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i read all of it so you dont have to - 2/14/2020
I accidentally ended up in the world of video game policy this week. It all started when we noticed something odd on the IRS website.
For 2020, the IRS added a question to form 1040. It asks taxpayers whether or not they received, sold, sent, exchanged, or otherwise acquired any financial interest in any virtual currency in 2019. Most people took this to mean the IRS wants people to report cryptocurrency transactions and moved on.
But… the IRS website defines “virtual currency” a bit more broadly, and helpfully provided examples:
This turns out to be a big deal, as covered by CNN:
The little-noticed provision, which dated back at least to October according to the cached version of an IRS webpage on Archive.org, appeared to mark the first time the agency has ruled on video game currencies, including Fortnite's V-bucks, purchased with real dollars. By applying the same policy to in-game money that it enforces on bitcoin, ether and other cryptocurrencies, the IRS guide seemed poised to affect millions of gamers — or their parents.
After we pointed this out, some journalists started asking the IRS to clarify. That’s when things got weirder:
But on Wednesday, the IRS scrubbed all mentions of the in-game currency from the webpage after questions from CNN and other outlets about the policy. Despite the sudden deletion, experts believe that transactions involving video game currencies will still need to be reported under a new question the IRS is including this year on tax forms. Just because the IRS deleted the language, they said, does not resolve questions about how the IRS plans to treat video game currencies.
The IRS didn't respond to multiple requests for comment, and did not respond when CNN asked for a clear statement about the tax treatment of video game currencies.
Our friends at Bloomberg Law were able to capture and report on the original wording before it was changed:
The IRS’s webpage, which has since been updated, originally listed Roblox and V-bucks as examples of convertible virtual currency, alongside well-known cryptocurrencies, such as Bitcoin and Ether. Bloomberg Tax took a screenshot of that original wording. The webpage has since been revised to list Bitcoin as the only example.
Setting aside the question of why they would remove Ether and leave Bitcoin if they intend to cover cryptocurrencies, Jerry observed that simply removing the examples doesn’t actually change whether or not in-game currencies are covered:
All of this confusion could be avoided with an open and transparent rulemaking process. But I got to talk to CNN about League of Legends so I guess I am thankful for that.
This excellent 2014 essay by Sarah Jeong, arguing in defense of financial privacy, made the rounds on Twitter again.
A mask in itself should not be a crime. Giving a man a mask should not be one, either. Yes, anonymity is desired by those whose activities disrupt the state—but sometimes disrupting the state looks like a bus boycott in Montgomery, Ala. There is tangible free speech potential in cryptocurrency, and it should not be easily dismissed.
It’s a must read for anyone interested in cryptocurrency.
I’ve long loved YouTube penny hoarders and their grainy footage showing off stashes of thousands of pre-1982 pennies.
The basic idea is that older pennies contain much more than a penny’s worth of copper, and once the penny gets inevitably phased out, it will be legal to melt these hoards down and sell them for a tidy profit. The absurd logistics of this plan are very amusing to me, but I never took my thinking much further than that.
Luckily, JP Koning has done the math on hedge fund manager Kyle Bass’ $1 million bet on nickels. Here’s a taste:
Bass's hoard would be extremely heavy, far exceeding the capacity of a lone shipping container. Twenty million nickels weighs 100,000 kg, or 220,462 pounds. But a 20' container is only rated to hold 25,000 kg (55,120 lbs). Both the weight of the coins and the honeycombing effect mean that it could take as much as four freight containers to handle $1 million worth of nickels.
Bass could find a farmer who would be willing to store four freight containers in his field for a few hundred bucks a year. But he probably wants something more formal than that. One option is a warehouse. Warehouses charge by the pallet. A pallet can hold up to 4,600 lbs worth of goods, which works out to around 417,000 nickels, or 104 bags per pallet. Which means Bass will have to store 48 pallets of nickels.
I searched around a bit and found that warehouses generally charge a monthly fee of anywhere from $5 to $20 per pallet. There are a lot of variables that can affect this amount. If the pallets are stackable, and thus take up less floor area, then the monthly fee will be less. Location of the warehouse is another factor. Securing space in the vicinity of New York costs more than Des Moines.
If this is the kind of thing you like, I highly recommend checking out the whole post.
(And if you are rooting for the penny to be phased out, my condolences.)
In The Atlantic, an essay conceptualizes a “Pseudoworld” future in which our near constant surveillance society drives everyone to take dramatic steps to stymie tracking of things like location, voice, and even gait:
As that kind of surveillance grows, catalyzed by free-range viral videos recorded wherever an embarrassing incident unfolds, coupled with a contest to name the bad actors and where they work, the demand for pseudonymity will require more than non-revealing Twitter handles. As yesterday’s locks are supplemented by today’s networked home-security cams, companies will markettools for us to secure the manifold ways in which our identities could leak. Nico Sell (which may or may not be her real name) has led the way: She’s a digital-security researcher who has worked hard to never be publicly photographed without wearing sunglasses. Researchers at Carnegie Mellon have designed special glasses to confuse facial recognition without requiring shades, and the artist Adam Harvey has pioneered an open tool kit of new fashions for the same purpose. Next up will be shoe inserts to stymie gait detection, and the commandeering of Auto-Tune to prevent voice recognition.
It goes on to imagine the opposite, “Transcripworld.”
I couldn’t help but think of Pseudoworld as I later read this: frustration grows in China as face masks compromise facial recognition, and Transcriptworld as I read the many reports of people submitting to extreme surveillance as the virus is contained.
This one is kind of crazy. Here’s a bit from a law firm’s press release celebrating the results of a recent proceeding, as reported by Fortune:
“The State of New York Supreme Court has awarded more than $13.8 million to a Trust whose beneficiaries are Bitcoin fraud victims,” the announcement from law firm Global Attorneys began. The defendant in the case is officially “The Bitcoin Voluntary Associations," which the plaintiff's lawyer, Dr. Jonathan Levy, claims is "the same as the crypto enterprise ‘Bitcoin.’”
If you’re scratching your head, you’re not alone. Fortune’s David Z. Morris breaks it down deeply in the article, but here’s the basic gist.
Some guy told a judge that he represents all of Bitcoin.
Some other guy told that same judge that he represents anyone who has ever lost money in any way by using Bitcoin, and that he blames the first guy.
The first guy confesses to the many crimes of Bitcoin.
All people who run Bitcoin owe the other guy money somehow.
This is one of the strangest schemes I’ve seen in all my years of watching this space. And don’t worry, you probably don’t owe anyone anything. But just in case:
All of this may add up to an attempt to get money out of individual node operators by brandishing a court document that might not be as powerful as it seems. So bitcoin miners, if a subpoena shows up on your doorstep: call a lawyer.
If you think this is good please…