bitcoins

[stangmx13]

Each exchange can choose what currencies to include. Though most are going to have BTC/ETH/LTC.

does this answers those questions. the exchange can choose if BTC can be sold there. but if no one brings owned BTC to the exchange, there will be none to buy and there can be no market price?

im just trying to compare this to how i think a stock exchange works. generally, a stock isnt listed on multiple exchanges. but if it is and its actually two listings for one company, i think its all the same bucket of stock. so the price cannot be different across each exchange. is that right?

 

[panthera]

Here is an example I pulled from the web. Its from 2013 but applies.

There are a variety of variables that affect Bitcoin pricing on the exchanges. Some are:

Market size
Exchange volume
Price of entry
Market size: Relatively speaking, the market for Bitcoins is small. In April of 2013 it was about 1.2 billion USD, and a few days later dropped to below 750 million USD. That's a small market cap, which means, among other things, that there's less consensus on the price to the BTC. This is the capitalization for all mined bitcoins and includes coins that have been lost, so the real value is something smaller. Each exchange is a subset of the total market, so those markets are even smaller, which allows for greater variation.

Exchange Volume: For all the coins that have been mined, the quotes are only from online exchanges, which are a small set of the total coins that have been mined. If only a quarter or less are in play, then the swings can be pretty dramatic. Since the volume is limited, and people don't take full advantage or arbitrage, different prices can and will exist on the different exchanges.

This happens with foreign currency exchanges too. However, with professional traders, billions of dollars, and serious automated trading the differences are in fractions of a percent.

Fundamentally, BTC is a small, highly speculative, irrational market. Each exchange is a small, highly speculative, irrational market. That's why the spread is so great.

As a crude example: Consider two towns in the medieval period separated by twenty miles. They both have markets and people sell apples in both markets. In one market people really like apples. They pay 2 coins for the apples. In another market they aren't as enthusiastic, they only pay 1.5 coins for the apples. The economic thing to do would be to buy the apples in the second market and sell them at the first. But it's hard. It's a twenty mile walk, and all your friends are at the other market. Plus, the price could change by time you get there. It's just easier to stick with your current market, even if you're not maximizing your return.

 

[CABilly]

It will be interesting to see what happens when the IRS sends out tax bills - including interest and penalties - to the 95+% of CoinBase users who have never reported gains or losses. Most of these users will not have the cash to pay these tax bills, so will need to sell their crypto... just one of many reasons this mania will one day subside.

Those who think btc and other crypto is "outside of the system" will have a rude awakening, I'm afraid. Crypto currency, blockchain tech and smart contracts are the brainchild of the deep state (from the BIS right on down to the NSA). Evidential papers and documents by these organizations, dating back 20 years and more, are out there for all to see. Seek and ye shall find. Sorry guys - you're just beta testers for the soon-to-come global crypto SDR. The centuries-old establishment is not gonna just lie down and allow "satoshis" to take over lmao. Everything is controlled. Everything is engineered.



It did exactly what it's supposed to do and always has done: held its value. Unlike anything else. USD has lost 99% of its purchasing power; btc is wayyyy too new, unproven and volatile to be a currency.

IRS should only enter if people converted gains back into dollars, right?

If you're a bitcoin millionaire, it shouldn't matter if it's still in bitcoin and sitting in fantasy land.

 

[Schnellbandit]

The IRS interview goes like this:

You own bitcoin?

Sure do.

How much did you pay for it?

Mumble

Hmmm, so, the bitcoin holds a value equivalent to US dollars?

Well, yeah.

Ok, we're done here and so are you.

Walks outside and sees a line around the building.

Asks next person, what are you here for?

Sold my bitcoin to cover my tax levy. Didn't you...everyone else in line did.

Note: I have no idea about bitcoin other than some vague notion. That would make a heck of a cartoon strip though, sort of like stock selling day after the CEO said the company filing for bankruptcy.

 

[byke]

It did exactly what it's supposed to do and always has done: held its value. Unlike anything else. USD has lost 99% of its purchasing power; btc is wayyyy too new, unproven and volatile to be a currency.

I was questioning the actual value of it. The only reason why gold carries the stability that it does is because that's how we've all been programmed. Had the USD been backed by taco's and had we all been raised to think that's normal, then it would be. Tell me when a currency is backed by food/water/shelter/fuel/etc, then it'll be backed by something with a foot on the ground. Until then, the USD, or gold, or bitcoin, are all just as real as we choose to make it.

 

[Entoptic]

It will be interesting to see what happens when the IRS sends out tax bills - including interest and penalties - to the 95+% of CoinBase users who have never reported gains or losses. Most of these users will not have the cash to pay these tax bills, so will need to sell their crypto... just one of many reasons this mania will one day subside.

Those who think btc and other crypto is "outside of the system" will have a rude awakening, I'm afraid. Crypto currency, blockchain tech and smart contracts are the brainchild of the deep state (from the BIS right on down to the NSA). Evidential papers and documents by these organizations, dating back 20 years and more, are out there for all to see. Seek and ye shall find. Sorry guys - you're just beta testers for the soon-to-come global crypto SDR. The centuries-old establishment is not gonna just lie down and allow "satoshis" to take over lmao. Everything is controlled. Everything is engineered.



It did exactly what it's supposed to do and always has done: held its value. Unlike anything else. USD has lost 99% of its purchasing power; btc is wayyyy too new, unproven and volatile to be a currency.

I predict a lot of ex pats. Money ain't no thing but jail time is not an option.

Why are you apologizing to us for being "beta testers". Myself and few others are making a killing right now. We have opened up our adventures and shared strategies on barf.

My big question to you is why aren't you investing in btc? Even the most conservative people are making huge gains right now, paying taxes and laughing all the way to the bank knowing it was all legal.

For all the folks that will pay taxes this year there is a nice site bitcoin.tax that will use an api to connect to whatever wallet/exchange you'd like. Then calculations are made and you just present that to your tax person or submit it yourself.

 

[RightCoastBias]

If my crypto was sent from Coinbase to a wallet, how would the IRS know it's my wallet and that ive made any profit? If you're day trading, there's a record of buying and selling. I'm buying and holding now.

When/if I sell, that money will go into an exchange, but perhaps from a different wallet address. How would the IRS know if that was my wallet or a friend?

 

[byke]

Thought I read that they plan to handle it like any stock, no..? If yes, anything converted to cash will be recorded as profit and sent to the irs, then you send the list of all your buys and pay income tax on the profit gap. If you bought and are holding, there's no sell for the exchange to report and you wouldn't receive anything from the irs.

 

[CABilly]

If my crypto was sent from Coinbase to a wallet, how would the IRS know it's my wallet and that ive made any profit? If you're day trading, there's a record of buying and selling. I'm buying and holding now.

When/if I sell, that money will go into an exchange, but perhaps from a different wallet address. How would the IRS know if that was my wallet or a friend?

That's my question. If you're holding and not selling or trading, where's the taxable part?

I'm asking as someone who has only ever filed 1049-EZ. I wouldn't consider crypto gains anything worth reporting unless I reconverted it back to dollars.

 

[panthera]

You will only incur a tax liability if you sell from bitcoin to fiat. Anyone who says otherwise doesnt know what they are talking about. The current stance of the sec is that it is a security and for tax purposes will be treated as such. Also if you hold for a year or longer it is a 15% tax rate. If less then a year it is treated as income.

 

[byke]

You only pay on gains that are realized. Until you convert to cash, those gains don't exist.

 

[CABilly]

Conspiracy theorist me:

Hactivists created cryptocurrencies with a poison pill in the blockchain. Greed and fervor reaches a fever pitch and the whole world thinks it's raking in money hand over fist then *poof*

It all just disappears. Everyone who got greedy and dumped everything they had in to get rich quick lost it all. And the ones who just used it to score drugs and deal in the black market get to laugh at everyone else.

 

[CABilly]

You will only incur a tax liability if you sell from bitcoin to fiat. Anyone who says otherwise doesnt know what they are talking about. The current stance of the sec is that it is a security and for tax purposes will be treated as such. Also if you hold for a year or longer it is a 15% tax rate. If less then a year it is treated as income.

You only pay on gains that are realized. Until you convert to cash, those gains don't exist.

Thanks. Looks like I'm not such a dumbo after all

 

[E.HONDA]

seems like the markets are gearing back up after the sell off.

 

[E.HONDA]

You will only incur a tax liability if you sell from bitcoin to fiat. Anyone who says otherwise doesnt know what they are talking about. The current stance of the sec is that it is a security and for tax purposes will be treated as such. Also if you hold for a year or longer it is a 15% tax rate. If less then a year it is treated as income.

so people that convert their btc to their USD wallet on coinbase would be taxed on that even if it did not go into their bank account?

 

[RightCoastBias]

Conspiracy theorist me:

Hactivists created cryptocurrencies with a poison pill in the blockchain. Greed and fervor reaches a fever pitch and the whole world thinks it's raking in money hand over fist then *poof*

It all just disappears. Everyone who got greedy and dumped everything they had in to get rich quick lost it all. And the ones who just used it to score drugs and deal in the black market get to laugh at everyone else.

The blockchain is open source. You can look for yourself and see what it's doing.

Though, I've joked about this with a co-worker.

 

[RightCoastBias]

Thought I read that they plan to handle it like any stock, no..? If yes, anything converted to cash will be recorded as profit and sent to the irs, then you send the list of all your buys and pay income tax on the profit gap. If you bought and are holding, there's no sell for the exchange to report and you wouldn't receive anything from the irs.

If I'm storing crypto in a wallet, it's stored anonymously. So how would the IRS know what I did with my crypto after it left the exchange.

 

[Entoptic]

You will only incur a tax liability if you sell from bitcoin to fiat. Anyone who says otherwise doesnt know what they are talking about. The current stance of the sec is that it is a security and for tax purposes will be treated as such. Also if you hold for a year or longer it is a 15% tax rate. If less then a year it is treated as income.

You only pay on gains that are realized. Until you convert to cash, those gains don't exist.

so people that convert their btc to their USD wallet on coinbase would be taxed on that even if it did not go into their bank account?

If you convert to fiat then it’s taxable on the gains. Where it gets weird is when the IRS says “hey we see 20k showed up in your wallet. How much was it when you bought it and where did it come from?”

They may very well attempt to tax incoming btc to your wallet.

 

[byke]

If I'm storing crypto in a wallet, it's stored anonymously. So how would the IRS know what I did with my crypto after it left the exchange.

I'm not hip to the in's and out's, but I don't think it matters how it's held, only when it's converted.

If you convert to fiat then it’s taxable on the gains. Where it gets weird is when the IRS says “hey we see 20k showed up in your wallet. How much was it when you bought it and where did it come from?”

They may very well attempt to tax incoming btc to your wallet.

It would make sense to tax profits on incoming. Like if you bought a car for $5k and traded it for a motorcycle of equal value and then sold that motorcycle for $7k. You're technically on the hook for taxes on $2k. The question isn't as much about this area as much as it is about what an exchange reports, otherwise they'd have to subpoena everyone's records and comb through them, which it totally unrealistic...unless you're flagged for some other reason.

 

[Entoptic]

I'm not hip to the in's and out's, but I don't think it matters how it's held, only when it's converted.



It would make sense to tax profits on incoming. Like if you bought a car for $5k and traded it for a motorcycle of equal value and then sold that motorcycle for $7k. You're technically on the hook for taxes on $2k. The question isn't as much about this area as much as it is about what an exchange reports, otherwise they'd have to subpoena everyone's records and comb through them, which it totally unrealistic...unless you're flagged for some other reason.

It is up to you to show the IRS where the money came from. Otherwise they will tax it.