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Time For Bitcoin to Come Out of the Closet?

05/29/2014 08:45 am ET | Updated Jul 28, 2014
  • Jim Gibson Personal Finance writer, Your Finances Simplified

Feds Missing The Boat?

Didja ya hear the latest buzz about the so-called crypto-currencies? This time around, the news is all about Bitcoin. As you may have already figured out from all of the media attention there are proponents and there are opponents. However, with this latest news updates, you will see the evidence is beginning to pile up. Evidence for eventual full recognition of Bitcoin as an alternative payment system. Take a look at this list of recent events.

Pay Up

Your sales taxes, that is. Naturally, just about any sort of business operating in our country ends up having to pay the tax man. No, not Uncle Sam, that's a given. The other tax man expecting a piece of any business owner's pie is the local guys. In other words, the state and county and even city Department of Revenue through their Sales Tax department.

What does this have to do with Bitcoin? Consider: recently, the company that provides the behind the scenes computer systems to calculate and charge sales taxes throughout all fifty states announced their new updated Sales Tax Module is ready to go. Get this: this new module includes a new bitcoin submodule.

The company, Avalara, Inc says that this new Bitcoin module takes care of sales tax and even VAT for bitcoin transactions in real time. Hello! Have you been paying attention lately? Avalara can do Bitcoin Sales Taxes on the fly? Wow! That's number one.

FEC Says OK, well sort of

Number two on our list is none other than our Federal Election Commission. Now hold your nose here for a minute while we wade into this arena. On the one hand, after much handwringing, the Federal Election Commission (FEC) ruled that it is "acceptable" for political committees to take small bitcoin donations. Not only, the FEC also said, sure why not, these same political committees could in fact buy and sell bitcoins as an investments. Sounds pretty cut and dry right?

Unless and until you keep reading. Apparently, even deciding that little bit proved to be a bit much. For the last issue on the table, the FEC waffled and said, "uh no, not so much, or we don't know". That is, the FEC could not make up it's mind if candidates or political committees could use their bitcoins to buy goods and services. Yes, if you're thinking that's a bit two-faced, you are exactly right. Still, two out of three ain't bad as the saying goes.

Big Money Pours In

Next on our list comes to us from the investing and venture capital world. Certainly you recognize when big money starts flowing in, something is about to change. This time, the big money, to the tune of $4 million in seed capital, is flowing to a new startup named Vaurum. Take note that Vaurum is focusing on a new area with Bitcoin, an area that could speed up turning Bitcoin into a mainstream payment option.

Check this out: Vaurum is building the software that will eventually allow traditional financial institutions to host their own bitcoin exchanges. Do you get the enormity of that? Recall that some of the naysayers about the new digital currencies love to point out the problems with Bitcoin exchanges over the last year or so.

Specifically, these naysayers love to pull out the story of the failure of Mt. Gox, the Tokyo bitcoin exchange that went kaput. "See, I told you so," these Luddites shout out to anyone who will listen. Whatever. It does not change the reality of a rapidly approaching change in the way financial transactions are handled. Can you say 'paradigm shift'?

SEC rains on the parade

Finally, we can't leave out our very own Securities and Exchange Commission (SEC). Talk about an agency stuck in the 1920s? "Bitcoin lacks credibility and trust" or so proclaims the SEC. In a stern warning to investors, SEC points to the short lifespan of Bitcoin and the fact that it has no established record.

Yeah, and? Can you just picture a similar group of government employees talking about Thomas Edison? "Mr. Edison's light bulb has no credibility and no trust. Take a look at how fragile this glass thing a-ma-jiggy is. Watch how easily it breaks". Well, you get the point.

Perhaps we should send a note to our friends in the federal government. The genie is already out of the bottle, and he ain't going back, much like it was expressed here. It's time to embrace our future, and take advantage of our new technology, not be afraid of it.

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