The IRS Decision: What Does It Mean?

On March 25th, the United States’ Internal Revenue Service (IRS), issued a statement saying that bitcoins (and presumably other cryptocurrencies) are to be treated as property for tax purposes. Basically, this means that all capital gains and losses made from holding or using bitcoins must be reported for tax purposes. While many see this as an encroachment of the government into a decentralized system, others think that the ruling shows that bitcoin is becoming more mainstream.
Ideally, the ruling will affect all transactions made in bitcoin. Among other things, workers paid in bitcoin must report it as income on a Form W-2, any payment for goods must be reported, and any capital gain or loss from buying or selling bitcoin must also be reported. In order to pay the required taxes, everyone who gets (whether mining, buying, or earning) bitcoins must record the price of the bitcoins when they were acquired and the price when they are sold, in order to record a capital gain or loss. In theory, almost every transaction may involve a gain or loss that must be reported, even buying a cup of coffee, because of the volatility of bitcoin’s price. Jeffrey Hochberg, a tax attorney in New York, said that the ruling “would obviously create an accounting nightmare for taxpayers and may cause taxpayers to avoid using virtual currency.” Essentially, bitcoins will be treated like stocks and bonds. Taxes can be applied for gains made with bitcoin and up to $3000 can be deducted for losses. The ruling also affects miners, technically any income from mining should now be reported as income for tax purposes. They would also have to declare capital gains like everyone else should they sell the coins.
Many think this ruling represents too much government intrusion and the death of bitcoin as a currency, but others believe that this ruling will improve bitcoin’s standing in the mainstream view. While the ruling says bitcoin is property not a currency, the ruling may actually help investors, allowing a sense of certainty and security. The property ruling was also the lesser of two evils. Had bitcoin been ruled as a currency, the taxes for investors would’ve been much greater. Some also believe that because the IRS has recognized bitcoin, its credibility will be increased in the public eye, and it will see wider adoption.
While the announcement was certainly big news to the bitcoin community, some were quick to point out that such a ruling would be nearly impossible to enforce. Steven Rosenthal, senior fellow with the Tax Policy Center said on the IRS ruling that “Nobody in their right mind would ever comply with that,” and that “The IRS can’t even get the information they need from normal consumer purchases.” The pseudo-anonymous nature of bitcoin would make it extremely difficult for the IRS to track all purchases and catch tax evaders. Essentially, small time bitcoin users likely have little to worry about. The IRS is simply trying to catch big time tax evaders. Alex Daley, a technology investment analyst for Casey Research, said that “This ruling is a warning shot across the bow, mostly to business and large traders, that you’ll have to deal with the income tax evasion consequences.” He doesn’t think that the ruling is “a signal to consumers that we’ll take away the anonymous nature of Bitcoin.”
Regardless of whether the IRS’s ruling will be beneficial in the long run or not, the announcement in conjunction with rumors about a ban in China have driven prices down to about $450, from the $500-600 prices found just a week before.

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Coindib launches the first mobile bitcoin directory for Android devices

Sacramento, CA, 3/26/14 — Coindib is the bitcoin directory that pays you. We are proud to launch the first bitcoin directory app on Android marketplaces. Free and paid versions are immediately available on both Google Play and Amazon Appstore. An iOS version is under development and will be released upon completion.
Coindib awards ‘dibs’ to content contributors. To earn dibs, add websites or mining pools to the directory. Dibs are analogous to shares in the directory. Coindib’s advertising revenue is tallied biweekly, converted to bitcoin, and proportionately distributed to all dibholders. If you control 5% of dibs, you earn 5% of Coindib’s advertising revenue.
Coindib encourages crowdsourcing through the Develop tab at www.coindib.com/develop. Here, members direct app updates by submitting new feature suggestions and bug fixes. Suggestions with the most upvotes are prioritized in future updates. We are proudly shaped by our community‘s feedback.
The full version features searchable listings of bitcoin related resources including popular currency data. Users of the $2 full version can add and edit content on their mobile device. The free version is view only with no currency data access. The web version is available at www.coindib.com. Here, all users have full access to Coindib’s services.
Coindib is eager to become an integral resource in a community that represents the most exciting paradigm shift of the century.

First Bitcoin Derivative On Tera May Bring Regulation

On Monday, March 24, TeraExchange, a trade execution platform that deals in numerous types of cleared OTC swaps, announced that it had constructed the first derivative swap involving Bitcoin. Two U.S. firms had privately negotiated the swap, which is a mult-million dollar transaction of funds to hedge the value of Bitcoin. If the swap is transacted, it would bring Bitcoin under the scrutiny of the U.S Federal Government for the first time in its history. The contract would need to be reported to the U.S Commodity Futures Trading Commission (CFTC), which regulates futures and swaps.
TeraExchange said that it had been communicating with the CFTC and is using all of the features available on its Swap Execution Facility (SEF) but, that because Bitcoin is not regulated and not authorized to be traded on a SEF, the transaction will not actually occur on the SEF. However, if the CFTC determines that their jurisdiction covers digital currencies, then they may authorize Bitcoin being traded on the SEF. TeraExchange received permission to operate an SEF last year, which allows for more transparency and reportability.
For the most part, the fate of Bitcoin in terms of regulations is still relatively unknown. Recently the exchange Kraken.com completed an audit of its reserves, in an attempt to improve credibility after recent debacles with Mt. Gox and Vircurex. The cry for regulation has only increased in the wake of the Mt. Gox collapse, and many wish for the government to become involved as evidenced by the class action lawsuit in the U.S against Mt. Gox, and the company’s assets being frozen.
Other attempts at regulations for Bitcoin have also appeared recently. Ben Lawsky at the State Department of Financial Services in New York promoted a need for oversight which recently led to established application procedures for Bitcoin exchanges. Many believe that regulation would be a good thing. Tera President and Co-founder Leonard T. Nuara, in the press release regarding the new Bitcoin swap, said that, “Regulatory approval is crucial to the long-term growth of the market utilizing bitcoin.” The press release also said that Tera plans to make Bitcoin swaps available to eligible contract participant.
While the future of Bitcoin regulation remains uncertain, it is certain that it will continue to remain in the discussion and, if the TeraExchange development is any indication, will become more and more accepted in mainstream finance. While this new development may bring more government oversight, it is also certain to bring more widespread acceptance for Bitcoin.

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Mediabistro’s Inside Bitcoins Heads to New York City in Two Weeks – Get 10% OFF

After thousands gathered at Inside Bitcoins in Berlin, Germany on February 12-13, this innovative Bitcoin event is returning to New York City on April 7-8 at the Javits Convention Center.
Inside Bitcoins is the largest event of its kind, with over 25 exhibitors and 80 speakers exploring the opportunities surrounding the world’s largest digital currency exchange with session topics including “Best Practices for Using and Securing Bitcoins” and “Creating and Funding the Next 100 Great Bitcoin Companies”.
And don’t miss the all new Bitcoin Basics Booth, where experts will be available at the top of every hour to help bitcoin beginners set up their first digital wallet, make purchases, and more. Also taking place at the event will be the Bitcoin Trading Café, where attendees can buy and sell bitcoins in the middle of the exhibit hall floor, hosted by Bitcoin Center NYC.
A second track of conference sessions have also been added to the event and include: A Startup Perspective: Building a Trading Platform from Scratch by Luke Jones, Co-Founder of Coinarch, Bitcoin Merchant On-Ramp by Steve Beauregard, Founder & CEO of GoCoin.com, Bitcoin in the Cloud by Benjamin Gorlick, COO of CloudHashing, Bitcoin Comes To Main Street by Tyler Roye, Co-Founder & CEO of eGifter, Beyond Bitcoin: BitShares Delves Into Digital Shares by Daniel Larimer, Founder & CEO of BitShares.org, and Data Center Planning Calculator for Megawatt Mining by Eric P. Doricko a Data Center Crypto-Consultant.
We’re excited to have partnered with Inside Bitcoins to offer 10% OFF full conference passes with code SOURCE. Also, when you register now, you’ll save an extra $300 on on-site pricing.

The Satoshi Nakamoto Mystery

Since the creation of Bitcoin, many have wondered who Satoshi Nakamoto, the pseudonymous creator, actually was. The mystery was deepened recently when on March 6, 2014, Newsweek published an article which identified a man named Dorian Prentice Satoshi Nakamoto as the Satoshi Nakamoto who created Bitcoin. Dorian Nakamoto is a 64 year old Japanese American male who lives a modest lifestyle in Temple City, California and also likes to collect model trains. It appears as though if he is the creator of Bitcoin, he has not spent any of his riches.
The article was written by Leah McGrath Goodman, and gives several pieces of evidence to suggest that Dorian is the real creator of Bitcoin. Apparently, Dorian Nakamoto was very good at math and also had a background in engineering and knew how to program. Much of his career, which includes work for the U.S government, is shrouded in secrecy. The greatest piece of evidence is the statement given by Dorian Nakamoto at the time of the interview: “I am no longer involved in that and I cannot discuss it. It’s been turned over to other people. They are in charge of it now. I no longer have any connection.”
This statement was later confirmed by police. However, in a later interview, Dorian denied being the creator and said that his quote was taken out of context. He apparently though that the interviewer was talking about his classified work for the U.S military. He would also deny having anything to do with Bitcoin, saying he had just recently heard of it. The mystery was deepened even further when on March 7th Satoshi Nakamoto’s profile on the P2P Foundation posted: “I am not Dorian Nakamoto.”
Other issues remain with the Newsweek story, such as why the writing style and skill of Dorian Nakamoto is so much different than the Bitcoin creator’s writing skills. Satoshi Nakamoto wrote in a very technical tone and with very good English skills. As evidenced by earlier emails and letters written by Dorian, his writing is nowhere near as good. Because of these issues, many in the Bitcoin community met the article with skepticism. Many were also concerned with Dorian Nakamoto’s lack of privacy and exposure which, regardless of whether he really created Bitcoin, may put him in danger.
While many may still be inclined to believe that Dorian Nakamoto is the creator of Bitcoin, it seems as though he is serious about denying it. A law firm hired by Dorian Nakamoto released a statement that said: “I did not create, invent or otherwise work on Bitcoin. I unconditionally deny the Newsweek report.” The fact that Dorian hired a law firm may mean that he is contemplating action against Newsweek. Regardless of what happens, the mystery of Bitcoin’s anonymous creator will continue on.

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Bitcoin 0.9.0 FINAL is Released

The Core Developers of Bitcoin released the 0.9.0 FINAL of Bitcoin Core (aka Bitcoin QT).
DOWNLOAD:
https://bitcoin.org/bin/0.9.0/bitcoin-0.9.0-linux.tar.gz
https://bitcoin.org/bin/0.9.0/bitcoin-0.9.0-macosx.dmg
https://bitcoin.org/bin/0.9.0/bitcoin-0.9.0-win.zip
https://bitcoin.org/bin/0.9.0/bitcoin-0.9.0-win32-setup.exe
https://bitcoin.org/bin/0.9.0/bitcoin-0.9.0-win64-setup.exe
Code:

15616baea0640277c81a8ca4d3e0d963834b8a7d  bitcoin-0.9.0-linux.tar.gz
82b7210587c2037beb5d0b3b9ef2643b7580dfe7  bitcoin-0.9.0-macosx.dmg
5bac25ffc2afa7eaea2bbbd783b787325cf8b537  bitcoin-0.9.0-win.zip
23b315772c86389a8ac05c13bd352f4ec631a659  bitcoin-0.9.0-win32-setup.exe
b404b0ed348be5b15c0704bfdc6b838a732c338e  bitcoin-0.9.0-win64-setup.exe

This is a Final Version, but its the same as 0.9.0rc3
Sources:
https://github.com/bitcoin/bitcoin/releases
http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.9.0/
https://bitcoin.org/bin/0.9.0/README.txt
Bitcoin Core version 0.9.0 is now available from:
https://bitcoin.org/bin/0.9.0/
This is a release candidate for a new major version. A major version brings
both new features and bug fixes.
Please report bugs using the issue tracker at github:
https://github.com/bitcoin/bitcoin/issues
How to Upgrade
————–
If you are running an older version, shut it down. Wait until it has completely
shut down (which might take a few minutes for older versions), uninstall all
earlier versions of Bitcoin, then run the installer (on Windows) or just copy
over /Applications/Bitcoin-Qt (on Mac) or bitcoind/bitcoin-qt (on Linux).
If you are upgrading from version 0.7.2 or earlier, the first time you run
0.9.0 your blockchain files will be re-indexed, which will take anywhere from
30 minutes to several hours, depending on the speed of your machine.
On Windows, do not forget to uninstall all earlier versions of the Bitcoin
client first, especially if you are switching to the 64-bit version.
Windows 64-bit installer
————————-
New in 0.9.0 is the Windows 64-bit version of the client. There have been
frequent reports of users running out of virtual memory on 32-bit systems
during the initial sync. Because of this it is recommended to install the
64-bit version if your system supports it.
NOTE: Release candidate 2 Windows binaries are not code-signed; use PGP
and the SHA256SUMS.asc file to make sure your binaries are correct.
In the final 0.9.0 release, Windows setup.exe binaries will be code-signed.
OSX 10.5 / 32-bit no longer supported
————————————-
0.9.0 drops support for older Macs. The minimum requirements are now:
* A 64-bit-capable CPU (see http://support.apple.com/kb/ht3696);
* Mac OS 10.6 or later (see https://support.apple.com/kb/ht1633).
Downgrading warnings
——————–
The ‘chainstate’ for this release is not always compatible with previous
releases, so if you run 0.9 and then decide to switch back to a
0.8.x release you might get a blockchain validation error when starting the
old release (due to ‘pruned outputs’ being omitted from the index of
unspent transaction outputs).
Running the old release with the -reindex option will rebuild the chainstate
data structures and correct the problem.
Also, the first time you run a 0.8.x release on a 0.9 wallet it will rescan
the blockchain for missing spent coins, which will take a long time (tens
of minutes on a typical machine).
Rebranding to Bitcoin Core
—————————
To reduce confusion between Bitcoin-the-network and Bitcoin-the-software we
have renamed the reference client to Bitcoin Core.
Autotools build system
———————–
For 0.9.0 we switched to an autotools-based build system instead of individual
(q)makefiles.
Using the standard “./autogen.sh; ./configure; make” to build Bitcoin-Qt and
bitcoind makes it easier for experienced open source developers to contribute
to the project.
Be sure to check doc/build-*.md for your platform before building from source.
Bitcoin-cli
————-
Another change in the 0.9 release is moving away from the bitcoind executable
functioning both as a server and as a RPC client. The RPC client functionality
(“tell the running bitcoin daemon to do THIS”) was split into a separate
executable, ‘bitcoin-cli’. The RPC client code will eventually be removed from
bitcoind, but will be kept for backwards compatibility for a release or two.
`walletpassphrase` RPC
———————–
The behavior of the `walletpassphrase` RPC when the wallet is already unlocked
has changed between 0.8 and 0.9.
The 0.8 behavior of `walletpassphrase` is to fail when the wallet is already unlocked:
> walletpassphrase 1000
walletunlocktime = now + 1000
> walletpassphrase 10
Error: Wallet is already unlocked (old unlock time stays)
The new behavior of `walletpassphrase` is to set a new unlock time overriding
the old one:
> walletpassphrase 1000
walletunlocktime = now + 1000
> walletpassphrase 10
walletunlocktime = now + 10 (overriding the old unlock time)
Transaction malleability-related fixes
————————————–
This release contains a few fixes for transaction ID (TXID) malleability
issues:
– -nospendzeroconfchange command-line option, to avoid spending
zero-confirmation change
– IsStandard() transaction rules tightened to prevent relaying and mining of
mutated transactions
– Additional information in listtransactions/gettransaction output to
report wallet transactions that conflict with each other because
they spend the same outputs.
– Bug fixes to the getbalance/listaccounts RPC commands, which would report
incorrect balances for double-spent (or mutated) transactions.
– New option: -zapwallettxes to rebuild the wallet’s transaction information
Transaction Fees
—————-
This release drops the default fee required to relay transactions across the
network and for miners to consider the transaction in their blocks to
0.01mBTC per kilobyte.
Note that getting a transaction relayed across the network does NOT guarantee
that the transaction will be accepted by a miner; by default, miners fill
their blocks with 50 kilobytes of high-priority transactions, and then with
700 kilobytes of the highest-fee-per-kilobyte transactions.
The minimum relay/mining fee-per-kilobyte may be changed with the
minrelaytxfee option. Note that previous releases incorrectly used
the mintxfee setting to determine which low-priority transactions should
be considered for inclusion in blocks.
The wallet code still uses a default fee for low-priority transactions of
0.1mBTC per kilobyte. During periods of heavy transaction volume, even this
fee may not be enough to get transactions confirmed quickly; the mintxfee
option may be used to override the default.
0.9.0 Release notes
=======================
RPC:
– New notion of ‘conflicted’ transactions, reported as confirmations: -1
– ‘listreceivedbyaddress’ now provides tx ids
– Add raw transaction hex to ‘gettransaction’ output
– Updated help and tests for ‘getreceivedby(account|address)’
– In ‘getblock’, accept 2nd ‘verbose’ parameter, similar to getrawtransaction,
but defaulting to 1 for backward compatibility
– Add ‘verifychain’, to verify chain database at runtime
– Add ‘dumpwallet’ and ‘importwallet’ RPCs
– ‘keypoolrefill’ gains optional size parameter
– Add ‘getbestblockhash’, to return tip of best chain
– Add ‘chainwork’ (the total work done by all blocks since the genesis block)
to ‘getblock’ output
– Make RPC password resistant to timing attacks
– Clarify help messages and add examples
– Add ‘getrawchangeaddress’ call for raw transaction change destinations
– Reject insanely high fees by default in ‘sendrawtransaction’
– Add RPC call ‘decodescript’ to decode a hex-encoded transaction script
– Make ‘validateaddress’ provide redeemScript
– Add ‘getnetworkhashps’ to get the calculated network hashrate
– New RPC ‘ping’ command to request ping, new ‘pingtime’ and ‘pingwait’ fields
in ‘getpeerinfo’ output
– Adding new ‘addrlocal’ field to ‘getpeerinfo’ output
– Add verbose boolean to ‘getrawmempool’
– Add rpc command ‘getunconfirmedbalance’ to obtain total unconfirmed balance
– Explicitly ensure that wallet is unlocked in `importprivkey`
– Add check for valid keys in `importprivkey`
Command-line options:
– New option: -nospendzeroconfchange to never spend unconfirmed change outputs
– New option: -zapwallettxes to rebuild the wallet’s transaction information
– Rename option ‘-tor’ to ‘-onion’ to better reflect what it does
– Add ‘-disablewallet’ mode to let bitcoind run entirely without wallet (when
built with wallet)
– Update default ‘-rpcsslciphers’ to include TLSv1.2
– make ‘-logtimestamps’ default on and rework help-message
– RPC client option: ‘-rpcwait’, to wait for server start
– Remove ‘-logtodebugger’
– Allow `-noserver` with bitcoind
Block-chain handling and storage:
– Update leveldb to 1.15
– Check for correct genesis (prevent cases where a datadir from the wrong
network is accidentally loaded)
– Allow txindex to be removed and add a reindex dialog
– Log aborted block database rebuilds
– Store orphan blocks in serialized form, to save memory
– Limit the number of orphan blocks in memory to 750
– Fix non-standard disconnected transactions causing mempool orphans
– Add a new checkpoint at block 279,000
Wallet:
– Bug fixes and new regression tests to correctly compute
the balance of wallets containing double-spent (or mutated) transactions
– Store key creation time. Calculate whole-wallet birthday.
– Optimize rescan to skip blocks prior to birthday
– Let user select wallet file with -wallet=foo.dat
– Consider generated coins mature at 101 instead of 120 blocks
– Improve wallet load time
– Don’t count txins for priority to encourage sweeping
– Don’t create empty transactions when reading a corrupted wallet
– Fix rescan to start from beginning after importprivkey
– Only create signatures with low S values
Mining:
– Increase default -blockmaxsize/prioritysize to 750K/50K
– ‘getblocktemplate’ does not require a key to create a block template
– Mining code fee policy now matches relay fee policy
Protocol and network:
– Drop the fee required to relay a transaction to 0.01mBTC per kilobyte
– Send tx relay flag with version
– New ‘reject’ P2P message (BIP 0061, see
https://gist.github.com/gavinandresen/7079034 for draft)
– Dump addresses every 15 minutes instead of 10 seconds
– Relay OP_RETURN data TxOut as standard transaction type
– Remove CENT-output free transaction rule when relaying
– Lower maximum size for free transaction creation
– Send multiple inv messages if mempool.size > MAX_INV_SZ
– Split MIN_PROTO_VERSION into INIT_PROTO_VERSION and MIN_PEER_PROTO_VERSION
– Do not treat fFromMe transaction differently when broadcasting
– Process received messages one at a time without sleeping between messages
– Improve logging of failed connections
– Bump protocol version to 70002
– Add some additional logging to give extra network insight
– Added new DNS seed from bitcoinstats.com
Validation:
– Log reason for non-standard transaction rejection
– Prune provably-unspendable outputs, and adapt consistency check for it.
– Detect any sufficiently long fork and add a warning
– Call the -alertnotify script when we see a long or invalid fork
– Fix multi-block reorg transaction resurrection
– Reject non-canonically-encoded serialization sizes
– Reject dust amounts during validation
– Accept nLockTime transactions that finalize in the next block
Build system:
– Switch to autotools-based build system
– Build without wallet by passing `–disable-wallet` to configure, this
removes the BerkeleyDB dependency
– Upgrade gitian dependencies (libpng, libz, libupnpc, boost, openssl) to more
recent versions
– Windows 64-bit build support
– Solaris compatibility fixes
– Check integrity of gitian input source tarballs
– Enable full GCC Stack-smashing protection for all OSes
GUI:
– Switch to Qt 5.2.0 for Windows build
– Add payment request (BIP 0070) support
– Improve options dialog
– Show transaction fee in new send confirmation dialog
– Add total balance in overview page
– Allow user to choose data directory on first start, when data directory is
missing, or when the -choosedatadir option is passed
– Save and restore window positions
– Add vout index to transaction id in transactions details dialog
– Add network traffic graph in debug window
– Add open URI dialog
– Add Coin Control Features
– Improve receive coins workflow: make the ‘Receive’ tab into a form to request
payments, and move historical address list functionality to File menu.
– Rebrand to `Bitcoin Core`
– Move initialization/shutdown to a thread. This prevents “Not responding”
messages during startup. Also show a window during shutdown.
– Don’t regenerate autostart link on every client startup
– Show and store message of normal bitcoin:URI
– Fix richtext detection hang issue on very old Qt versions
– OS X: Make use of the 10.8+ user notification center to display Growl-like
notifications
– OS X: Added NSHighResolutionCapable flag to Info.plist for better font
rendering on Retina displays.
– OS X: Fix bitcoin-qt startup crash when clicking dock icon
– Linux: Fix Gnome bitcoin: URI handler
Miscellaneous:
– Add Linux script (contrib/qos/tc.sh) to limit outgoing bandwidth
– Add ‘-regtest’ mode, similar to testnet but private with instant block
generation with ‘setgenerate’ RPC.
– Add ‘linearize.py’ script to contrib, for creating bootstrap.dat
– Add separate bitcoin-cli client
 
 
More Info: https://bitcointalk.org/index.php?topic=522014