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Comment by rdmcfee | Hacker News Reader

On one hand this makes sense. The IRS is trying to avoid early adopters from cashing out millions by purchasing goods to avoid paying capital gains tax.

On the other hand, this is debilitating for people who want to use BTC for day to day transactions. Imagine the paperwork involved. <- opportunity for a wallet app which tracks gains/losses

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What is so hard about looking through the blockchain and backtracing all of your trades at a later date?

You know your own public and private key, so you can find all of your transactions and the date at which you've received or sent off BTC. Come tax day, you run a single program over all your transactions and you should be set.

There's no need to go "cloud" on this one, a simple offline blockchain app would solve the problem.

You need some sort of data source for what prices were at various points. This could be offline, but is likely to be big. Still, substantially easier problem than a lot of tax-related reporting.

Which exchange price would you use too?

IANA Accountant, but I would guess until/unless the IRS has blessed some particular entity, you can use any public-facing exchange but you should probably be consistent.

You say it's debilitating, but you describe the precise solution. This is easy to code around if you don't care about preserving BTC anonymity.

BTC Anonymity requires the use of mixers, and using mixers is against the law (its money laundering).

"BTC Anonymity requires the use of mixers"

There are different levels of anonymity.

"using mixers is against the law (its money laundering)"

I think that's likely the case, and I think if it's not yet the case it will be soon, but do you know if this has actually been prosecuted (or otherwise made legally clear) anywhere yet?

""" There are different levels of anonymity. """

You are either secure, or not secure. There is no in between. BTC is a permanent public ledger that can be analyzed for the rest of time. Without mixers (or similar techniques), it becomes possible to figure out lots of facts.

http://www.coindesk.com/194993-btc-transaction-147m-mystery-...

Similarly, your transactions can be tracked and analyzed because its all public information.

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And yes, people have been prosecuted for money laundering through mixers. (ie: Silk Road seizure + prosecution). So don't play the ignorance game, learn about the current state of affairs and understand the risks you're taking.

"You are either secure, or not secure. There is no in between."

First, no, everything is in between. You're never "secure", you're secure against certain classes of threats.

Second, I didn't say "secure", I said "anonymous". Leaving someone a handwritten note is more anonymous than meeting them face-to-face and producing ID, even if they could potentially hire handwriting experts and find you.

"BTC is a permanent public ledger that can be analyzed for the rest of time. Without mixers (or similar techniques), it becomes possible to figure out lots of facts."

Certainly. Even with mixers, it's possible to figure some of it out - I've said many times, "you're never leaking less information than you think". Even so, this sort of thing requires someone do the analysis, which is far easier to automate if you've got a big long list of (btc account, TIN) of a large percentage of actors in the system.

"So don't play the ignorance game, learn about the current state of affairs and understand the risks you're taking."

I own no bitcoins, and have never used a mixer. I'm not "playing the ignorance game", I'm trying to cure my ignorance. Don't be a dick.

https://research.microsoft.com/en-us/people/mickens/thisworl...

Then I'm curious to see what happens when Matthew Green releases Zerocash, a cryptocurrency with built-in strong anonymity.

Similarly, there is already DarkCoin, which can do anonymous(ish) payments via DarkSend. Whitepaper:

http://www.darkcoin.io/downloads/DarkcoinWhitepaper.pdf

Unlike ZeroCoin, it has actually been built.

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