Gary Howland wrote:
But digital currencies will never become fiat currencies, let alone legal tender, unless governments say they are. So why should they worry? (OK, OK, they will worry about tax evasion etc. etc.)
Exactly. How can they claim, on one hand, that something does not qualify as currency, or as legal tender, and then turn around and tax it? If I have 10 Million UNITS that aren't considered to legally be of value, then I'm certainly not going to 'go easy' to tax court. Any currency that becomes sufficiently distributed and traded will find itself becoming a 'legal entity' in some form or another. Once it has been 'entityenized' (don't bother looking for that word in the dictionary), it will be a short step for it to achieve a quantifiable status among other currencies. The bottom line has always been that anything which manages to reach a sufficient level of use that it causes the government to want a 'piece of the pie' becomes regulated, taxed, and enters the mainstream of the economic system. There has been a card-game going on in Texas for close to a hundred years which works on a personal credit system and the IRS, to this point, has been able to do no better than require the players to 'report' as income any credits that become translated into hard goods or taxable services. If this card game involved sufficient revenue to make a serious impact on this country's economic system, then there would undoubtedly already be an act of congress addressing the issue of drawing to an inside straight.
"Regulation - which is based on force and fear - undermines the moral base of business dealings. -- Alan Greenspan
I hope that the IRS didn't take this as a personal attack. Toto