Brian Doherty on Bitcoin and Taxes


The leading digital currency protocol Bitcoin has suffered blow after blow lately—each one interpreted by doubters as fatal. Major exchanges collapse, taking hundreds of thousands of customers' Bitcoin. Minor exchanges also suffer severe hacking attacks or disappear. Major players in the Bitcoin game, even from the respectable representatives of legitimate business at the Bitcoin Foundation, are arrested for money-laundering. China continues its push to stamp out its citizens ability to use it. After zooming above $1,000 late last year, Bitcoin's dollar price has fallen by more than half in the past few months. 

Last week, Bitcoin suffered what seemed to be its most insulting injury yet: the IRS officially announced that in its eyes bitcoin is not the currency it purports to be, but merely property.

But as Reason Senior Editor Brian Doherty explains, the libertarian dream of Bitcoin has a way of surviving both any government attempt to manage it, and the internecine war in the Bitcoin community between the crypto-anarchists from whom Bitcoin arose and who were its first adopters, and the big-time legitimate businesses stepping in to normalize the market, who would just as soon lose the stink of weirdo anarchism surrounding the coin that can scare off big money. Both sides of Bitcoin can and will coexist.