Reply to post: Re: Oh, the irony

Cryptocurrencies to end in tears, says investor wizard Warren Buffett

Anonymous Coward
Anonymous Coward

Re: Oh, the irony

This neatly brings home the point that despite being designed as a currency Bitcoin no longer is one. It can now only be regarded as an investment. Whilst calling it a currency or an investment may sound just semantics it does have important ramifications. Currency trades are not subject to capital gains tax (under UK law at least) whereas if it's classed as an investment vehicle capital gains tax is due on all disposals. Sovereign states are free to rule that Bitcoin is not a currency because it fails to pass a test of what they consider to be the essential characteristics of a currency. Once this happens failing to declare gains above the threshold will be tax evasion.

Of course the taxman won't know who is trading Bitcoins, however getting the proceeds of a significant gain back into real money that can be spent is going to be challenging. The technical term for achieving it without the tax man noticing is Money Laundering, and despite what you read in the press BitCoin isn't good for that either as every transaction is recorded in the blockchain.

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