And even if it did go out, it's likely to reboot and continue along when the power comes back on. Do you believe that banning Bitcoin the US will stop ransomware attacks from abroad (where most of them come from). Especially when the attackers know how simple it is to install a Bitcoin node, obtain (even if made illegal), and send it? So yeah, let's go ahead and ban it, understand it less while the rest of world starts to understand it more, and then be completely defenseless with no homegrown talent against all the ransomware attacks headed our way.

Point was your credit card/debit card does that for you/steam.
Still sounds awfully pyramid like by your earlier description.

 

[fskimospy]

Joe can report those transactions. He just cannot report all of the information the IRS requires. He can provide all the details of the contracts he interacted with, but he cannot report who is tied to those contracts other than himself. And because he cannot report the information in full, he is now performing an illegal activity. Steam does not have to report the information the IRS is requesting here. If they did, Steam would be asking for your SSN, or at the very least, doing some kind of basic identity verification upon registration (something that includes photos of government IDs). They may for sellers, but they certainly do not for the consumers which is probably 99% of their userbase.



Yes, grandma will no longer be a target because attackers know she doesn't have a Bitcoin wallet on her computer. Bitcoin will not go away if it is banned in the US. You cannot turn it off at this point unless the entire power grid of the world goes out. And even if it did go out, it's likely to reboot and continue along when the power comes back on. Do you believe that banning Bitcoin the US will stop ransomware attacks from abroad (where most of them come from). Especially when the attackers know how simple it is to install a Bitcoin node, obtain (even if made illegal), and send it? So yeah, let's go ahead and ban it, understand it less while the rest of world starts to understand it more, and then be completely defenseless with no homegrown talent against all the ransomware attacks headed our way.

You don’t understand how this works. US companies conduct financial transactions through financial institutions that do work in the US. If you ban transactions in crypto for any financial instruction that does business in the US then companies have no way to pay the ransom. Not much point in taking a hostage you can’t get paid for.

So yes, I think it would substantially decrease ransomware attacks from abroad.

 

[njdevilsfan87]

Point was your credit card/debit card does that for you/steam.
Still sounds awfully pyramid like by your earlier description.

Ok fine, you said Steam was doing the heavy lifting but ok...

Generation 3.0 blockchains like Cardano are looking into how to have your identity digitally connected safely and securely to the network, here's one example: https://atalaprism.io/app

Not only did we just reach the point where the technology enables things like this to be built, but this tech like this takes time to build and test. Who is funding it? Certainly not our government (in fact they're now doing the opposite of being productive). No, it's the people that have already made out and done well within the ecosystem, thanks to it being a free market. And once all of this is "finished", it will be far more secure and robust than the systems we have in place today. Regulations, rules, etc all of that will come with time. And the hammer will come down on those who have been avoiding taxes - which is not as easy to do as someone of you make it out to be. You're not entering the crypto market with $10K and leaving with $100K without some flags being raised. Unless you plan to live off Bitcoin ATMs for the rest of your life (and that will come to fail too as digital identity tech is developed and adopted).

 

[njdevilsfan87]

Another example of great use case:

Cardano has a community fund, and I'm not sure how exactly it is funded - but I assume through the some network fees being diverted into this fund as well as donations, etc. Anyone can inject a project/funding proposal into the ecosystem. And the stakeholders of Cardano get to cast votes on what gets funded (for the development and growth of their ecosystem). It's all 100% open and transparent. Imagine our taxes at city, state, and the federal working like this. No more games - nothing behind closed doors. How funds are allocated and used becomes 100% transparent and are thus less likely to be mismanaged due to negligence or corruption (as I'm sure everyone complains about).

 

[Fanatical Meat]

Another example of great use case:

Cardano has a community fund, and I'm not sure how exactly it is funded - but I assume through the some network fees being diverted into this fund as well as donations, etc. Anyone can inject a project/funding proposal into the ecosystem. And the stakeholders of Cardano get to cast votes on what gets funded (for the development and growth of their ecosystem). It's all 100% open and transparent. Imagine our taxes at city, state, and the federal working like this. No more games - nothing behind closed doors. How funds are allocated and used becomes 100% transparent and are thus less likely to be mismanaged due to negligence or corruption (as I'm sure everyone complains about).

You need a network as secure as Ethereum to facilitate all of this.

What prevents the above scenario from happening with what we have now?

 

[njdevilsfan87]

What prevents the above scenario from happening with what we have now?

Generation 3.0 blockchain technology is still in the proof-of-concept phase. The things it votes on don't really matter from a larger macro economic worldview. They're voting on games on dapps right now. You need stress testing, along with software and apps that dumb it all down for the more average person to be able to use. So to answer your question: a few years of software development and testing. Ethereum smart-contracts were around for a few years before people started using them outside of ICO scam tokens (shut down by the SEC in 2017 - a good regulation).

 

[fskimospy]

What prevents the above scenario from happening with what we have now?

Other than the good sense that putting everyone federal expenditure up for a vote is a terrible idea?

Really though if he wants to tout crypto’s one really good advantage he needs to focus on how much it’s helped criminals. That’s what it’s actually good at!

 

[njdevilsfan87]

Other than the good sense that putting everyone federal expenditure up for a vote is a terrible idea?

Really? It's a bad idea for me to have a more direct say in how I'd like to have my tax dollars spent? Or better yet - how the majority of people may feel? And to know the money is being properly used?

You do realize politicians would still likely have their place in creating and putting up proposals...

 

[Fanatical Meat]

Other than the good sense that putting everyone federal expenditure up for a vote is a terrible idea?

Kind of my point

 

[IronWing]

IRS reporting doesn't require that every transaction be reported with all party info included. No one does that. If the transaction involves funds you wish to claim as a non-taxable business expense then yes, the IRS requires the business to maintain records showing each side of the transaction in order to prevent fraud and tax avoidance. For Joe's game sales, no, just no, it isn't required. That would be like a store having to report the names of all parties to soda sales.

 

[fskimospy]

Really? It's a bad idea for me to have a more direct say in how I'd like to have my tax dollars spent? Or better yet - how the majority of people may feel? And to know the money is being properly used?

You do realize politicians would still likely have their place in creating and putting up proposals...

We have a representative democracy for a reason.

 

[njdevilsfan87]

IRS reporting doesn't require that every transaction be reported with all party info included. No one does that. If the transaction involves funds you wish to claim as a non-taxable business expense then yes, the IRS requires the business to maintain records showing each side of the transaction in order to prevent fraud and tax avoidance. For Joe's game sales, no, just no, it isn't required. That would be like a store having to report the names of all parties to soda sales.

If sodas were considered currencies or a commodity like gold, then yes they would. The problem with Joe is he's not really transacting either, but without amendments to the bill to clarify that, then he is. Even just the facilitation of the transfer (even if just being a node operator helping secure the network or connected to a smart-contract) of any digital assets on any blockchain even if he is not receiving any income from it. Until the bill is amended, almost everyone in the cryptocurrency ecosystem is treated like a currency exchange broker under old/traditional laws, and that's the problem. Those laws were written for centralized entities doing the work, and not this new decentralized way of finance.

Anyway, this really is taking up way too much of my time now - so fkimospy, https, etc - you guys win in that I now "accept" your opposing views will remain opposing. Have a great rest of your day/week.