Reply to: Can someone please explain..

[doodab]

I can see a bubble coming up Bitcoins will raise in value until everybody finds out it's actually based on nothing and it will crash into worthless Bits and Bytes.

It's based on serving as a medium of exchange. As long as people are willing to accept it as payment then it has value, just the same as cigarettes in the prison yard.

[Eirikur]

The first(?) bitcoin robbery: BBC News - Major Bitcoin theft from website, claims owner

I can see a bubble coming up Bitcoins will raise in value until everybody finds out it's actually based on nothing and it will crash into worthless Bits and Bytes.
Expect the usual scenario of pensioners losing all their life savings, to be shown on the tv news.

[CheeseSlice]

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

AFAIK there are no banks for BitCoin. There's no central bank (since you can't print it) and money has to be kept somewhere, a digital wallet, or according to that video it can also be held in a Bitcoin exchange.

I've been vaguely following the stories in the financial media and its quite interesting how various US officials and institutions (even states) have been quite hostile to BitCoin as an emerging currency. It was after all developed in reaction to the abuses of central banks and governments to fiat currency, which have undermined paper money as a store of value.

BitCoin could really threaten the monopoly of central and commercial banks if it is widely adopted. A government can't simply get their central bank print their way out of trouble, and goverments can't seize BitCoins from you like Cyprus did to its own people earlier this year. It would also revolutionise foreign trade and transactions. And who needs a fiat reserve currency when you've got the digital equivalent of gold? Who knows what else it would do, but there are some people out there who would rather it was killed off as a currency, and killed off soon.

[CheeseSlice]

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”.

I'm not sure you're on the same page here. QE is something you can't do with BitCoin.

[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!

[doodab]

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

[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?

[LisaContractorUmbrella]

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

[northernladuk]

There are now Bitcoin ATM's

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

[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!

[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.

[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”.

[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.

[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?

[LisaContractorUmbrella]

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

Yeah you are Dodgy searches fruitlessly for head patting smiley