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Some basic rules for using ‘bitcoin’ as virtual money

Jul 1, 2013, 01:50 am CDT

Comments

This is incredibly stupid.  Only a fool would take this crap for real currency.  It’s a pyramid scam, see you in a few years when the whole thing blows up.  I guess general counsel Patrick Murck couldn’t figure out how to set up a quick ACH from his client’s bank account to his own so he accepted Monopoly money.  Problem:  It’s only good until it’s no longer good like any other fad.

The last point says it all:  “don’t invest in Bitcoins unless you can afford to lose them.”  Huh?  Then why do it at all?  At least if you invest in a stock or even bet a football game you have a chance to profit.  Seems like Bitcoins are all risk and no benefit.

By Jeffrey Wilens on 2013 06 26, 4:03 am CDT

I can’t wait to see the IRS get involved. If someone’s getting paid for services in bitcoins, that’s taxable income. But will the IRS accept bitcoins as payment? And for states that charges sales taxes, how are they getting their cut of any purchases made with bitcoins?

By Netochka Nezvanova on 2013 06 26, 12:41 pm CDT

Netochka, ... nobody is claiming income from services paid for in bitcoin somehow makes that revenue non-taxable.  So yes, the person that claims that income and then has tax liability will need to cash out a portion of that revenue into dollars to be able to pay taxes.  There many methods to exchange into dollars, so access to dollars is not an issue.

As far as sales taxes, it is the same thing—the merchant converts some or all of the bitcoin revenue into dollars.  A payment processor like BitPay lets the merchant split their revenues, ... like having 70% of each payment converted instantly to dollars and keeping the remaining 30% in bitcoin.

By Jaques Mehoff on 2013 06 26, 1:00 pm CDT

I see by Jeffrey Wilens post that he has just heard about bitcoin and does not know anything about it. Jeffery, you should do some reading on the subject before making such bold statements. Those of us who have used bitcoin for years always get a good laugh at such ignorance.  You don’t have to use it. I’m glad I did, it has made me rich.

By Outside Artworld on 2013 06 26, 1:36 pm CDT

Yesh, Artworld it made you rich.  Sounds more like Herbalife or other schemes.

By Jeffrey Wilens on 2013 06 26, 1:39 pm CDT

Jeffrey,

Your views about the instability of Bitcoin overlook that one can put their currency balance in Lire or Drachmas and see the value decline just a violently. One can live in Myanmar and have the government declare all bills of a certain denomination to be worthless one morning. The fact remains that for many places in the world, governmental notes are viewed with suspicion-which is why US currency is so widely used even in countries that have their own. 

Yes, people are speculating in Bitcoin, and some people promoting it will make money on it while others investing in it will lose; in other words, it’s just like gold.

By Robert B. on 2013 06 26, 4:13 pm CDT

ACCEPTING BITCOIN FOR PAYMENT HAS ADVANTAGES OVER ACCEPTING PAYPAL OR CREDIT CARDS. 

If you accept client payments of bitcoin through a U.S.-based bitcoin payment service,such as coinbase.com or bitpay.com, you will be able to receive payment in U.S. dollars deposited to your firm’s checking account within 24 hours.  The fee for this payment processing service is only 1%, as opposed to the 3% charge of credit cards.  Furthermore, unlike credit cards, bitcoin payments are irreversible.  There are no risks of charge-backs from your clients. 

If your firm accepts credit cards, it should also consider accepting bitcoin, so long as the bitcoin payments are immediately converted into U.S. dollars.  There is no currency risk for this type of payment acceptance, and you will save 2% in fees per transaction.

By Dave on 2013 06 27, 4:38 pm CDT

Jeffrey Wilens: “It’s only good until it’s no longer good like any other fad.”

Isn’t that true of just about anything?  USD is only good until its no longer good.  Cake is good until its no longer good.  Your statement doesn’t actually convey anything

By Ben on 2013 06 28, 8:26 am CDT

Jeffery Wilens: “Only a fool would take this crap for real currency. “

What? Like paper dollars not backed by anything? You mean the money that governments regularly devalue as a means to subsidize debt?

By Jake on 2013 07 31, 2:04 pm CDT

There’s a factual error in this article.

The maximum number of Bitcoins that will be created is 21 Million, not 21.4 Million.

See https://en.bitcoin.it/wiki/FAQ#How_are_new_bitcoins_created.3F

By Bob on 2013 07 31, 2:08 pm CDT

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