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Treasury Calls for Crypto Transfers over $10k to Be Reported to IRS (www.bloomberg.com) similar stories update story
198 points by PLenz | karma 1216 | avg karma 4.16 2021-05-20 11:41:19 | hide | past | favorite | 207 comments



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Once all the cryptos crash this will be a moot point. Also all cryptos are bad for the environment. The reporting should be for transfers less than 5$. /s

> Also all cryptos are bad for the environment

How is a proof of stake crypto worse for the environment than what we are currently using to verify transactions?


The /s at the end means that the previous statement is sarcasm.

Sarcasm doesn't excuse a statement from having semantic content worth asking questions about.

you’re right /s

How does mining work in proof of stake models?

This isn't intended to be a gotcha, I genuinely don't know. I've mostly just heard the term "proof of stake" without much explanation, and the Wikipedia doesn't mention mining at all.


The specific details vary on the implementation, but the analogue to mining in a Proof-of-Stake system is this: newly minted coin is distributed as a reward to whomever wins the block validation "lottery" for a given block.

A validator is required to lock up a certain amount of coin before they can start validating (their stake in the system) and based on the more coin you lock up/the longer you've been locking it up/any other variable depending on the implementation, the greater the chances you'll be selected as a given block's validator, and if consensus is achieved, you get your reward. If your node goes offline or collusion is detected, you get penalized by losing a part/all of your stake, again, depending on the exact implementation.


Because there is no mining at all... The reward for new blocks is given on what can be thought of as a lottery system to those that have coins staked, and the reward is proportional to the amount staked. Effectively, payouts go out to everyone in the form similar to interest paid out on a CD.

In short, anyone with coins can put them in a special state (they're unspendable temporarily) in order to vote on which chain is correct. So you vote with your "stake" (coins) instead of with your computational power. I don't think it's called mining in PoS usually.

> In short, anyone with coins can put them in a special state

You mean exchanges. People aren't going to run a node and risk to be punished for bad configuration or a power outage. They are going to deposit to managed staking at Coinbase and Binance which will be the biggest validators.

Congratulations. You've just recreated the current financial system with central banks and whatnot.


Maybe - ETH staking was specifically setup with incentives to encourage self hosting as much as possible (downtime penalties are tiny, especially if they only comprise a small portion of the network). There are some "decentralized" staking options that don't give over custody of your funds (the node operator only has enough control to run the node, doesn't actually have the ability to take your funds).

And even with centralized exchanges, at least this system gives people a choice. I can choose to run my own Ethereum staking node. I can't choose to operate a bank / participate in the fed's central banking system.


If the link bellow is accurate then the penalty for being offline is 4 times the base reward.

https://consensys.net/blog/codefi/rewards-and-penalties-on-e...

For someone who is staking 32 ETH on a faulty RPi how big the reward would be? I'm too dumb to figure out the reward value.


Why comment with an incorrect statement on something you don’t seem to know much about? Most proof of stake algorithms allow people to delegate coins to validators who run actual nodes. The coins are still in control of the user, but they will lose some if the validator they have delegated to misbehaves.

I'm not talking about who owns the coins. I'm talking about the fact that people will just use the managed nodes hosted by exchanges to stake because there are penalties for poorly configured or offline nodes. As a result you have a huge chunk of your network controlled by exchanges who besides controlling the ramps for fiat money and custody of your coins now they also become the heaviest validators.

Tell me how this is not a weird clone of our current financial system.


Not that PoW and PoS are not themselves consensus algorithms but generally in PoS-using algorithms you just sign blocks, or "votes", etc with a private key that's been committed to with some amount of stake.

In the case of Ethereum for example, a random number generator decides a set of stake that may produce the next block and when it's your turn you make a simple digital signature on place of where BTC miners brute-force a hash collision.

In the case of Avalanche, nodes choose random stakers on their own and perform a repeated subsample across the staker set. Stakers respond with votes signed by a key thay was committed to when the staker first staked their coins.


Proof of Stake changes things to the point where mining is no longer really a good descriptor of what is going on behind the scenes.

Proof of Stake starts out with a large amount of coins being generated out of thin air. These are then distributed, and owners add nodes to the network by locking in a portion of their coins as their "stake".

The nodes perform transaction verification, and over time a reward block is built out of the transaction fees involved. This is awarded to a psuedorandomly selected node weighted by stake.


So the people who already have the most of a coin are the most likely to earn even more by just sitting on it?

By the rich, for the rich.

In proof of work, the rich also get richer, but they just spew tons of co2 while doing so.

Anyway, what doesn’t work this way? Have you ever heard of stocks, or interest on a loan or bank account?


Well yes and no: those staking coins do indeed get more coins but there's still lots of speculation going on. I mean: it's not a given that if, today, with x coins you can buy, say, a laptop tomorrow with x * 2 coins you'll still be able to buy that same laptop.

Stakers do definitely take the volatility risk. They're rewarded by getting more coins.


Mining is voting weighted by wasted CPU power. Stake is voting weighted by wealth. That's all, really.

Both are used to build decentralized networks, since they allow it to pick a random participant to order the previous X transactions (aka block), without being susceptible to sybil attacks. PoS is much less energy-hungry than PoW, but it has a problem: how do you distribute money fairly, to begin with? Which is why Ethereum started with a few years of PoW to only then shift to PoS. Pretty clever IMO.


In addition to what the others said: if you try to cheat in a proof-of-stake system, your stake is forfeited. Which is kinda the whole point: if someone wants to make a double spent / revert a transaction and gets caught, his stake is destroyed and all the people helping him to try to do his double-spent have their stake destroyed to.

The one issue is "long range attacks": where someone creates a fake chain and then tries to substitute it for the real-chain. In a PoW model you need more PoW than the real chain to mount your attack: that's how PoW chains are protected. In a PoS model not so much.

But Vitalik Buterin (the Ethereum creator) and a few others are pretty sure they've got a working proof-of-stake system.

Time will tell: expensive experiment ongoing!


Wait until they hear about Monero and Zcash…

You'd need to be pretty confident you haven't made a mistake in laundering your money through a privacy coin. And that the logic is sound enough that they haven't been compromised without your knowing (or ever will be in the future).

Better you than me..


Yes, it's interesting how so many people are now willing to just "do crime" because crypto. Certainly speculate about doing crime. At the end of the day, if you're willing to commit crime there's a lot of options.

It worked for AirBnB and Uber.

I think there are a lot of armchair Heisenbergs on the Internet whose comments should be viewed as a form of ancap fanfiction. Ransomware and adjacent stuff is the only notable exception.

Look, all I want to do is avoid paying capital gains taxes on internet money that I earned with no effort. Is that so wrong?

Why wouldn't you want to avoid paying taxes if at all possible? Do you enjoy paying taxes?

There's avoid and evade. One's legal, one's not. One should not break the law - it is the foundation of a civil society.

But.. this thread is literally about taxation of crypto and the post was responding to someone suggesting privacy coins instead.

Tax evasion is a crime unless I’ve lost my marbles.


Just because it's a crime doesn't mean it's wrong. If your government is corrupt, paying taxes means you're funding that corruption.

You are finding that corruption, but at some point “render unto Caesar” is just about the only viable option. I personally view the government as amoral, it is not supposed to be the source of morality that is your own personal responsibility.

I think governments should be held to the highest possible standard. They are granted powers the rest of us don't enjoy, including the use of force and coercion. Any citizen faced with evidence of corruption has a moral duty to take back those powers any way they can.

Makes sense. Can’t allow hackers to hold up everything for Bitcoin

This won't disallow that.

This would only apply to law abiding US Businesses

How is that going to work?

Exchange reporting requirements, existing fiat bank reporting infra, as well as https://www.chainalysis.com/ and similar chain surveillance products.

From experience, Chainalysis is already in use with government financial regulators and law enforcement.


Same as it does for non-crypto transactions I expect. If you deposit a 11k check in your bank it gets reported, for example.

So if I “email” you 1 BTC how would that get reported?

This is for businesses, not individuals.

So far. Individuals will eventually be included, considering currency reporting requirements apply to them.

https://www.fincen.gov/sites/default/files/shared/CTRPamphle...


Isn't this already required, sort of? AFAIK you have to report fiat transfers exceeding $10k. If you're cashing out at an exchange, and you sell $10K of bitcoins and then transfer to your bank account, that transfer would have to be reported. I suppose this requirement would cover crypto-to-crypto trades, but most of the volume aren't on US exchanges so I doubt this would do much.

edit: misunderstood FINCEN requirements, only cash transactions over $10k have to be reported


Doesn’t matter if it’s on a US exchange. If you’re a US person, and you move bitcoin from one wallet to another without cashing anything out, this is potentially a reportable event now. And if you fail to do so, the public ledger has cryptographic proof of your crime.

Here's a solution, though I don't know how the IRS views this:

1) Buy "dirty" ETH through a KYC exchange like Coinbase

2) Send to tornado.cash

3) Wait a few days, remove from tornado.cash

4) You now have "clean" ETH uncorrelated with your identity

5) Use one of the many DeFi non-KYC exchanges to get whatever crypto you want

The blockchain trail would just show that you sent to tornado.cash, and nothing after. This could be an interesting problem for US regulatory pariahs.

Whether tornado.cash survives will determine the future of ETH. Is it a free, global exchange network? Or will it cripple under regulatory pressure? As the US continues to debase its currency (and regulatory institutions), it will not go down without a fight.


Or just convert to Monero and back

doesn't that require going through a centralized exchange, or at least going through the trouble of organizing an OTC trade?

There are decentralized exchanges like Bisq

Dear weeweww32,

During a routine audit of registered exchanges we discovered that you transferred/received $30k of the crypto token Montero.

Under penalty of perjury provide us with documentation as to the destination/source of this funds within 7 business day.

Failing to do so is a felony under the Crypto act of 2022.

Cheerio

The Government


"During a routine audit of registered exchanges". The obvious answer here seems to be "don't use a registered exchange". Might cost a few basis points but nothing to be alarmed about and likely cheaper than taxes.

I might be missing something, but isn't part of the allure of it all being a blockchain the ledger that will, for ever after show that such and such wallet received 30k on a particular date & time - potentially requiring some stitching that would probably be trivial to do if the actual transfer was broken up into a series of smaller transfers?

And if you're using a shared wallet that obscures internal money movements then the feds can still see any entry/exit point activity - they might just be uncertain about what happened to the money in the middle.

I guess if you created a private coin for your nefarious dealings you could keep it really hidden (maybe one tied as a stable coin to a more major coin) - but only so long as you managed to keep the feds from getting a ledger view of the private coin - which would require limiting the spending power of that coin to only parties you strongly trusted which, again, would strongly devalue the coin.

The real world equivalent might be deciding, as a criminal ring, to use gems as a currency to avoid handling USD directly too often - but those gems become worthless apart from their inherent value as soon as trust collapses.


With Monero, no one can see the sender, destination or amount of any transaction.

But people can see the car/house/yacht etc you bought with it.

If you want to actually enjoy your wealth you better find a way to legalize your anonymous money and pay taxes on it.

"I dunno...It just appeared in my crypto Wallet" is not convincing


Until the very act of using a mixer is considered money laundering. Which is ironic because you started with clean money.

I suspect existing anti-money-laundering law will cover this somehow. Outfoxing governments through technical cleverness rarely (but sometimes!) works in perpetuity.

An example: If any future >$10k transaction can be traced back to a wallet that you control (it wouldn't matter how you got the funds, only that you transferred them), then you'd be on the hook.


But why would you want to take (presumably) clean fiat on your coinbase account, exchange it for crypto, launder it, only to transfer back to your coinbase account? I'd presume anyone doing this is going to use the laundered money for illegal stuff, or at least transferring to some sort of offshore jurisdiction for tax evasion purposes. In both cases it won't be tied back to you.

When The Man gets a warrant to monitor your communications, arrests you, takes all of your electronic devices, and then chats with your friends and colleagues, there is a chance that they might uncover your "hidden" wallet.

Or, in the case that The Man gets a copy of the overseas bank's records with your name on it and a long and credible-looking list of transfers from wallets that match the amounts put into the mixer, it is going to look real suspicious.

Investigators are smart people with many tools at their disposal.


The general term for Tornado.cash is a Bitcoin mixer and it has come and gone through the existence of Bitcoin.

Eg. Monero doesn't leave a trail by default.


Describing tornado.cash as a Bitcoin mixer is not accurate.

Exchanging BTC/ETH for Monero leaves just as much of a trail as using Tornado.cash, unless you use a decentralized P2P exchange.


Oh, from reading the Google seo description i didn't see it was fully on eth and it matched perfectly the description of a Bitcoin/crypto mixer.

Furthermore, it doesn't "mix" by creating lots of transactions and trying to obfuscate the trail--it completely cuts off the trail.

A Bitcoin mixer has no direct link fyi. Which is similar to their seo description.

As we speak, the Attorneys for Manhattan and the State of New York are investigating a high net-worth individual for allegedly engaging in clever ways to avoid taxes and other regulations using activities that are legal when engaged by themselves in good faith, but when used in conjunction with each other in bad faith, may be criminal.

The problem with “gaming” any system involving state-level entities is that they always have the power to retroactively look at your behaviour and declare that there is a pattern that amounts to criminal behaviour, even if none of the actions taken in isolation would be considered criminal.


Give them no behavior to look back on.

Losing your monero wallet in a boating accident is also increasingly common these days

Is it all that different than a company claiming they are a victim of a ransomware attack and they paid the ransom?

Oh no, the hackers got our accounting database encrypted. We can't process your thing for 2 weeks and we paid 80M in crypto for ransom. Can we please get a tax write-off for our embezzlement?


And if I'm moving between two wallets that I control (be it directly via some software/hardware wallet or indirectly via some exchange)? Does it work the same as it would if I was moving that much USD between two bank accounts under my name? What are the tax implications there?

This is arguably a problem I've been far from rich enough to encounter, so it's a genuine question should that someday change :)


Depending on how the two accounts are linked - yes I believe you still need to report the transfer, however, since it isn't leaving your person (unless it's being transferred between separate representations like a business you wholly own and a personal account) then it isn't subject to taxation.

This reporting primarily exists to make money laundering less efficient by forcing parties that want to keep things out of view of law enforcement to make many relatively small money movements - and 10k is high enough that it doesn't affect normal folks all that often.

Honestly, when it comes to anything involving a bank these transfers are usually automatically reported by the institution.


> Depending on how the two accounts are linked - yes I believe you still need to report the transfer

Pedantic note here - "You" don't have to do anything here, your bank will do the reporting.


That is precisely correct and I think it's a good mention. I made it more clear in other comments after people brought up the burden of having to filling out tax forms constantly. You won't often execute transactions that actually qualify you for this level of reporting and in almost all circumstances the financial institution backing the transaction will actually do the reporting (bank or credit card company). If the payment is cash (which is beyond rare for transactions of this scale) it'll still usually only be required for the vendor to report the transaction.

It’s not a tax implication it’s a money laundering one. Your financial firm will fill out a currency transaction report if you transfer 10k or more between accounts. They will also do it if they believe you are structuring transfers to avoid the 10k number. They also may file a suspicious activity report (sar) if they deem your transactions may constitute money laundering or they may deny transactions that would require them to do so.

The specific language in the 2020 US1040 instructions say otherwise:

"A transaction involving virtual currency does not include the holding of virtual currency in a wallet or account, or the transfer of virtual currency from one wallet or account you own or control to another that you own or control." (2020 1040 instructions, pg. 16)

So as long as you "own or control" both wallets, your described transfer would not be a reportable event under the current tax instructions.


Easy peasy. If you don't want to report a transaction, move from personal wallet to joint wallet. Then recipient moves from joint wallet to personal wallet.

If both parties have shared ownership and control of the joint wallet, I think this would get around the reporting requirement.


I doubt any court would agree with you on that.

> Easy peasy.

All these sort of regulations tend to have language disallowing actions made just to avoid the requirement (see, for example, "structuring")


https://xkcd.com/1494/

"Lifehack - you can just take all the luggage off the conveyor belt at the airport and leave with it. They don't check at the door!"


Do you also have to report cash transfers of 10k? Wasn't aware of that. I had thought it was just KYC for money banks deal with - not paying someone 11k cash for some construction work, for example.

As far as I know it is cash. If I write a check to ABC construction for $15,000, that is not reportable as it is already traceable.

Apps like venmo and cashapp have a threshold of around $20k/year, where if you exceed it they are required to report your transactions to the IRS.

> AFAIK you have to report fiat transfers exceeding $10k.

This is false.


The form you are looking for is Form 8300.

I cannot speak for other jurisdictions, but Canada defines something called a “Reporting Entity,” and if you qualify as such, you absolutely have reporting requirements:

https://www.fintrac-canafe.gc.ca/reporting-declaration/info/...


You seem to be right. I skimmed wikipedia which said "other payment or transfer" and assumed it covered eletronic transfers as well, but it looks like only cash is covered.

https://verafin.com/wp-content/uploads/2017/01/currency-tran...

>A CTR is only required when a transaction involves cold hard cash, in either paper or coin form. Other forms of payment, such as wire transfers, don’t need to be reported on a CTR.


CTRs are reporting requirements for financial institutions. Individual payments between people in the US don't require reporting.

It is different if you have a business.


Cool, it's being treated just like the USD is. And it's for businesses only. Just like the USD regulation.

Governments are awesome at fighting the last fight

This is already required, even for person-to-person transactions. Coinbase, Gemini, and Kraken do this. However I find it highly unlikely people do this voluntarily or will do this now voluntarily. Tools like Tornado.cash make it easy to “warp” funds into Defi land and then back out later with plausible deniability.

What are some non-criminal uses of tools like Tornado.cash?

> “As with cash transactions, businesses that receive cryptoassets with a fair-market value of more than $10,000 would also be reported on,” the Treasury Department said in a report on tax-enforcement proposals released Thursday.

Nothing to see here. It's part of a pattern of explicitly stating that for regulatory purposes, Bitcoin works like a currency, but for tax purposes Bitcoin works like an asset.


>> cryptoassets with a fair-market value

Lol. Good luck defining a "fair" value for a cryptocurrency. The day the IRS goes after people trading currency A everyone will leap onto currency B, hammering the value of A. Nothing in that market if fair or logical.


It's not hard at all, any reasonable group of people will say, "what was the price on coinbase (or equivalent) when you sold?"

That's also the valuation to be used for tax reporting, since exchanging cryptocurreny is a deemed disposition for capital gains taxes.

I think you're reading this wrong. They're not going after coins that have values of over $10,000 (eg bitcoin), they're going after any crypto transactions that have value over $10,000. So it doesn't matter whether you're trading 0.25 BTC or 25000 DOGE, they both have USD value of over $10,000 and have to be reported.

"fair value" is just a financial term meaning "price traded on the open market"[1]. It makes no qualitative judgement about if that price is "fair" in the colloquial sense.

[1] This is trivial to do with equities (top-of-book bid/ask prices are the fair). Currencies are a little trickier because your relationship with the exchange determines the quotes you see. Certainly, currency swaps do have a fair, but defining it is a little trickier.


Even currency is an asset for tax purposes: if you make a bunch of money trading forex you have to pay capital gains on that. There's nothing out of the ordinary regarding how cryptocurrency is treated here.

Foreign exchange trading is usually on the futures market, and the futures contracts are an extremely standard financial asset. I believe the tax differences alluded to are of the form "If you buy a currency and then later exchange it for goods and services, you have to pay capital gains taxes if it was Bitcoin and you don't if it was Euros"

Most forex trading happens otc on spot or forward contracts not on futures.

If I understand it correctly the latter isn't true. There are usually allowances for "vacation" type amounts in physical currency but they are small.

It is different in that futures contracts etc. show up a cap gain on a standard asset. But just doing the exchange directly with currency can land you in a situation where you have taxable foreign income.


If you spend more than 10000 euro or dollars in this case, your bank must report the transaction. Same with btc.

Eh not really true as they've explicitly stated every single swap / transaction for crypto should be reported vs having any sort of threshold

This makes using crypto so unworkable that it practically makes every user with large amounts a criminal. Well, based on the author's implications, not on the quote that just indicates it is payments to a business

Mandatory reporting laws don't make all reporters criminal - they exist to combat money laundering and, honestly, due to the difficulties in tracking money laundering this is one area where "The innocent have nothing to hide" is much less terror inspiring.

Whenever you make large purchases with cash these laws also kick into effect - it's just usually that the consumer isn't the one the government is relying on to do the reporting. Generally vendors (like car dealerships) and financial institutions (like banks) will carry out the burden of reporting.

In the case of crypto currency (similar to the case of cash gifts) this reporting needs to be handled manually.

Edit: Also excuse me - it looks like this will only apply to businesses in the current iteration - sorry about any confusion!


I mean that the manual record keeping and reporting is completely infeasible. Some traders I know in USA end up with hundreds of pages of records

I think that's a fair point, but, to contrast, most average folks will end up with maybe 6-12 transactions over their lifetime that result in mandatory reporting requirements. Largely depending on how many cars they purchase plus maybe four from buying a house, renoing the house, retiring to a smaller house and then passing away.

Businesses file 8300 forms, not customers. The cost will still trickle down to customers but they won't suddenly be required to fill out these forms.

$10,000 makes absolutely no sense in this day and age. The Bank Secrecy Act was made in 1970 and 10k was >250k in todays dollars. It is borderline authoritarian to audit all transactions over 10k now.

> 10k was >250k in todays dollars

Source? A basic inflation calculator tells me that 10k in 1970 is ~70k in 2021.

Yes, that's more, but it's significantly less than 250k.


This made me wonder if inflation is enough to account for price increases. For instance, it could be the case - I don't know since I'm not an acquainted with the field/data - that the costs of important goods such as homes, cars, education, health care, etc. has increased more or less that what that 10k approx. 70k figure tells you. For instance, maybe its the case that for a generic 10k its worth 70k distributed over all goods and services, but for those that matter most maybe its 250k or 20k, I don't know. Does anyone know more about this topic?

I think they use a basket of goods to calculate inflation, but how has that basket changed / been updated over time? Can any economist weigh in here?


You are right. Inflation is usually computed by tracking the price of a "basket of goods". But this only makes sense in the short term and doesn't account for profound societal changes that technology, ideology, etc. brings to that basket. Consider this quote by Agatha Christie (1890-1976): I never thought I would be so poor as to not have live-in staff, or so Rich as to have a car.

I think you're referring to the CPI (https://en.wikipedia.org/wiki/Consumer_price_index), which, as I understand it, is a pretty hotly contested tool in econ/business circles today.

If you want to check out the raw data for the CPI that the US Federal Reserve uses, check out https://fred.stlouisfed.org/ - though I couldn't begin to recommend how to navigate that site.


Two points on the market basket mechanism for measuring inflation:

One is that I think lots of people over-focus on specific sectors: sure houses and college education have gotten more expensive, but clothes, travel and computers have gotten much cheaper. Most of the complaints about "hidden inflation" that I've seen are basically ways of saying 'if you only look at the things that have grown much faster than the inflation average, then it looks like inflation is much greater than average.'

Now the question of 'hedonic adjustments' (how do you account for the problem that no amount of 1970 money could buy you an iPhone, or a car as safe and reliable as any car made in 2021) is a tricky one. As I recall from my macro class <mumble mumble> years ago, economists basically introduce fudge factors to account for that. I recall some speculation that the fudge factors in the health care sector (of the US) were systematically wrong, because the population isn't actually getting healthy or living longer as those numbers would suggest.


I over-focus on those sectors because the proportion of my budget that is spent on clothes, travel, computers, iPhones, etc. is a small fraction of that spent on housing, college education, and healthcare. I'm not interested in hearing the CPI tell me how many fewer televisions I can buy this year due to inflation when those other sectors dominate my spending.

It seems self-evident that the anything for which the cost has gone up will take up a greater proportion of your budget than anything for which the cost has gone down, no matter what the things are.

I, for one, own a house and am not currently paying for anyone's college education, so the proportion of my budget going to food and clothing is more relevant to me. Should I say that I'm not interested in hearing people tell me how many fewer students I can send to college when I don't have any students to send?

CPI items were picked precisely because they apply to everyone. Raises in housing cost renters more, but increase my net worth as an owner, so it's left out of the CPI. Health care costs in the US are ridiculous, but they're also widely disparate depending on more factors than can be accounted for in a simple measurement like CPI.


Cost of some these things you mentioned definitely went up by a lot and is not fully explained by inflation. A good blog post on the topic: https://slatestarcodex.com/2017/02/09/considerations-on-cost...

Depends on what you are buying - relative prices of various goods change over time; many are critical of things like CPI as being a stand in for inflation for exactly this reason

Example:

1970 corvette: $5,192.00 (Coupe), $4,849.00 (Convertible) 2021 corvette: $59,900

    >>> int(10000 \* (59900 / 5192))
    115369
so, using 'a corvette' as the 'basket of goods' has a ~65% higher inflation rate than the inflation calculator, vs for the big mac:

    >>> int(10000 \* (5.66 / .65))
    87076
which is ~24% higher than the 70k you mention.

> which is ~24% higher than the 70k you mention.

Which is still not 250k.

Either way, I see the point you're trying to make, but when people discuss "how much was X in todays dollars" they don't mean "go find a 'basket of goods' to reflect whatever value they want".

CPI is the go-to measure that is understood. Yes, some things are more expensive relative to CPI (housing, education, medical care), but using a non-standard measuring stick is not intellectually honest (unless you make it clear and disclose your reason for why you think it should be different).


I think it's important to note that a 2021 corvette is not a 1970 corvette. Think of all the additional safety features, the different materials of construction, the vastly better electronics, etc. If you could transport a 2021 corvette back to 1970, there's no way it would sell for only $5,192.

This is actually a serious issue with many products, for example cleaning supplies that are sold for the same price but in different bottles with different internal volumes. Even for something as simple as bread, the average loaf on a modern shelf has many chemicals which would not have been present 50 years ago, and if you do go for a loaf comparable to what used to be available you're paying some markup for "organic" or "artisanal" labelling. Indeed virtually no where can you find a good whose price has not been affected by changes to technology, marketing, customer demographics, supply chains, etc. All of these obfuscate the change in the value of money. A reasonable basket-of-goods comparison requires looking at multiple goods and trying to normalize for all these changes.

Also a Big Mac in 2021 is 3.99. A meal is 5.99, which would have been $1.11 in 1970. Although even here, McDonalds is a very different restaurant now, it's impossible to say how much is inflation and how much is the big mac no longer being one of 6 items on the menu.


> I think it's important to note that a 2021 corvette is not a 1970 corvette. Think of all the additional safety features, the different materials of construction, the vastly better electronics, etc.

This person is clearly neither a car enthusiast not a Corvette collector (e.g. one who determines the price via purchasing)


Paying more for something because it has become a valuable collector item is very much not the same as paying more for something because the value of currency has decreased.

But who buys used cars except for people seeking transportation (honda civic, etc) or enthusiasts? Clearly the former group is not setting the price of sports cars

We're not talking about buying a 50 year old corvette now vs when it was new, we're talking about buying a new corvette now vs a new corvette 50 years ago.

And it doesn't matter if a car enthusiast doesn't care about safety features, if the manufacturer is required to put them in, and they cost money to add, then they affect the price all the same.

Also I used to drive a corvette. It's actually a remarkably practical car for its category - not insanely expensive, low maintenance costs, and good lifetime. It's hardly a super-car intended for a small niche audience (though admittedly not a workhorse).


Sorry, I am past the edit window. I was on mobile and used 1913 not 1970. The point still stands but obviously to a lesser extent. Thank you for correcting me

Inflation calculator says about $70k. But I do agree with your message, stuff like this definitely should be tied to inflation.

The point above is fair but also I can't help but think a lot of people who are bitcoin hardcores really overestimate historical inflation.

I'm a thirty-something and when I was born money was worth roughly twice as much as it is today. When my grandfather was born, it was worth ten times as much as it is today. But you're right, I think us Bitcoiners in particular have a very allergic reaction to inflation and overestimate it's affects accordingly.

That's completely irrelevant because you're not supposed to stash it in a mattress you're supposed either spend it on basic needs or to invest it.

If you started with $10K in 1970, sure, the value is reduced by a factor of 7. Intentionally to incentivize investment.

If you started with $10K in 1970 and put it into the S&P 500, you'd have a 4162/83.15= 51X return, adjusted for inflation is still a 7X return. Notionally $510,000 - excluding dividends/re-investment thereof.

If you started with $10K in 1970 and put it into an average home in the US you'd have $70K today, adjusted for inflation. (Average $/sqft on an inflation adjusted basis in the US is the same now as it was in 1973 [1] - you'd have way, way, way more if you'd bought property in a major metro - I'm just being conservative).

You save value not money. The idea you should save money is a severe misunderstanding of basic economics.

It's really not that hard: don't save money, save value. Your narrative is as harmful as it is straight-up wrong.

[1] https://fee.org/articles/new-homes-today-have-twice-the-squa...


I think it’s BS that everyone has to participate in the rigged game. Saving your money should be a valid option.

Ok, let's dig in.

> ... everyone has to participate in the rigged game.

In what way exactly is the current system of separating a long-term store of value and a short-term medium of exchange a "rigged game?"

In what way would fusing the two change that?

Are you not able to replicate that which you desire by simple purchasing an asset that does that? For instance, let's say you're a coiner and think that's a better way to store value - does the current system prevent you from backing your personal economy with bitcoin? How about gold? Why would you force me into the one of your choice when maximum freedom dictates giving me the choice on how to store value?

Further, how would you propose keeping the unit of value at a specific pegged constant value without managing the supply actively? When the population changes? Productivity changes? Transient shocks like COVID leading to massive drops in velocity? After all, a constant supply does not mean a constant value.

You realize the fed literally avoided a catastrophic deflationary spiral and held the value of money to within +/- 0.6% last year. That's a heck of an accomplishment.


Well, they've never been at a full match with inflation but banks did use to actually pay interest on savings accounts once upon a time.

I think it's reasonable to allow members of society that want to sit on cash to preserve their quantity to a certain extent in that manner - even if it will fall short of gains expected by inflation.


They sort of can. There are CDs, treasuries, money market funds. Interest rates at the moment are pretty awful and I'm pretty much out of all that sort of thing. But they do exist.

Well, for one, you didn't really answer any of the questions I posited.

But further, you have to consider the flip-side of receiving interest: paying it. Having low-cost access to capital makes businesses more efficient. It also makes your personal life cheaper as the average homeowner ends up on a 30-year fixed rate mortgage. A mortgage rate of 2.5% leaves you with way, way, way more free money than the 12% you'd have payed in the 70s. That's true even after factoring in inflation and historic wages.


It's important to consider that converting between the long-term store of value and the short-term medium of exchange is a taxable event, so if your asset gains value at exactly the same rate as inflation, you still end up losing money.

It's not clear to me what that means. I suppose you can go all Scarlett O'Hara and Land is the only thing that matters. But there has never in human history been some value store that was guaranteed to maintain value over time through war, technology changes, cultural/demographic/migration shifts, and yes inflation with modern currency instruments.

If you put the cash into gold, real estate, stocks, etc. it will maintain most of its value if not grow faster. Even putting it into low-interest CDs would help you preserve most of it.

>That's completely irrelevant because you're not supposed to stash it in a mattress you're supposed either spend it on basic needs or to invest it.

Says who? And why has saving become something only stupid people do? This idea that you MUST invest is pure evil and is designed to make the rich richer and the poor poorer.


Saving value is smart, saving money, is stupid. You can tell because on the sticker it says "will lose 2% per year in value."

Exactly, cash has an opportunity cost which is the interest not earned by holding cash instead of investing it at the risk-free rate, and this is true regardless of whether there is inflation or not. Therefore what makes cash a sub-optimal savings vehicle is the existence of risk-free investment opportunities with a positive rate of return. Nothing to do with inflation.

>"Your narrative is as harmful as it is straight-up wrong."

I don't know what narrative you are alluding to. All I was trying to do was provide a human relatable example of how much inflation had happened over three generations. Sure, each individual dollar has less purchasing power but that's supposed to be balanced out by having more of those dollars. But if the reporting threshold doesn't also inflate then you've got an issue.


The narrative is suggesting it at all matters that the units of stored value have changed over time is a bad thing. It's roughly speaking a neutral thing. Like switching between Celsius and Fahrenheit. You just have to plan accordingly.

That wasn't my intention. My intent was to show that the units of stored value changing over time, in this case, is a bad thing when the reporting threshold doesn't rise for inflation as well.

I apologize if I misread, by the way! I know tone doesn't always carry well over the internet.

No worries, and you're spot-on about storing value and not money.

Well if the government mandates that the thermostat must be set to 72 degrees no matter what, that switch from Fahrenheit to Celsius is going to be pretty uncomfortable.

Yes in general we care more about what we can buy with our money than how many pieces of green paper it takes to represent that value, but there are many laws on the books where something bad happens if you have too many or too few pieces of green paper regardless of what they're worth.


> When my grandfather was born, it was worth ten times as much as it is today.

And this is concerning why...?


Imagine being concerned about inflation at 2-3% a year but not saying a word about bitcoin losing 30% of its value in 20 days.

Alternatively some people miss that asset inflation in the crypto currency space is happening at 1000s of percent of even high consumer inflation. Same with houses, rising 20% in less than a year, some assets are rocketting, inflation or not.

I guess it's an instance of legislative #TODO comments.

No, it's a feature not a bug. If you don't index things to inflation you can eventually cover average and middle-class amounts of money under the law - you just have to be patient.

More likely the number 10000 is now entrenched in so many varied locations in the last 50 years that it would be a monumental undertaking to try and adjust it successfully.

If the rule is > $100k, can't businesses just continue reporting everything > $10k until they get around to updating their systems?

Some countries phrase monetary fines and thresholds in terms of some inflation-indexed value (e.g. "penalty units" in Australia) to as to avoid having to manually update every single value in the laws when they get around to it. I wish the US would do the same.

https://en.wikipedia.org/wiki/Penalty_unit


I strongly disagree that it's authoritarian to audit lots of transactions - 10k is high enough that most people will only hit it when 1) buying a car (or other vehicle - i.e. boat) 2) purchasing a house 3) doing a renovation. Otherwise most normal transactions will be well below this level.

I do think that eventually it'd be good to revisit the specific threshold for reporting but 10k still feels incredibly reasonable to me and calling it borderline authoritarian seems quite hyperbolic.

Bear in mind that money laundering is extremely effective and difficult to combat without really strong reporting laws and that the detection of money laundering is what leads to take downs of most large criminal organizations since, once you take away their wallet, most of them wither in efficacy.


> 10k is high enough that most people will only hit it when 1) buying a car (or other vehicle - i.e. boat) 2) purchasing a house 3) doing a renovation

Okay but in 1970 it was 7 years of median rent, 58% of the median home value and 13 months of median salary according to the census bureau.


Money has definitely become inflated since that 10k figure was originally established - but I don't think it passed a significant threshold societally like, say, five dollars passed.

Five dollars was enough to get a modest lunch pretty much anywhere in the 70s and is now, in the affluent parts of the country, around the expected cost for a coffee.

10k, in my mind and opinion of course, went from being "Hey, that's a lot of cash" to "Hey, that's a lot of cash". It remains an amount we (most people at least) don't trivially deal in on a day to day basis and that's where I think the cutoff for this reporting law should be. If most people are going to trigger a mandatory report then LEOs have a lot more data about transactions that are common in society which may be a privacy concern but certainly lowers the usefulness of that ledger - if these transactions are still "rare" then there is a volume of data that can be hand-sifted through to produce interesting insights.

With computers and everything in theory we could probably now handle the volume of tracking the full list of every person's transactions but that would lead to normalizing refusing to report large transactions and we'd only end up seeing the transactions that are made by completely innocent people.


$10K is not a lot of money, especially when compared what $10K was worth when the law was created. $10K won't cover a major health expense, tuition at a nice preschool, a wedding, a nice vacation, any number of hobbies, or many many other things. It's not just a vehicle, house, or renovation.

I think this might be a question of scale since, for me at least, 10k would be an excessively fancy vacation - about three times as costly as a wedding - and when did preschool get so expensive!

I suspect that for the average person it's probably reasonable to include a wedding and tuition in the 10k list - maybe a hobby, though you'd only hit 10k for a transaction if you're buying serious power tools or working on a car/reno on your own.

From Canada at least an all-inclusive nine day stay in Cancun will currently run you under 3k CAD - I know there are resorts that can break the 1k/day threshold but that's a lot of money to put out for a vacation. And, honestly, if you're spending that much you're likely not going to make the purchase in a single transaction or else you're very much not what I'd consider an average person.


Preschool in the San Francisco Bay Area is between $1,200 and $2,000 a month (1). The median house price in the Bay Area is over $1M so just the good faith deposit on a house is >$30K let alone the downpayment and closing costs so you're going to have like at least three >$10K transactions. A four-star hotel in Hawaii is >$500/night, a five-star is >$1,000/night. So a nice two week vacation in Hawaii is >$8K just for flights and hotel for 2 people. The average household income in the Bay Area is >$150K/year (2). $10K isn't a lot of money in California and $70K seems much more reasonable for reporting purposes.

(1) https://www.mercurynews.com/2018/08/25/to-stay-or-not-to-sta...

(2) https://dqydj.com/income-by-city/


> I suspect that for the average person it's probably reasonable to include a wedding and tuition in the 10k list

You're off by a factor of 2-3 here (a little skewed due to COVID), as the average wedding runs 20-30k...

[1] https://www.theknot.com/content/average-wedding-cost


Holy crap people - spend less money on your weddings. Instead spend that money on a honeymoon or setting up your future lives.

When I proposed I did it with a 30$ engagement ring that was quite pretty but cheap. When we got married we had a pair of rings made set with sapphires for 700$ a piece. For the actual wedding we catered in a few hundred dollars worth of indian food for the dozen people we had attend the ceremony - and held it at the house of a family member (a ridiculously scenic house, granted).

Honestly - the most expensive part of our wedding was my suit that was hand-tailored and made of raw silk (and that was picked out by my wife). My wife's wedding dress was bought off a rack and altered for about 120$ altogether.


Certainly don't get into debt for a wedding and I wouldn't recommend trading a downpayment for a wedding. Otherwise, do whatever you want.

$10K is like a used 2013 Honda Civic (1). It's really not a large amount of money for many many people. If someone wants to spend it on a day that enables them to celebrate with family and friends in a rare occasion, who are you to judge?

(1) https://www.kbb.com/cars-for-sale/used/2013/honda/civic/rich...


Oh - I don't think there's anything wrong with viewing a wedding as a luxurious event in your life and spending a lot on it it's just... Do you actually value what you're getting out of blowing 40k on a particular day more than having[1] 50 days of all-inclusive honeymoon vacation in Cancun? Or like, putting a down payment on a relatively fancy[2] house.

I wouldn't judge anyone who made this choice - but if I was their friend I would ask a lot of questions about whether they'd actually enjoy it or just feel like it's a thing you "absolutely must do" due to weird cultural hangups. My wedding was quite pleasant, but it was mostly a blur because it wasn't for us. I think generally isn't a party for the groom and bride to actually maximally enjoy - it's a celebration with the guests.

1. At canadian rates, 'cause I'm Canadian. Somewhat estimated since nothing lets you book that long.

2. Highly dependent on the housing market you're in - if you're in wisconsin enjoy the mansion - if you're in SF enjoy what's probably a slightly larger than average studio.


A $10k credit card bill isn't rare for people who do a lot of business travel. I'm not sure what "auditing" means in this context. As long as I'm not aware of it, I don't really care. It would rapidly get annoying to fill out some form whenever I had a $10K credit card payment. (Not that it's especially frequent.)

That's alright since the credit card company is the one who'd be filling out the form - you'd only need to fill it out if it was a private transaction between two natural persons - and even then only one form needs to be submitted so if it's someone who regularly engages in such transactions (like some kind of service worker) then they'll probably submit the record of it assuming you insist on paying with cash.

Nearly all of this sort of reporting is generally carried out by banks and credit card companies that are being used to execute the transaction - but the US really does want to know if you purchased a used car from someone for 13,000 dollars in cash since, you're probably laundering money at that point.


Possibly incorrect rates aside, inflation also greatly affects what charges someone could face for property crimes.

Ditto. Also, FBAR reporting of any account with 10k+ in it. Like seriously, the IRS/US is concerned about 10k in a bank account? Gotta get those tax evaders!

No, it's worse. FBAR is required if you have $10k in total. If you do, then you have to report all accounts, even the ones that have just one dollar on them.

Remember, all transactions over $10,000 are suspicious, but transactions under $10,000 are considered "structuring". "All transactions" will be suspect independent of where the threshold is set.

Transactions under $10k that are performed in such a way to move more than $10k but keep from the reporting requirements for bigger transactions are structuring, not just any transaction under $10k is considered “structuring”.

This is not correct. "Structuring" has a specific meaning and transferring $9,000 (or any other amount under $10,000) is not enough on its own.

Banks and financial institutions (in the US or that are in some way regulated by the US Treasury- which in practice means everyone who uses USD, including such surprising places as casinos in the Philippines) are required to make Suspicious Activity Reports (SARs) when they suspect foul play no matter what size of transaction. But only when they suspect it: not every transaction gets a SAR, but if you do, then it might be structuring no matter the size.

The most notable person ensnared in structuring case is, of course, former House Speaker Denny Hastert (R-IL). He was being blackmailed to keep his sexual assaults of children secret. He went to the bank to withdraw lots of money to pay his blackmailer, and they filed a document with the FinCEN network. When he realized this, he asked about it and was told that everything above 10k needed to be filed, so he stood in line ~150 times and withdrew 5k each time. That's pretty obviously structuring, and because they couldn't get him for child abuse (because it was so long ago and the victim had committed suicide in the interim), he plead guilty to structuring.


* Puts on tinfoil hat *

Considering how long it takes decisions like these to roll out is it likely that Tesla recently dropped coin based payments in part to avoid being a party to any upcoming money laundering investigations? Companies at all associated with large coin based payments have probably been in the know about this coming up for quite some time now.


If not this exact thing, then probably due to some regulatory issue.

As tech people, we love to complain about the bone-headed tech decisions that business leaders make. I have every reason to believe that accountants have the same complaints about leadership. It wouldn't be surprising if accountants over on Gaaper News were facepalming over this decision.


Seems like a stretch. For sure, the used Tesla market is hot and they are much more liquid than any other automobile you can buy. Still, all the tracking of VIN-related transactions would seem to make cars an extraordinarily bad choice of good to use in a laundering operation.

I was actually just thinking of buying a fancy Tesla being an end node for laundered money - it's fancy and flashy so I'd imagine that if you've got a fair amount of cash sitting around snapping up one of those is attractive.

Also, I do agree that it seems like a stretch, that claim is entirely baseless and speculative - hence the tin foil hat prefix.


IMO its more likely nobody used bitcoin to pay for teslas and they didn't think it was worth their while to deal with all the headaches.

Definitely not. The compliance obligations for Tesla would be identical to someone purchasing a vehicle with cash which, AFAIK, is still an acceptable form of payment.

Telsa announced support for buying cars with Bitcoin in March and revoked support in May. In Jan-Feb, they bought ~50,000BTC for 1.5BUSD, and likely sold it all before the May announcement for nearly 100% profit.

Was even one vehicle was paid for in BTC in the 60 day period where this was supposedly possible?

"Pump and dump" comes to mind.

[1] https://news.yahoo.com/tesla-stops-taking-bitcoin-cites-2220...


They didn't sell their BTC holdings (per recent Elon tweet)

Interesting! I didn't see that. If that's the case, that's less scammy than it originally looked.

As others mentioned, this was just a reminder of existing laws. Its not really a new decision.

I (and I think many others in crypto) have always assumed that any money/crypto transactions at any exchanges in the US is reported to the government or will be reported sooner or later. So not that big of a news imo.

Good. No one is really using any cryptocurrency for anything other than gambling or illegal activities.

Prove me wrong: who in their right mind would spend any crypto any literally anything right now when the price is going up and down like crazy?


Privileged take. You probably get paid in or have access to the USD or EUR.

Consider majority of the world doesn't.

https://bitcoinmagazine.com/culture/check-your-financial-pri...


What privilege? Can't you be more explicit?

I mean, I think they were pretty clear: the privilege of having ready access to/being paid in USD or EUR.

(I don't particularly endorse their view, but I did think their statement was clear enough.)


I don't see how having access/being paid in USD or EUR is a "privilege", or the connection this supposed privilege has with crypto-currencies.

They were pretty clear - the privilege of having direct access to USD or EUR.

If you have the means to access bitcoin, and can withstand the radical swings in exchange rate, you are already privileged.

I use crypto to do international transfers to Argentina. It's cheaper. I also get a way better rate that way. I try to do it as fast as possible due to the quickly changing rate you mentioned.

I'm genuinely curious if You find it cheaper including transferring from your currency, to crypto-currency-x, blockchain fee, crypto-currency-x to argentinian peso than transferwise or any of it's competitors? I think they're like $5 and 1.5% to transfer. If you remitted money early this week it probably wiped out any of the savings from the whole year I would guess?

The issue is that when I transfer via international bank transfer I'm subject to pretty steep taxes on the Argentinian bank account. Plus the cost of doing the transfer, which was not cheap (about 40 euro for the sender). Also, most transfer systems convert your currency using the official rate, which is fixed by the government.

On the other side, if I use crypto, the value of my bitcoins (well, my fraction of a bitcoin) is decided not by the government but by the market. That alone makes a difference of between 33% and 60% of the transfer amount.

For example, right now officially an euro is 115 ARS. But non-officially is 184 ARS.


Very interesting, thanks for the response!

Another thing, when I started I used bitcoin, but lately fees are pretty steep so I switched to litecoin which has way lower fees.

This is a very closed minded view. Just because you and most people in the USA don't see a use outside of speculation, there are many suffering countries that find great use in Bitcoin as an escape from their crumbling currencies. Check your privilege.

> Check your privilege.

You do not understand what privilege means. We are talking about cryptocurrency, not institutional racism or sexism, or other cases where power structures are used to oppress a minority group of people. That is the context for using the term privilege, and Bitcoin is nowhere near that context.

Plus if someone has the technological capability to access bitcoin or other cryptocurrency, they are most likely already privileged.

Putting aside your flippant attempts to weaponize wokeness (yes, I read your other posts), I'm open to understanding how Bitcoin is helping lift people out of poverty in developing nations. Care to cite some real world examples?


I am talking about "financial privilege", not the other versions of privilege you describe. Yes, it is a thing. Please, point out to me comments where I weaponize wokeness. With every comment I am trying to guide the discussion around crypto in a more rational direction, which on HN is nearly impossible these days.

Many critics don't see a use in Bitcoin and want to "shut it down" because of its energy use and volatility, and can't even imagine how useful it is to people whose currencies suffer from even more mismanagement and volatility/inflation.

https://bitcoinmagazine.com/culture/check-your-financial-pri...


Taking of advantage of yield farms where 5-20% APY is the norm and a relatively safe place to hold stablecoins.

DeFi space is growing fast and has real-world applications. Compound, Curve, Synthetix, Maker, and Internet Computer are a few of the DeFi promising protocols.

Holding Bitcoin is not necessarily a bad store of value. https://casebitcoin.com/


I also hold USDC earning interest, but I also am very aware there are risks. However, risk should be obvious since I am earning 8.6% APY.

What's a "yield farm"? As far as I know yield is not farmed.

I'm using skepticoin for something other than gambling or illegal activities... namely to prove that cryptocurrency is nonsense.

> Prove me wrong

OK. I've edited Everipedia articles and got paid in IQ tokens for my contributions.


I accepted Bitcoin as payment for a service– I received $X at the current BTC-USD exchange rate.

I’ve used crypto to donate to a few places, as well as buying a few other mundane things. I’m a tech worker in the U.S.

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