Episode 208 - How is Gods Unchained standing up to China? What did the IRS just do for US Investors? Also some poker content.

Crypto Basic Podcast: Teaching You The Basics of Bitcoin and the World of Cryptocurrency. CryptoBasic

• Rapid Fire
  • UNICEF launches crypto fund
    • UNICEF can now receive, hold, and disperse donations of ether and bitcoin cryptocurrencies. Funding open source technology benefiting children and young people around the world
  • Median US Income by year in BTC
  • Vitalik Buterin claimed that Ethereum will be more secure than Bitcoin after it moves to proof of stake over the next few years.
    • POS introduces a system where validators can be questioned. So you can challenge a block for being illegitimate .
    • "This is how the blockchain becomes more expensive to attack. If someone wants to really bring the network down, they would have to create a lot of malicious blocks. To do so, they would have to stump up a huge amount of ether as collateral—which they would lose if challenged. This makes a major attack much more expensive to run, which Buterin claimed, would be an improvement on proof of work."
  • McAfee started a decentralized "no restrictions" crypto exchange.
    • Called the McAfee DEX, completely decentralized crypto exchange running on the Ethereum blockchain.
    • no KYC, opened in Beta, only ERC=20s. Nothing on the exchange will ever be monitored, recorded, or restricted.

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• Hearthstone Player Blitzchung speaks out and gets banned by Blizzard. Gods Unchained responds with an invite to $500k tournament

  Update: Gods Unchained hit by cyberattacks after speaking out

  • Earlier this week Hearthstone player, Blitzchung, spoke out against Hong Kong in a Twitch interview saying "Liberate Hong Kong, revolution of our age!" in a gas mask. Blizzard then removed him from the Hearthstone Grand Masters tournament taking away his prize money ($10,000) and effectively banning him from future tournaments. Tencent, a Chinese conglomerate has a large stake in Activision/Blizzard
  • Gods Unchained reaches out and says they will reimburse his lost winnings plus invite him to their upcoming $500k tournament. Went on to say that Blizzard will exploit their players if it is in their immediate financial interest. And how Gods Unchained has built uncensorable items with an open economy and market.

• IRS FAQ on Virtual Currency Transaction

  • It's being treated as property for general tax purposes.
  • You must recognize capital gains or losses on Virtual currency sales
  • If you held it for 1 year or less you pay via short term, and 1 year or more it's long term capital gains. This starts the day after it was received.
  • They are basing gain or loss on USD.
  • You get to include all fees you get charged while acquiring the currency in value. It's unclear if you get to claim network fees here, but it sounds like you can.
  • Getting paid in Virtual Currency is income. Paying someone in Virtual currency means you have to recognize your gain or loss on that.
  • They say a lot that you need to determine the fair market value of the currency based on the day you get it, but don't give any specific guidelines for doing it with regards to crypto.
  • If you DON'T receive coin through a hard fork you don't have income. If you DO get coins in a hard fork you do have income. Soft forks produce no value.
  • Hard forks are considered ordinary income, not capital gains, again based on fair market value when it happens. This is going to be wildly hard to track - but you are supposed to base it on the day that you can actually sell it / transfer it
  • If you get paid / goods / or whatever for a currency with no market value you have to base its value on the goods you got.
  • Gifts are not taxable income, but have a value placed on them when you get them.
  • Donations don't recognize gain/loss and do count as donations based on fair market value.
  • Transfers between your own wallets do not cause realization of gains.
  • Doesn't make sense in current form

  Problems the community has noticed:

  • The rules on hard forks are a little unclear.
  • Someone could theoretically hard fork you into a massive tax liability as an attack.
  • They determine that having the public / private keys is enough to determine ownership, so as long as I send that to the person I attack I guess I can make them get taxed?

• Is Ethereum legal?

  • In a talk at DevCon5, Vlad Zamfir gave a warning about Ethereum. Developers need to start thinking about it's legal status, rather than hoping it is so disruptive governments are forced to accept it.
  • "Ethereum was born into a counter-cultural movement, a cypherpunk movement. In Ethereum, we went much farther than Bitcoin and said we didn't just want to do this for money, but for everything."
  • The issue is smart contracts are basically an esoteric legal form, marked as understood as legal contracts. He went on to ask "how does our anti-legal revolution react with the established legal order?"
  • He is posing this question that is important. If blockchain creators keep acting brazenly with no respect for the law, it will provoke a reaction from the governments.
  • Three scenarios: Ethereum gets co-opted, regulated, or competed out of existence. Governments could create a centralized system that runs electronic contracts, making payments happen automatically. Could be faster and cheaper and more tempting to businesses
  • He then closes the talk saying "we (ethereum) are pretty disruptive and it's inevitably going to come to a head. What we're doing is too radical and revolutionary for the established legal order to ignore"

• More problems for Libra

  • Mark Zuckerberg To Testify Before Congress on Facebook's Libra Cryptocurrency
    • House Financial Committee will be meeting with Zuck(Bucks) Oct 23rd.
    • The hearing is tentatively called "An Examination of Facebook and Its Impact on the Financial Services and Housing Sectors"
  • Paypal doesn't show up for a meeting on Libra, and then quits the Libra foundation.
    • Facebook had a meeting about regulation pressure.
    • 27/28 people that signed up showed up for the meeting.
  • Tim Apple slams Libra as a power grab.
    • “No. I really think that a currency should stay in the hands of countries. I’m not comfortable with the idea of a private group setting up a competing currency,” Cook told the publication in an interview published today. “A private company shouldn’t be looking to gain power this way.”