Dave Emory’s entire lifetime of work is available on a flash drive that can be obtained here. (The flash drive includes the anti-fascist books available on this site.)
COMMENT: In 1985, Ronald Reagan incurred the wrath of many when he agreed to visit the Bitburg cemetery in Germany, where Waffen SS soldiers are interred.
In this post, we examine the origins of the bitcoin virtual currency, which evolved into the online currency of choice for the customers of the Silk Road network.
Alone among sovereign nations, Germany has recognized bitcoin as legal tender, following on the theory of Friedrich von Hayek of the Autrian school of economic theory, disseminated from (among other institutions) the Ludwig von Mises Institute.
Credit for creating this virtual currency is generally given to one Satoshi Nakomoto. An article at Fastcompany hypothesizes that three individuals named Neal J. King, Charles Bry and Vladimir Oksman are the true originators of bitcoin. (Listeners are emphatically encouraged to read the entire linked article to flesh out their understanding of Adam Penenberg’s argument.)
Of more than passing interest under the circumstances is the fact that all three of the hypothetical creators of bitcoin work for a company called Lantiq.
Lantiq is a German-based firm that has evolved from Siemens. Siemens spun-off Infineon A.G. (a semiconductor firm). Then Infineon and Golden Gate Capital created Lantiq.
Golden Gate Capitol was formed by alumni of Bain Capital, Mitt Romney’s firm.
In addition to links to the death squad-manifesting El Salvadoran junta of the 1980’s, Bain has links to the milieu of the late billionaire, Howard Hughes, as well as the milieu of Bebe Rebozo’s banking operations. The latter appears to have had links to the Bormann capital network.
If we were going to express this in biblical phraseology, it would go something like this: “And so Siemens begat Infineon. And Bain Capital begat Golden Gate Capital. Infineon did lie with Golden Gate Capital. And thus did Infineon beget Lantiq.”
Some of the purposes of the development of bitcoin, as well as the way in which it has been manipulated, will be discussed in a future post.
Among the points to be considered here are:
- Siemens functions as something of a quartermaster for German intelligence-the BND, the successor to the Reinhard Gehlen spy outfit. It is inextricably linked with BND, as well as with the Bormann network.
- With Lantiq having evolved directly from Siemens, Lantiq’s possible connections with BND should be carefully weighed.
- Lantiq’s links with Golden Gate Capital, run by alumni from Mitt Romney’s Bain Capital, warrants consideration that both Lantiq and GGC may be Underground Reich, Bormann entities.
- We have noted that Infineon A.G. is a leading producer of TPM chips, which were cited by the German press as a backdoor source for NSA snooping. We wondered if that TPM backdoor might actually be a BND backdoor?
- Neal J. King has denied Penenberg’s musings. He may, of course, be doing so honestly. IF, however, bitcoin’s development was in conjunction with BND, denial would be pro forma intelligence methodology.
- We will explore the bitcoin landscape at greater length in a future post for greater perspective and understanding.
EXCERPT: . . . I looked at the date on the patent application filing: 08/15/2008.
Now take a look at the domain bitcoin.org. It was registered three days later.
Domain Name:BITCOIN.ORG
Created On:18-Aug-2008
Now that is one hell of a coincidence. What are the odds that a phrase in Nakamoto’s Bitcoin paper would be replicated in a patent application filed the same year? Further, what are the odds the domain name for Bitcoin would have been registered 72 hours after the patent application was filed?
Based on the timing, I wondered if one of the people on the patent application–or perhaps all three–had based the Bitcoin concept on research that led them to this patent application. The three inventors listed on patent #20100042841 are Neal King, Vladimir Oksman, Charles Bry, and all three have filed numerous patent applications over the years.
Neal King (he also goes by Neal J. King from Munich, Germany) is listed on a number of patent applications, notably “UPDATING AND DISTRIBUTING ENCRYPTION KEYS” (#20100042841) and “CONTENTION ACCESS TO A COMMUNICATION MEDIUM IN A COMMUNICATIONS NETWORK” (#20090196306), both of which seem Bitcoin‑y to me.
Charles Bry, who also resides in Munich, has filed several applications, many dealing with nodes and networks.
Vladamir Oksman, who lives in the U.S., has several patent applications, too, and they too seem related to networks, nodes.
I found another patent application that lists the three of them as inventors, filed June 2008–two months before the Bitcoin.org domain was registered.
KEY MANAGEMENT FOR COMMUNICATION NETWORKS
“Abstract One embodiment of the present invention relates to a method for key management in a communications network. In this method, a public key authentication scheme is carried out between a security controller and a plurality of nodes to establish a plurality of node-to-security-controller (NSC) keys. The NSC keys are respectively associated with the plurality of nodes and are used for secure communication between the security controller and the respective nodes.”
Could that also be related to Bitcoin?
Now, another coincidence: The Bitcoin.org domain was registered by a Finnish provider, based in Helsinki.
Charles Bry traveled to Finland in late 2007, six months before the domain was registered. In addition, Bry, who is a senior system engineer, lists German, English, French, and Italian as languages he speaks, and went to college in Paris. He works for a company called Lantiq.
Then there’s Neal J. King, and there are more oddities. A Neal J. King has a Facebook page that is sketchy with personal information, yet if you search for “Neal J. King” in Facebook’s search box, his profile doesn’t pop up. His wall is filled with posts about the recent Wall Street protests, banking, and criticism of the Patriot Act. Keep scrolling down and he “likes” blau.de, a German mobile phone sim card site. He also claims highbrow taste in literature and books, and it seems he’s an avid reader, having reviewed 46 books on Amazon–many deal with astronomy, biology, cryptography, linguistics, literature, mathematics, philosophy and physics. I read through his reviews, and his writing is excellent. Very clean. No typos. His sentences are elegant yet there are no extra words. The writing style reminds me of Satoshi Nakamoto’s posts in the Bitcoin Forum minus British spellings, which, as I noted above, I believe is a canard.
Finally, I looked up Vladamir Oksman’s LinkedIn profile (there are a couple of guys with this name, but he was easy to find). . . .
. . . [Correction, May 22, 2013: The Vladamir Oksman described above is the wrong one. The right one is listed on LinkedIn as having worked as a technical marketing director for semiconductor company Lantiq. . . . .
EXCERPT: . . . I represented Lantiq in Home Networking Standards. . . .
. . . .
Participant
IEEE P1901
2009 – 2011 (2 years)
I represented Infineon’s interests regarding the broadband Power Line Communication standards. I was active in clarifying the text.
Participant
IEEE P1901.2
2010 – 2010 (less than a year)
I represented Infineon’s interests in a technical standard for narrowband Power Line Communications.
Representative for Infineon
ITU‑T
1997 – 2010 (13 years)
I represented the interests of Infineon in the creation and revision of technical standards on xDSL and PCM (V.92) modems. I was the editor of the V.44 standard on Data Compression.
Systems Engineer
Infineon Technologies
Public Company; 10,001+ employees; IFX; Halbleiter industry
March 1997 – December 2008 (11 years 10 months)
- Analysis and roadmap planning for security techniques & protocols for Wireless LAN systems; calculation of communications capacity gained by adding a low-frequency band; assessment of external technology proposals. One issued patent on emergency phone calls.
- Organized Infineon’s participation in technical standards for broadband modems (xDSL modems): threat assessment, resource assignments, coordination and editorial control. Committees: ITU‑T Q.4/SG15, NIPP-NAI, DSL Forum; Secretary of NIPP-NAI for several years.
- Development of web-based information systems and tools to make technical-standards information available corporation-wide.
— Worked to achieve key agreements in the technical-standards process favorable to our position in the broadband modem market by either compromising with competitors and potential customers, or out-maneuvering them. . . .
EXCERPT:
Lantiq is an international fabless semiconductor business of approximately 1,000 people.
Lantiq’s central functions and the executive management team are located at Lilienthalstr. 15 in Neubiberg near Munich in Germany.
Lantiq makes semiconductor solutions for Next Generation Networks and the Digital Home and, via its Infineon heritage, has an over 20-year record of technology development. . . .
EXCERPT: . . . Neubiberg, Germany– November 6, 2009 – Infineon Technologies AG (FSE: IFX / OTCQX: IFNNY) and Lantiq today announced the closing of the sale of Infineon’s Wireline business to Lantiq, an affiliate of the U.S. based investor Golden Gate Capital. . . .
“Golden Gate Capital”; wikipedia.com.
EXCERPT: . . . Golden Gate Capital Partners is an American private equity firm based in San Francisco, California. The firm makes investments primarily in mature technology companies, as well as other select industries, through leveraged buyout transactions as well as significant minority purchases and growth capital investments.
The firm was founded in 2000, by former investment professionals from private equity firm Bain Capital, as well as business consultants from its affiliate Bain & Company. . . .
“Infineon Technologies”; wikipedia.com.
EXCERPT: Infineon Technologies AG is a German semiconductor manufacturer founded on 1 April 1999, when the semiconductor operations of the parent company Siemens AG were spun off to form a separate legal entity. As of 30 September 2010, Infineon has 25,149 employees worldwide. In fiscal year 2010, the company achieved sales of €3.295 billion. . . .
“Bitcoin Recognized by Germany as ‘Private Money’ ” by Matt Clinch; CNBC.com; 8/19/2013.
EXCERPT: Virtual currency bitcoin has been recognized by the German Finance Ministry as a “unit of account”, meaning it is can be used for tax and trading purposes in the country.
Bitcoin is not classified as e‑money or a foreign currency, the Finance Ministry said in a statement, but is rather a financial instrument under German banking rules. It is more akin to “private money” that can be used in “multilateral clearing circles”, the Ministry said.
“We should have competition in the production of money. I have long been a proponent of Friedrich August von Hayek scheme to denationalize money. Bitcoins are a first step in this direction,“said Frank Schaeffler, a member of the German parliament’s Finance Committee, who has pushed for legal classification of bitcoins. . . .
So Deutschland:
a) outlaws Scientology (competing spy-ops orgs?)
but ...
b) protects Lyndon and Helga Zepp Larouche in covering up murder of Jeremiah Duggan at their Schiller Institute (co-operating/unified spy-ops orgs?)
c) 9/11 Hamburg cell (co-operating/unified spy-ops orgs?)
d) Palantir’s progenitors all Deutsch‑y douchey linked by background and education (co-operating/unified spy-ops orgs?)
e) Every nation-state Eddy the Spook considered for safe landing has modeled their statecraft on post-war evolutionary benefit of Germany.
— All of fascist South America
— G.H.W.Bush’s Berlin-wall blast with it’s phoenix~fire rising-from-the-ashes [of humanity] in spirit and flesh, manifestations ultimately subjugating Europe to its economic hegemony (and Russia has a new permanent dictator — Yuri Andropov’s ass-eater “Shirtless” Vlad Putin).
f) when all else fails, cater to criminality and kill off public-government oversight of economic transactions with complicity and sponsorship of cruel hoax shitcoin.
So exactly how secure can Bitcoin be when, even on a thumb drive, you have to plug it into a system with TPM in order to do transactions. Even if the backdoor doesn’t allow the keys to be read, the transaction would still be hacked.
...theft? criminality? oh really?!!
see point f) above in previous comments ^^^^^^^^^^^^^^
http://www.bloomberg.com/news/print/2014–02-25/mt-gox-bitcoin-exchange-goes-offline-as-peers-lash-out-at-firm.html
Mt. Gox Bitcoin Exchange Down Amid $365 Million Theft Claim
By Carter Dougherty and Pavel Alpeyev — Feb 25, 2014
Mt. Gox, the Tokyo-based Bitcoin exchange that halted withdrawals this month, went offline as a document surfaced alleging long-term theft of about $365 million in the digital currency.
A document posted online that appeared to be an internal strategy paper said unidentified thieves stole 744,408 Bitcoins from the exchange — about $365 million at current rates — and that the theft “went unnoticed for several years.”
“The reality is that Mt. Gox can go bankrupt at any moment, and certainly deserves to as a company,” according to the document.
The document, which outlines plans for leadership changes, re-branding and a possible move to Singapore, was posted online by blogger Ryan Galt. A person briefed on the situation at Mt. Gox, who asked to remain anonymous because the document is private, said he believed it is authentic.
Bitcoin fell 5 percent to $517.71 at 4:48 p.m. London time, according to the CoinDesk Bitcoin Price Index, which averages exchange prices. That’s down from as high as $1,151 on Dec. 4.
Mt. Gox went offline to “protect the site and our users,” according to a statement on its website. “We will be closely monitoring the situation and will react accordingly,” it added.
‘Tragic Violation’
A group of Bitcoin-related companies sought to distance themselves from Mt. Gox, and promised to protect customer funds to promote usage of the currency.
“This tragic violation of the trust of users of Mt. Gox was the result of one company’s actions and does not reflect the resilience or value of Bitcoin and the digital currency industry,” San Francisco-based Coinbase said in a joint statement on its website with Kraken, BitStamp, Circle and BTC China, other prominent Bitcoin companies.
Is Bitcoin Real Money?
“As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today,” the companies said in the statement.
Efforts to reach the http://www.mtgox.com website earlier today directed users to a blank white page, a day after Mt. Gox Chief Executive OfficerMark Karpeles resigned from the Bitcoin Foundation, an advocacy group for the digital money. At one point today, the site read “put announce for mtgox acq here.”
‘Alleged Insolvency’
“We are shocked to learn about Mt. Gox’s alleged insolvency,” the foundation said in an e‑mailed statement.
Bitcoin was introduced in 2008 by a programmer or group of programmers under the name Satoshi Nakamoto and has since gained traction with merchants around the world. The digital money, based on a peer-to-peer software protocol, has no central issuing authority, and uses a public ledger to verify transactions while preserving users’ anonymity.
The Bitcoin Foundation said that, despite the troubles at Mt. Gox, the Bitcoin protocol was functioning normally. In recent days, Mt. Gox had stopped withdrawals, citing an alleged flaw in the protocol.
Since at least 2011, enthusiasts have been trading Bitcoins for dollars and other traditional currencies, and in early 2013 Mt. Gox was one of the biggest exchanges. Mt. Gox said this month that it identified a bug that enables people to withdraw the same Bitcoins more than once, leaving it vulnerable to hackers.
Prices quoted on the exchange plunged on speculation that account holders wouldn’t be able to get their coins back.
The troubles at Mt. Gox are the latest setback for Bitcoin after authorities in Russia, China and Israel sought to restrict the digital money, while the U.S. seeks ways to prevent money-laundering and illicit sales without killing the new technology.
To contact the reporters on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net; Carter Dougherty in Washington at cdougherty6@bloomberg.net
To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net
®2014 BLOOMBERG L.P. ALL RIGHTS RESERVED.
...nothing to see here, move along now people, move along...
http://www.nbcnews.com/business/business-news/head-online-currency-exchange-found-dead-singapore-n45101
Head of Online Currency Exchange Found Dead in
By Javier E. David
Autumn Radtke, the CEO of an upstart online currency exchange, last week under mysterious circumstances at her home in Singapore.
Radtke, the U.S.-born head of First Meta, was found dead by local police Feb. 28, with the cause of death yet to be determined. In a statement on its website, First Meta said the company “was shocked and saddened by the tragic loss of our friend and CEO Autumn Radtke.”
In an interview with The Wall Street Journal, the company’s director and nonexecutive chairman, Douglas Abrams, said the exact cause of Radtke’s death was “still under investigation.”
Prior to taking the reins at First Meta in 2012, the 28-year-old Radtke had once closely worked with technology giant Apple, to bring cloud-computing software to Johns Hopkins University, Los Alamos Labs and the Aerospace Corp., according to her biography. She then took up business development roles at tech start-ups Xfire and Geodelic Systems, according to information on her LinkedIn profile.
First Meta bills itself as a clearinghouse for the purchase and exchange of virtual currencies, including bitcoin.
Her death comes as troubles swirl around the nascent cryptocurrency industry, and amid a rash of suicides in the financial industry as a whole.
Last week, the world’s largest bitcoin exchange, Mt.Gox, imploded; meanwhile, nearly $500 million in client funds vanished overnight. Elsewhere, untimely demises unrelated to bitcoin have claimed the lives of bankers at JPMorgan, Deutsche Bank and Zurich Insurance Group.
First published March 5th 2014, 10:09 am
Javier E. David
Javier E. David is a reporter for CNBC.com, based in Englewood Cliffs, N.J.
Newsweek appears to have found Satoshi Nakamoto. If they’re correct, Satoshi Nakamoto is, somewhat surprisingly, a guy really named ‘Satoshi Nakamoto’ with a libertarian philosophy and a career working in the US defense industry. That includes contract work working on security for the FAA after 9/11, which is also apparently the time he started working on bitcoin. There isn’t much else known about his past because he’s done a lot of secretive work that he doesn’t share with anyone. So the mystery might be solved with another mystery:
Curiouser and curiouser...:
yep, that’s where most folks misplace $116,000,000.00 — in an “old wallet.”
Mt.Gox finds 200,000 bitcoins in old wallet
By Charles Riley @CRrileyCNN March 21, 2014: 1:00 PM ET
http://money.cnn.com/2014/03/21/technology/mt-gox-missing-bitcoin/index.html?hpt=hp_t3
HONG KONG (CNNMoney)
Embattled exchange Mt.Gox said Friday that it has found 200,000 bitcoins in a “forgotten” digital wallet — a haul worth $116 million at current prices.
Mt.Gox CEO Mark Karpeles said in a statement that the bitcoins had been uncovered in an old-format wallet that was thought to be empty. Bitcoin wallets allow users to store the digital currency and execute transactions.
(The dog ate my homework...)
“On March 7, 2014, Mt.Gox Co., Ltd. confirmed that an old-format wallet which was used prior to June 2011 held a balance of approximately 200,000 BTC,” the statement said.
Karpeles said that the discovery was reported to lawyers on March 8. The bitcoins were later moved to “offline” wallets.
Mt.Gox was one of the world’s largest Bitcoin exchanges until last month, when it stopped investors from withdrawing money and blamed the disruption on technical issues and cyber attacks.
(Boo hoo ...)
The Japan-based company then filed for bankruptcy in Tokyo and the U.S., with debts totaling $64 million.
At the time of its closure, Mt.Gox said that it was unable to locate 850,000 bitcoins, the vast majority of which belonged to customers. The discovery reduces the number of lost bitcoins to 650,000, but also raises questions about what really happened to the missing currency.
(Insert image of Ernie Kovac’s three monkeys...)
While the search for the missing bitcoins will continue, many investors harbor little hope that all will be recovered. Japanese authorities had not regulated the exchange, and no deposit insurance was offered.
(Which always makes for a good investment vehicle, scheme, fraud...)
Related: ‘I lost money with Mt.Gox’
Responding to the wave of doubt generated by the exchange’s failure, several other exchanges and digital wallet providers have sought to reassure investors.
“This tragic violation of the trust of users of Mt.Gox was the result of one company’s abhorrent actions and does not reflect the resilience or value of Bitcoin and the digital currency industry,” an industry group said in February.
(Mt. Gox is the Lee Harvey Oswald of Bitcoin exchanges?)
In related news, the team of volunteer computer developers who manage the Bitcoin software program has fixed some of the technical issues that Mt.Gox initially blamed for its troubles — a quirk in the way Bitcoin works called transaction malleability.
– CNNMoney’s Jose Pagliery contributed to this report.
First Published: March 21, 2014: 2:19 AM ET
As one financial regulatory bureaucrat might say in the heat of shitcoin passion, “SERENITY NOW!”
March 25, 2014, 2:59 pm
I.R.S. Says Bitcoin Should Be Considered Property, Not Currency (emphasis — participo)
http://nyti.ms/1hnpRaE
By RACHEL ABRAMS
The Internal Revenue Service announced on Tuesday that Bitcoin should be viewed and taxed as property, giving a little clarity to the shifting regulatory landscape of virtual currency.
Despite the fact that many users treat Bitcoin like a regulated currency, “it does not have legal tender status in any jurisdiction,” the agency said.
That means that employers who choose to pay wages in Bitcoins will have to report those wages just like any other payment made with property, and Bitcoin income will be subject to the normal federal income withholding and payroll taxes.
Shortly after the announcement, Senator Tom Carper, Democrat of Delaware, praised the decision by the I.R.S. “The Internal Revenue Service’s guidance today provides clarity for taxpayers who want to ensure that they’re doing the right thing and playing by the rules when utilizing Bitcoin and other digital currencies,” he said.
(yes, the notion of “doing the right thing,” and “playing by the rules,” is anathema to this lost generation of narcissistic-sociopathic, video-gamer, drugged-out, sexed-up, social media digital conformists)
Bitcoin, the computer-driven virtual currency that has gained momentum since it first popped up in 2009, has presented challenges for regulators. It has attracted a growing following of users and merchants, but it has no central bank and no government oversight.
In the wake of the collapse of one of the largest online exchanges for buying and selling Bitcoin last month, governments around the world have stepped up their efforts to figure out a way to protect consumers against fraud and other illegal activities.
The I.R.S.’s announcement also included a question-and-answer section:
Q‑1: How is virtual currency treated for federal tax purposes?
A‑1: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency.
Q‑2: Is virtual currency treated as currency for purposes of determining whether a transaction results in foreign currency gain or loss under U.S. federal tax laws?
A‑2: No. Under currently applicable law, virtual currency is not treated as currency that could generate foreign currency gain or loss for U.S. federal tax purposes.
Q‑3: Must a taxpayer who receives virtual currency as payment for goods or services include in computing gross income the fair market value of the virtual currency?
A‑3: Yes. A taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in U.S. dollars, as of the date that the virtual currency was received. See Publication 525, Taxable and Nontaxable Income, for more information on miscellaneous income from exchanges involving property or services.
Q‑4: What is the basis of virtual currency received as payment for goods or services in Q&A‑3?
A‑4: The basis of virtual currency that a taxpayer receives as payment for goods or services in Q&A‑3 is the fair market value of the virtual currency in U.S. dollars as of the date of receipt. See Publication 551, Basis of Assets, for more information on the computation of basis when property is received for goods or services.
Q‑5: How is the fair market value of virtual currency determined?
A‑5: For U.S. tax purposes, transactions using virtual currency must be reported in U.S. dollars. Therefore, taxpayers will be required to determine the fair market value of virtual currency in U.S. dollars as of the date of payment or receipt. If a virtual currency is listed on an exchange and the exchange rate is established by market supply and demand, the fair market value of the virtual currency is determined by converting the virtual currency into U.S. dollars (or into another real currency which in turn can be converted into U.S. dollars) at the exchange rate, in a reasonable manner that is consistently applied.
Q‑6: Does a taxpayer have gain or loss upon an exchange of virtual currency for other property?
A‑6: Yes. If the fair market value of property received in exchange for virtual currency exceeds the taxpayer’s adjusted basis of the virtual currency, the taxpayer has taxable gain. The taxpayer has a loss if the fair market value of the property received is less than the adjusted basis of the virtual currency. See Publication 544, Sales and Other Dispositions of Assets, for information about the tax treatment of sales and exchanges, such as whether a loss is deductible.
Q‑7: What type of gain or loss does a taxpayer realize on the sale or exchange of virtual currency?
A‑7: The character of the gain or loss generally depends on whether the virtual currency is a capital asset in the hands of the taxpayer. A taxpayer generally realizes capital gain or loss on the sale or exchange of virtual currency that is a capital asset in the hands of the taxpayer. For example, stocks, bonds, and other investment property are generally capital assets. A taxpayer generally realizes ordinary gain or loss on the sale or exchange of virtual currency that is not a capital asset in the hands of the taxpayer. Inventory and other property held mainly for sale to customers in a trade or business are examples of property that is not a capital asset. See Publication 544 for more information about capital assets and the character of gain or loss.
Q‑8: Does a taxpayer who “mines” virtual currency (for example, uses computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities?
A‑8: Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income. See Publication 525, Taxable and Nontaxable Income, for more information on taxable income.
Q‑9: Is an individual who “mines” virtual currency as a trade or business subject to self-employment tax on the income derived from those activities?
A‑9: If a taxpayer’s “mining” of virtual currency constitutes a trade or business, and the “mining” activity is not undertaken by the taxpayer as an employee, the net earnings from self-employment (generally, gross income derived from carrying on a trade or business less allowable deductions) resulting from those activities constitute self-employment income and are subject to the self-employment tax. See Chapter 10 of Publication 334, Tax Guide for Small Business, for more information on self-employment tax and Publication 535, Business Expenses, for more information on determining whether expenses are from a business activity carried on to make a profit.
Q‑10: Does virtual currency received by an independent contractor for performing services constitute self employment income?
A‑10: Yes. Generally, self employment income includes all gross income derived by an individual from any trade or business carried on by the individual as other than an employee. Consequently, the fair market value of virtual currency received for services performed as an independent contractor, measured in U.S. dollars as of the date of receipt, constitutes self employment income and is subject to the self-employment tax. See FS-2007–18, April 2007, Business or Hobby? Answer Has Implications for Deductions, for information on determining whether an activity is a business or a hobby.
Q‑11: Does virtual currency paid by an employer as remuneration for services constitute wages for employment tax purposes?
A‑11: Yes. Generally, the medium in which remuneration for services is paid is immaterial to the determination of whether the remuneration constitutes wages for employment tax purposes. Consequently, the fair market value of virtual currency paid as wages is subject to federal income tax withholding, Federal Insurance Contributions Act (FICA) tax, and Federal Unemployment Tax Act (FUTA) tax and must be reported on Form W‑2, Wage and Tax Statement. See Publication 15 (Circular E), Employer’s Tax Guide, for information on the withholding, depositing, reporting, and paying of employment taxes.
Q‑12: Is a payment made using virtual currency subject to information reporting?
A‑12: A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property. For example, a person who in the course of a trade or business makes a payment of fixed and determinable income using virtual currency with a value of $600 or more to a U.S. non-exempt recipient in a taxable year is required to report the payment to the IRS and to the payee. Examples of payments of fixed and determinable income include rent, salaries, wages, premiums, annuities, and compensation.
Q‑13: Is a person who in the course of a trade or business makes a payment using virtual currency worth $600 or more to an independent contractor for performing services required to file an information return with the IRS?
A‑13: Generally, a person who in the course of a trade or business makes a payment of $600 or more in a taxable year to an independent contractor for the performance of services is required to report that payment to the IRS and to the payee on Form 1099-MISC, Miscellaneous Income. Payments of virtual currency required to be reported on Form 1099-MISC should be reported using the fair market value of the virtual currency in U.S. dollars as of the date of payment. The payment recipient may have income even if the recipient does not receive a Form 1099-MISC. See the Instructions to Form 1099-MISC and the General Instructions for Certain Information Returns for more information. For payments to non‑U.S. persons, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities.
Q‑14: Are payments made using virtual currency subject to backup withholding?
A‑14: Payments made using virtual currency are subject to backup withholding to the same extent as other payments made in property. Therefore, payors making reportable payments using virtual currency must solicit a taxpayer identification number (TIN) from the payee. The payor must backup withhold from the payment if a TIN is not obtained prior to payment or if the payor receives notification from the IRS that backup withholding is required. See Publication 1281, Backup Withholding for Missing and Incorrect Name/TINs, for more information.
Q‑15: Are there IRS information reporting requirements for a person who settles payments made in virtual currency on behalf of merchants that accept virtual currency from their customers?
A‑15: Yes, if certain requirements are met. In general, a third party that contracts with a substantial number of unrelated merchants to settle payments between the merchants and their customers is a third party settlement organization (TPSO). A TPSO is required to report payments made to a merchant on a Form 1099‑K, Payment Card and Third Party Network Transactions, if, for the calendar year, both (1) the number of transactions settled for the merchant exceeds 200, and (2) the gross amount of payments made to the merchant exceeds $20,000. When completing Boxes 1, 3, and 5a‑1 on the Form 1099‑K, transactions where the TPSO settles payments made with virtual currency are aggregated with transactions where the TPSO settles payments made with real currency to determine the total amounts to be reported in those boxes. When determining whether the transactions are reportable, the value of the virtual currency is the fair market value of the virtual currency in U.S. dollars on the date of payment.
See The Third Party Information Reporting Center, http://www.irs.gov/Tax-Professionals/Third-Party-Reporting-Information-Center, for more information on reporting transactions on Form 1099‑K.
Q‑16: Will taxpayers be subject to penalties for having treated a virtual currency transaction in a manner that is inconsistent with this notice prior to March 25, 2014?
A‑16: Taxpayers may be subject to penalties for failure to comply with tax laws. For example, underpayments attributable to virtual currency transactions may be subject to penalties, such as accuracy-related penalties under section 6662. In addition, failure to timely or correctly report virtual currency transactions when required to do so may be subject to information reporting penalties under section 6721 and 6722. However, penalty relief may be available to taxpayers and persons required to file an information return who are able to establish that the underpayment or failure to properly file information returns is due to reasonable cause.
Online, internet child abuse expands and flourishes with Bitcoin....resulting in the need/requirement for implementation of virtual panopticon.
http://www.dailymail.co.uk/news/article-2609971/Disturbing-new-internet-child-abuse-sees-toddlers-raped-burned-live-webcam-paedophiles-use-Bitcoin-stop-traced-warns-police-chief.html
Disturbing new internet child abuse sees toddlers raped and burned live on webcam as paedophiles use Bitcoin to stop being traced, warns police chief
-Rob Wainwright, director of Europol, warned of depraved new trend
‑Paedophiles pay for sick online ‘shows’ using untraceable Bitcoin
‑Mr Wainwright warned that police and politicians struggle to keep up
By KIERAN CORCORAN
PUBLISHED: 19:52 EST, 21 April 2014 | UPDATED: 05:42 EST, 22 April 2014
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One of Europe’s top police officers has warned of a sickening online trade in child torture porn.
Rob Wainwright, the director of Europol, said offenders are using the untraceable online currency Bitcoin to pay for depraved ‘shows’, performed live on webcams, which see young children raped and burned.
He said: ‘The level of depravity seems to be descending year on year, frankly, including what seems to be in vogue now, which is live webcam ‘shows’ of toddlers not just being raped but being burnt with cigarettes.
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Sickening: Mark Wainwright warned that online predators were paying to watch children be raped and burned live on webcam
‘Sorry, but it’s happening online and it’s extremely difficult for us to identify.’
Mr Wainwright warned that Bitcoin — a ‘crypto-currency’ based on mathematical formulae and independent of any government or central bank — is propping up a criminal black market.
He also warned that police and politicians were struggling to keep up with the pace of online crime, thanks to widespread anonymity online, and easy access to encryption technology which can make criminals almost impossible to track down.
Mr Wainwright warned that the principle that everyone’s online activity should be anonymous by default needs to be challenged in order to police the internet effectively.
(*further enhancing the requirement for a virtual panopticon — participo)
He criticised the sluggish response from the police, politicians and big businesses, saying that equivalent levels of crime in the physical world would be ‘front page news.’
Everything you need to know about bitcoin
Black market: The Bitcoin cryptocurrency is being used for illegal activities, Mr Wainwright warned
-Black market: The Bitcoin cryptocurrency is being used for illegal activities, Mr Wainwright warned
He told The Times: ‘It is frustrating that we are not getting the message out, at least not loud enough for legislators to hear it.’
The Internet Watch Foundation pressure group has recently claimed to have found evidence of an email scam directing people to underground websites where the sick ‘shows’ could be seen in exchange for Bitcoin.
Read more: http://www.dailymail.co.uk/news/article-2609971/Disturbing-new-internet-child-abuse-sees-toddlers-raped-burned-live-webcam-paedophiles-use-Bitcoin-stop-traced-warns-police-chief.html#ixzz2zdLbFlLh
Peter Thiel’s quest to create a private global reserve currency through his “Stripe” company may be coming a little closer to fruition, albeit indirectly: Stripe recently invested in “Stellar”, a currency/currency exchange based on Ripple, and a German bank just became the first bank in the world to offer wire-transfer services using Ripple: