Thursday, April 10, 2014

IRS Bitcoin Ruling May Have a Bright Side

Last week’s guidance from the IRS on tax treatment for bitcoin transactions may have temporarily impeded one avenue in a single jurisdiction, but it has opened up another more significant avenue.

An IRS “property” classification for bitcoin reaffirms it’s status as “digital gold” because it tacitly encourages one type of monetary activity (store of value) over another (medium of exchange).

If bitcoin is digital gold, then gold is analog bitcoin. Both commodities have a significant economic role to play going forward because one is a consensual store of value based on chemical properties and the other is a consensual store of value based on mathematical properties.

This ruling was a lose-lose scenario for the IRS because an alternative tax ruling for treating bitcoin as a currency would have placed it in direct transactional competition with the US dollar. The Department of the Treasury was loath to do that at least from a tax perspective.

- Source, CoinDesk, read more here: