It’s weird that people think the IRS will accept the boating accident excuse. The IRS doesn’t care how you come up with the money. If you have KYC bitcoin they know everything they need to calculate what you owe. If you don’t pay it they lock you up. If you truly did lose access to your Bitcoin, you will be in a world of hurt.
Continuing my thinking out loud on 6102 confiscation. Wouldn’t it be easier for the government to ensure bitcoin moons? If the primary concern is to protect the dollar and the monopoly on money printing, then bitcoin as an asset is ok. It’s the peer to peer transaction feature that they would want to eliminate.
Bitcoin moons. That should stop a lot of liquidity since who wants to spend something that is worth so much and continues to rise? It’s why nobody uses a 1900 $20 gold coin as currency. It’s worth $2600 as gold.
Fidelity released a paper suggesting $1 billion per bitcoin by 2048. Sounded crazy but maybe they already thought thru what we are examining today. So fine, it’s $1 billion, or $10 per sat. Well, 1 sat would be the smallest transaction fee a miner or level two provider could accept.
Consider my most recent lightning purchase cost 3 sats and I was thrilled at how cheap it was. But at $10 per sat, I’m not buying those three donuts using sats. And if I had to use multiple UTXOs? That may end up costing more than the item I purchased.
So the government can eliminate any competition to the dollar by allowing bitcoin to moon and pressuring the exchanges and ETF firms to ensure the sat remained the lowest denomination of Bitcoin.
Completed my second purchase using lightning. Bought three donuts at a small business coffee shop. The first purchase was produce from a local farmer. Each time I had to pause and ask if it was really worth spending these sats when I know these sats will be able to buy so much more in the future. That’s probably the most exciting part of using real money. Significantly less consumption but probably a lot more happiness.
With real money, life got cheaper every single year for 30 years during 1870-1900. We had real money and the industrial revolution was making its productivity gains. And everyone got to benefit. We’ve had two equivalent productivity revolutions with the PC and the internet in my lifetime. And life got more expensive every single year because fiat. So the productivity gains were taken away from the public and handed over to the shareholders of the winning companies.
I expect that to continue with AI, robotics and quantum computing. But those technologies will permanently eliminate essential labor. So life continues to get more expensive, but essential labor dries up. How does this all get resolved?
Save in bitcoin. At the moment that seems like the only way to survive what’s coming
I thought about how I would go about 6102 if I was the government. I think I could easily attack KYC Bitcoin that was taken into self custody. From the exchanges, I know who bought Bitcoin, how much and for what price. So I declare self custody bitcoin illegal as of Dec 31. I call that a taxable event and would be able to compute how much tax you now owe. I might even set a flat 50% tax regardless of income bracket. I flag your accounts for automatic audit and if I do not receive the expected tax by April 15, I send the IRS after you with threats of jail time. Most normies would need to sell their bitcoin in order to pay the tax.
It also depend on why I am after your Bitcoin. If it is self custody is a threat to the dollar and my monopoly on money printing, then I would not go after the ETFs as that Bitcoin is locked up as an asset and cannot be used as currency. I may even allow self custody owners to trade their Bitcoin for equivalent ETF shares tax deferred, similar to the 1030 exchange in real estate.
I guess I don’t see a scenario where the government confiscates Bitcoin held in the ETFs and exchanges but does not have a plan to confiscate self custody bitcoin that was originally purchased from KYC exchanges. The taxation, IRS scrutiny and jail time threat eliminates any “I lost my Bitcoin” excuse. For this initial attack, I don’t care how you get the money because I know most people will only be able to get it thru selling their Bitcoin. If you truly lost your Bitcoin then that’s terrible news for you. Because I’ll garnish your wages or put you in jail or both.
Just me thinking out loud. Self custody KYC Bitcoin is no different than ETF Bitcoin when it comes to 6102 confiscation. If I were the government protecting the dollar and my monopoly on money printing, I would use the IRS as my first attack vector. I would be trying to separate the millions of normies from their Bitcoin. I know exactly who has KYC Bitcoin, how much they have and what they bought it for. I would make Dec 31 the taxable event day and say it is illegal to self custody or sell bitcoin. Your tax bill is 50% of the capital gains you made on bitcoin, due April 15. Then I really don’t care because I know most normies would have to sell a good chunk of their bitcoin to pay the tax bill.
If I wanted even more success, I would offer a program for voluntarily giving your bitcoin to the government thru OTC. I would pay out the full market price of bitcoin, say $1 million per coin, plus match your capital gains. So if you bought bitcoin at $100k, your capital gain is $900k. I would pay you 1.9 million, and withhold $900k for taxes, letting you keep the full million market value. This wouldn’t primarily be to reward those who comply, but to create a tax bill for those who do not comply equal to the full capital gains. Because the tax value I would use would not be the $1 million market value, but the $1.9 million I would have paid you if you did comply. I’m going to calculate a $900k tax bill for you and send the IRS and threats of jail if you don’t pay up. So now you have to sell most of your bitcoin to pay the tax bill. Since that was illegal if you did it after Dec 31, you won’t be able to document how you came up with $900k. That allows me to tax that $900k as ordinary income in the next tax year, adding an additional 300k of taxes you owe.
Nice! I know how you feel. I just bought 3 donuts at a coffee shop in Portland Maine, using my Zues wallet, connected to my lightning node running on my Start9 server. That was my second LN purchase and it happened this past Saturday
The cashier had been working there a year and I was the first BTC customer. The owner had to come out from the back and we had to do a lot of math to get the USD to sats conversion. I also had to have my sister restart my start9 an hour earlier as my Zues app would not connect. So still some technical difficulties to smooth out. But yeah…. Hell Yeah!
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