Dr. Wright,
I read your recent blog post entitled “Taxing Times…” and it scared the living crap out of me. I too read the news that the IRS was going to treat forks as taxable income, and that alone made me sick to my stomach. All along, I thought forks would (and should) be treated as a $0 cost basis investment. That’s what made sense to me, and I couldn’t foresee the IRS treating them any other way.
Now, if that alone didn’t sit well with me, your prognosis that the IRS will eventually treat BTC as the forked coin — and require that those in possession of it to claim taxable income based upon its value at “fork time” ($4,000+) — certainly didn’t ease the gut-wrenching feeling at all. In fact, it felt like a Mike Tyson gut-punch. Until, that is, I thought it through.
Before getting into that, I should note that I too prescribe to the notion that BTC doesn’t follow the whitepaper and should not be considered Bitcoin. Bitcoin is Bitcoin-SV, as defined by your whitepaper. But back in 2017, and even to this day, the world’s perception is that BTC is Bitcoin (and therefore the legacy chain), and I find it hard to believe that the IRS would assume anything different.
With that said, I do think you’ll have your day in court and Bitcoin-SV will inevitably be declared Bitcoin — and therefore dubbed as the legacy chain — because it is the chain that aligns with the original protocol as defined by the whitepaper. Based upon the price & hashpower history, however, even though BTC’s protocol change “results in a permanent division from the legacy distributed ledger,” how could the IRS tax it in such a way, when, at the time, it was the dominant chain by a long shot? To me, it just doesn’t make sense. (Not that a whole lot has made sense in the world of crypto…)
But, maybe you’re right and I am wrong. If you are indeed right, though, damn you. Damn you for disappearing; not taking these steps to declare the proper chain as Bitcoin sooner, and for letting these digital gold advocates take over.
When I first got into Bitcoin, I wanted to see YOUR version of Bitcoin blossom and transform our financial system (and internet) for the better. I made the investment because I thought it would become the best form of money to ever exist. I did NOT make the investment to see it used only for swapping of other “cryptocurrencies” via exchanges. I thought your invention was going to be revolutionary, and like you, it royally pisses me off that it was changed along the way. It was total BS, and I’m feeling pretty screwed right now because of it. I NEVER WANTED TO INVEST IN ANYTHING OTHER THAN BITCOIN.
But don’t take my “damn you” to heart. I don’t actually mean it, or even blame you at all. I’m just venting, and challenging your notion that the IRS will treat BTC as “taxable income” at the time of the BCH fork; once BSV officially becomes Bitcoin after you have your day in court. I don’t fault you at all.
In fact, I wish you well, and thank you for Bitcoin.