Bitcoin Bubble Tracker: A new Blow to Bitcoin … and Buffett!

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Bitcoin Tracker | Week 17

Uh oh. The tax man cometh this week, and in his sights is Bitcoin. Yes, who needs regulation when you can affect just about any outcome by taxing it (or not). The big news in Bitcoin land this week was the IRS deciding that bitcoins are property and not a currency, and taxed on its gains. So much for the theory of spending Bitcoin appreciation at your friendly, bitcoin-accepting retailer. And in other news, Bitcoin’s Number One fan, Marc Andreessen, lumped Warren Buffett into the category of “old white men crapping on new technology” when asked at a conference about Buffett’s criticism of the crypto currency. Way to make friends and influence the richest man in the world. Yeah, Buffett may like railroads as the richest man in the world, and he has just a smidge of credibility when it comes to making money and placing bets, wouldn’t you agree?  And, yes, you can now use bitcoins to purchase rifles in Austin, Texas, and Circle, with its latest round of funding, can help even more merchants get connected.

Hope you enjoy, and if you have any news you’d like to share, please send it our way at contactus@pymnts.com.

On the Plus Side …

Innovation continues in the field of cryptocurrencies, with one of the newest payment providers for emerging startups, Stripe, opening its acceptance to include Bitcoin payments. Iceland, which is teetering on economic fallout, is trying to save itself with bitcoins, and everyone in Dubai will have access to a Bitcoin ATM before too long.

• March 27, 2014 – Stripe will soon permit its customers to accept Bitcoin payments.
• March 26, 2014 – Circle Internet Financial announced its inaugural payments product and that it has raised $17 million in new capital.
• March 25, 2014 – Payward, which runs the alt-coin exchange Kraken, raised $5 million.
• March 24, 2014 – Auroracoin was launched in Iceland to save the countries economy. It will be distributed to the 330,000 citizens, and the price of each Auroracoin has continued to drop since the first batch of coins was distributed.
• March 24, 2014 – A financial startup is trying to create an exchange where people can bet on the future direction of Bitcoin’s value.
• March 23, 2014 – Dubai is going to have 400 Bitcoin ATMs installed.

On the Dark Side …

Uncle Sam wants your bitcoin upside! The IRS ruled that bitcoins will be taxed as property, not currency, and those who have moved under the radar of the government will have to report their earnings. Now with checkout comes paperwork. Talk about friction.

• March 27, 2014 – New information on the Mt. Gox attacks show that ‘malleability’ attacks aren’t to blame, casting further doubt on the failure of the exchange.
• March 27, 2014 – Smartscope rifles may now be purchased with Bitcoins. A small gun shop in Austin is also accepting Bitcoins. While the purchases aren’t anonymous and a background check is still required, it is a bit unnerving.
• March 27, 2014 – Reddit CEO Yishan Wong used some sharp words to criticize Bitcoin evangelists.
• March 26, 2014 – Marc Andreessen called Warren Buffett one of “those old white men crapping on new technology.”  Anyone now with a legitimate criticism of bitcoin will be labeled as either old, stupid (“you just don’t get it”) or a Luddite.
• March 26, 2014 – Warren Buffett is still staunchly anti-Bitcoin and stands by his statement that Bitcoin is “a mirage.”
• March 25, 2014 – The IRS decided that it would treat bitcoins as property instead of currency. The IRS was very clear that Bitcoin “does not have legal tender status in any jurisdiction.” There goes spending that appreciation of bitcoin on Overstock or Lord and Taylor.
• March 23, 2014 – A small Bitcoin exchange in Beijing, Vircurex, had to freeze withdrawals after it was nearly drained of its funds.