Bitcoin Exchange in Nepal

Thursday, October 9, 2014

Hello everyone!

The bit exchange website is currently under development.

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Bitcoin Currency and Economics References Committee inquiry

Friday, October 3, 2014

A Senate committee inquiry into bitcoin and other cryptocurrencies must examine the ATO's guidance requiring Australian bitcoin exchanges to charge GST on the full value of the bitcoins they supply to Australian residents, industry figures say.

The Senate Economics References Committee inquiry, to be chaired by NSW Labor Senator Sam Dastyari, was officially announced on Thursday, October 2.

This week, bitcoin exchange CoinJar announced that from October 3 users that buy bitcoin at CoinJar will be charged 10% GST. The decision has placed Australian exchanges in a difficult position, making their services substantially more expensive than those from other countries.

"In many ways the guidance has brought clarity to the position of bitcoin users in Australia," CoinJar says.

"However, we don't believe the ATO's guidelines are ideal for bitcoin in this country. We believe in a simpler financial system and we will continue to work with the ATO to help them discover a fairer decision."

Fellow Australian bitcoin exchange buyabitcoin.com.au is following suit, and began applying GST to purchases on Thursday.

Buyabitcoin's Holger Arians echoed the criticism when the ATO's guidance was announced, saying it hurts young, innovative companies.

"Bitcoin is an early-stage, disruptive technology, probably one of the most innovative fintech developments of our times. And like the internet in the early 90s, new technologies are often considered as useless, crazy or even scary when they are premature.

"But in a supportive and regulated environment (not meaning double taxing a virtual currency), these technologies can grow to something great.

"We firmly believe that the tax treatment of digital currencies in Australia will be adjusted soon, to ensure that Australia keeps being one of the most innovative countries in the world."

Daniel Wilczynski, the co-founder of Australian bitcoin exchange HardBlock, was less optimistic, saying it has created a dire situation for Australian exchanges.

"Being forced to charge GST on bitcoin sales translates to forcing us to close our business," he says.

"It is impossible to do and operate a bitcoin exchange.

"The government will receive zero tax in such a situation (should we close), and Australian customers and money will go overseas.

"The rules are divorced from the reality of what bitcoin is and how it works. We are considering what action to take, but have not made any decision."

Wilczynski's view that requiring exchanges to charge GST on bitcoin sales will force consumers and exchanges offshore was widely discussed in a Reddit thread on CoinJar's announcement, where users spoke of alternatives to the Australian exchanges. The obvious example being US-based startup Circle, where it's quick and easy for Australian consumers to purchase bitcoin and cheaper than any Australian exchange that has to charge GST.

Reuben Bramanathan, senior tax lawyer at Adroit Lawyers, says discussion like that on the Reddit thread is "an inevitable and disappointing result of the ATO's view".

He says depending on their business models, other Australian bitcoin exchanges and traders will need to charge GST to comply with the ruling.

"Australia's bitcoin industry is acknowledged globally as being ahead of the curve, and we are now seeing real evidence that the ATO ruling could seriously impact a lot of the progress made to date," Bramanathan says.

"With international providers opening up to Australian customers, the ATO ruling is a real problem for Australian bitcoin businesses and it puts them at risk of being unable to compete.

"There may be a small opportunity for local traders who remain under $75,000 GST registration threshold, but the majority of Australian bitcoin users will simply turn to well-established overseas suppliers to get their bitcoin."

Bramanathan says as a result the GST issue must be top of the list for the Senate committee inquiry into bitcoin because of its "immediate and serious negative impact on Australian businesses and consumers".

The committee's chairman, Senator Dastyari, says that will be the case. He left the door open for a possible reversal of the ATO decision.

"It is interesting to note the UK initially treated digital currencies, such as bitcoin, as a taxable product, only to change their definition to a currency a couple of months later," Dastyari says.

"(Tax commissioner) Chris Jordan was quite clear that the ATO decided to treat bitcoin as a taxable commodity because it doesn't fit within our current definition of a currency. We don't have the legal or regulatory framework to treat it as a currency.

"We note that the digital currency community argues that bitcoin, and others, are used effectively as a currency - a medium of exchange. The truth is government policy needs to catch up with a technology that has already emerged and is spreading quickly."

The inquiry is due to hand down its final report on March 15, 2015.

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A big Deal of the Paypal with Bitcoin worldwide

Thursday, October 2, 2014

A big deal with integrating Paypal - Bitcoin

Paypal, the online payment processing giant, recently announced it would start letting its merchants accept Bitcoin by taking first steps toward integrating with three of the largest existing Bitcoin payment processing companies: Bitpay, Coinbase and GoCoin.

This seemingly small step actually represents a major moment for the current and future legitimacy of Bitcoin. Not only does it exponentially increase the number of merchants who could start accepting Bitcoin as payment, more importantly it seriously challenges conventional notions of what we typically think of currency and payment systems.

Bitcoin has faced its share of naysayers and detractors and even today many people aren't aware of what it is or the benefits it can offer.

Bitcoin is a digital currency and peer-to-peer payment system that allows you to transfer value over the Internet without the use of an intermediary like a bank or even Paypal.

No one government, company or individual controls the production or regulation of Bitcoin. Rather, Bitcoin software runs on a worldwide network of computers that plays the role of an online accounting system called the "blockchain." In return for running the software, computers are rewarded with newly mined bitcoins. In order for bitcoins to have value, all people have to do is trust the code, which is publicly available for anyone to verify. Since the total supply of bitcoins is capped at 21 million, this creates scarcity and hence increases the value even more in the eyes of bitcoin holders.

Technologically, Bitcoin represents an advance in current electronic payment and currency systems. For example, currently merchants who accept payments electronically via credit cards or Paypal have to pay a minimum 3% processing fee on every sale. By accepting Bitcoin payments instead, merchants are able to reduce this fee to 1 % or even lower (Bitpay recently launched a 0% transaction fee package for merchants). That's a minimum of $20,000 saved for every $1 million in sales. Merchants can even have the Bitcoins automatically converted to dollars if they don't wish to hold on to Bitcoins themselves, thanks to companies like Bitpay and Coinbase that bear the exchange rate risk.

With benefits so large, Bitcoin represents some serious competition to credit card companies and, well, Paypal. Thus a global giant the size of Paypal making a step toward integrating with Bitcoin exemplifies an important property of any well-functioning competitive industry: "adapt or die." It also tells us that entrepreneurs and the market may actually be able to provide us with viable alternatives to government controlled fiat currencies in the not so distant future.

In many ways, money is what money does. A governmental agency has no more power to mandate or "create" money any more than a large company or a private individual. Money is something that is used as a medium of exchange, its role is to facilitate and smooth buying and selling. All that is really needed for a medium of exchange to come into existence, of which Bitcoin is but one example, is that people value it and are willing to trade goods in exchange for it. Though Bitcoin currently still has limited acceptability, it has come a long way in terms of how many merchants who accept it. With Paypal possibly opening up Bitcoin integration to its more than 150 million registered merchants worldwide (the option to accept Bitcoin through Paypal is limited to the United States currently), these numbers are only going to grow.

Bitcoin represents a major innovation in payment systems and currency in our times. It is inevitable that it faces its share of stumbles and road blocks. In a sense, the Bitcoin industry today is not dissimilar to the early days of the Internet. There is a lot of innovation and entrepreneurship and there is going to be failure, bankruptcy, price fluctuation and regulatory uncertainty. Yet, it has come a long way from being of interest only to computer geeks and an initiated few in 2010 to having a shot at becoming a purely market created and widely used currency and payment system.

The most recent endorsement of Paypal integrating with Bitcoin could well be a major defining step in that direction.

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