Can someone please explain..

[LisaContractorUmbrella]

Close. Initially, it was the clever people got into it early.
Then, it was more like a mixture of some clever people, and a bunch of kids with PCs.
Nowadays it's more likely to be people who already have money who will make any, as bigger players are using dedicated machines to do the work at faster speeds, so stand a higher chance of taking the virtual money - there can only be 1 winner of the virtual money (although this can be a syndicate). The biggest issue facing miners now (people working to solve algorithms and "win" the bitcoins) is balancing the cost of power to run their machines against the potential gains from "winning" the prize.

It's more and more difficult to actually make anything now, both in terms of inflation of the value of bitcoins, and in terms of actually getting any (unless you buy them or allow yourself to be paid in them). In short, you install a bit of software which automatically crack algorithms, and stand a chance of making virtual money, etc. Whoever actually solves the algorithm first takes the prize - there is no award for having participated or contributed to the solution, you could do 99.9% of the work and walk away with nothing.

Ok I think I get it now (sort of) but where do HMRC come in? Assuming the 'currency' remains virtual how can there be a taxable benefit?

[Old Greg]

Ok I think I get it now (sort of) but where do HMRC come in? Assuming the 'currency' remains virtual how can there be a taxable benefit?

It has a value. Money transferred electronically into your bank account is also virtual.

[Jeebo72]

It has a value. Money transferred electronically into your bank account is also virtual.

Yip and if you’re really intelligent it’s called QE. Or for the masses who’ll never understand what’s really going on: “printing money”.

[MyUserName]

Ok I think I get it now (sort of) but where do HMRC come in? Assuming the 'currency' remains virtual how can there be a taxable benefit?

I believe that the moment you use it for something in the 'real world' eg buy a car with it, convert it to real money in your bank etc then it becomes taxable income. The same happend with World or Warcraft money when people started using it to buy TVs etc.

[Ticktock]

Ok I think I get it now (sort of) but where do HMRC come in? Assuming the 'currency' remains virtual how can there be a taxable benefit?

I'd ask an accountant about the HMRC bit! I can see a few parallels though.

More and more shops are starting to accept payment with bitcoins - it used to be a mixture of hipsters and places like the Silk Road site in the news recently. I read something about a week ago talking about High Street shops starting to look into accepting them also. This could lead to the voucher definition I guess.

I think some countries (SE Asia, possibly S. Korea or that area) have now accepted them as a legal currency, so it would be the same as accepting payment in / speculating on FOREX I guess?

Possibly Capital Gains? If you are buying a voucher / virtual item for £10 that you suddenly sell a few years later for £100 I bet HMRC want their cut!

[northernladuk]

There are now Bitcoin ATM's

Bitcoin vending machine Robocoin launched in Canadian coffee shop | Mail Online

[LisaContractorUmbrella]

Thanks everyone - so basically virtual money has become real money as it has purchasing power for tangible items hence the interest from HMRC.

[LisaContractorUmbrella]

There are now Bitcoin ATM's

Bitcoin vending machine Robocoin launched in Canadian coffee shop | Mail Online

Interesting article. Any opinions on the long term implications of a decentralised bank?

[doodab]

I think it's a clever way to build an almighty rainbow table for free

[evilagent]

I understand how to take a percentage of what clever people earn, which makes me cleverer than them

I tell myself that when I have my recruiters hat on.

When I have my developers hat on, I call it riding the coat-tails!