The IRS is killing Bitcoin
The government has just made it much harder for Bitcoin to go mainstream.
Megan McArdle
BloombergView.com
Uncle Sam just took “a bite out of Bitcoin,” said Megan McArdle. I’ve never been a big believer in the virtual currency, but even if Bitcoin “meets the fondest hopes and dreams of its early adopters,” the government has just made it much harder for it to go mainstream. Last week, the IRS ruled that it would treat Bitcoins as property, which means that the digital dollars will now be “subject to capital gains tax” when sold. In practice, that means Bitcoin owners “will need to track the price at which each one is acquired, and the price at which” each one is sold, and pay a tax on the difference. As a result, turning Bitcoins into cash will be quite a headache. Sure, die-hards could find a way to keep their transactions off the books, but that would require “rather elaborate money-laundering operations.” And if you get caught, “Bitcoin’s public block chain will provide law enforcement with a nice ledger of all your illegal activity.” Whether or not the government is trying to diminish its appeal, the IRS’s ruling could be the nail in Bitcoin’s coffin as a viable alternative to fiat currencies, potentially reducing dealing in it to a mere hobby. After all, a currency in which each individual unit has a different value “is likely to be more trouble than it’s worth.”
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
George Floyd: Did Black Lives Matter fail?
Feature The momentum for change fades as the Black Lives Matter Plaza is scrubbed clean
-
National debt: Why Congress no longer cares
Feature Rising interest rates, tariffs and Trump's 'big, beautiful' bill could sent the national debt soaring
-
Why are military experts so interested in Ukraine's drone attack?
TODAY'S BIG QUESTION The Zelenskyy government's massive surprise assault on Russian airfields was a decisive tactical victory — could it also be the start of a new era in autonomous warfare?
-
The JFK files: the truth at last?
In The Spotlight More than 64,000 previously classified documents relating the 1963 assassination of John F. Kennedy have been released by the Trump administration
-
'Seriously, not literally': how should the world take Donald Trump?
Today's big question White House rhetoric and reality look likely to become increasingly blurred
-
Will Trump's 'madman' strategy pay off?
Today's Big Question Incoming US president likes to seem unpredictable but, this time round, world leaders could be wise to his playbook
-
Democrats vs. Republicans: who are the billionaires backing?
The Explainer Younger tech titans join 'boys' club throwing money and support' behind President Trump, while older plutocrats quietly rebuke new administration
-
US election: where things stand with one week to go
The Explainer Harris' lead in the polls has been narrowing in Trump's favour, but her campaign remains 'cautiously optimistic'
-
Is Trump okay?
Today's Big Question Former president's mental fitness and alleged cognitive decline firmly back in the spotlight after 'bizarre' town hall event
-
The life and times of Kamala Harris
The Explainer The vice-president is narrowly leading the race to become the next US president. How did she get to where she is now?
-
Will 'weirdly civil' VP debate move dial in US election?
Today's Big Question 'Diametrically opposed' candidates showed 'a lot of commonality' on some issues, but offered competing visions for America's future and democracy