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Bitcoin The Almighty Buck Your Rights Online

Bitcoins Join Global Bank Network 84

another random user writes "Bitcoin-Central, a currency exchange that specialises in virtual cash, has won the right to operate as a bank. They got the go-ahead thanks to a deal with French financial firms Aqoba and Credit Mutuel. The exchange is one of many that swaps bitcoins, computer generated cash, for real world currencies. The change in status makes it easier to use bitcoins and bestows national protections on balances held at the exchange. Under European laws, the deal means Bitcoin-Central becomes a Payment Services Provider (PSP) that has an International Bank ID number. This puts it on an equal footing with other payment networks such as PayPal and WorldPay. As a PSP it will be able to issue debit cards, carry out real-time transfers to other banks and accept transfers into its own coffers."
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Bitcoins Join Global Bank Network

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  • Re:Not so fast (Score:5, Interesting)

    by jbeaupre ( 752124 ) on Saturday December 08, 2012 @08:27AM (#42224433)

    I'm not an accountant or tax lawyer, so treat this with suspicion:

    US tax law doesn't do much to distinguish between receiving cash and anything with a market value. If it's a gift, you pay the gift tax based on the cash value when you received the gift. If it was compensation for employment, you pay income tax. If it was for an investment, you pay capital gains rate. If it was reimbusement for a business expense, you don't pay tax. If it was for, well, you get the idea. It's not quite that simple, but for a Slashdot explanation, it'll do.

    The good news is that you only pay one tax. You can estimate the value yourself. If you estimate too low, the IRS may come knocking. If you estimate too high, thank you for helping to fund our wonderful government with your kind donation.

  • Re:Not so fast (Score:3, Interesting)

    by sturle ( 1165695 ) on Saturday December 08, 2012 @08:39AM (#42224465)

    There is no official exchange rate from EUR to USD either. The only currencies operating with official exchange rates are IRN (Iran), KPW (North Korean won), and a few others. For those there is a black market using completely different rates.

    If you check the currency rates from different banks, you will see they differ. Usually by very small amounts, because every time a robot discovers it can buy USD with EUR in one bank and sell in another at a profit, the market rates at both banks will even out. The same mechanism is at work in Bitcoin. Sometimes however, the bots run out of funds and the exchange rate stays sparated by a few percent.

    As for taxation, I have reported my bitcoins and Bitcoin earnings to the tax authorities every year, and they still have no clue what to do about the information. Bitcoin is an undefined entity. All their calculations return undef, NaN, null or similar.

  • by IamTheRealMike ( 537420 ) on Saturday December 08, 2012 @10:01AM (#42224713)

    You don't need a bank if you are using Bitcoin. However your existing money does and your existing trading partners do. Therefore you need a way to move between the Bitcoin and banking worlds. Hence, exchanges (which already exist, but a new one has launched).

    Of course, with no banks, this leads to the question of how you can get credit from the Bitcoin economy. I explored these topics in a talk I gave at the London conference [youtube.com], the latter part covers distributed markets [bitcoin.it], ways to use modern cryptography in P2P networks to implement things like low overhead bond and stock markets. Consumer credit financed by individual bond issues isn't really practical today, but technology could make it so.

Statistics are no substitute for judgement. -- Henry Clay