Bitcoin in the News : 2016-11 More++

Even though my previous post, Bitcoin in the News : 2016-11 Election, had more than enough bitcoin news for a single month, there were a few other stories worth mentioning. The most important of these was the subject of a New York Times article by Nathaniel Popper, which automatically confirms its importance:-

• 2016-11-18: Bitcoin Users Who Evade Taxes Are Sought by the I.R.S. (nytimes.com) • 'The tax agency sent a broad request on Thursday to Coinbase, the largest Bitcoin exchange in the United States, asking for the records of all customers who bought virtual currency from the company from 2013 to 2015. '

I took away two points from this. Bitcoin transactions (1) are subject to capital gain treatment, and (2) can be used for 'creative' financial manipulation. The NYT article noted,

The basic tax rules for Bitcoin users were set down by the I.R.S. in 2014. The agency’s guidance said that people should treat their virtual currency as property, rather than currency, for tax purposes. [...; An I.R.S. agent] identified two companies that were buying Bitcoin and misreporting them with the I.R.S. as technology expenses.

For more angles on the IRS and Coinbase, see Google's related stories:-

• Full coverage: ncl=http://www.nytimes.com/

An unrelated story underscored another point of friction between sovereign governments and bitcoin:-

• 2016-11-03: Chinese Government To Force Capital Controls On Bitcoin Exchanges (newsbtc.com) • 'Local exchanges will deal with limitations regarding the amount of funds moving outside of the country. Additionally, the government also wants to cap the number of Bitcoins sent abroad. Neither of these scenarios can be enforced, though, as no one can exert control over Bitcoin.'

China featured in another pair of stories from the same source and writer:-

• 2016-11-10: Bitmain Reveals Plans for Major Bitcoin Mining Data-Center in Northwestern China (bitcoinmagazine.com) • 'The company says the facility will be capable of consuming up to 135 megawatts of power and is set to become the second largest data center [NB: ?] in the world.'
• 2016-11-16: Is Bitcoin Mining Destined for Data Centers? (bitcoinmagazine.com) • 'For many, Bitmain’s recent announcement of the realization of a major data center in northwestern China served as a reminder of the level of mining centralization in Bitcoin.'

Is China the defacto capital of the bitcoin world? With yearend arriving even faster than usual, I'm ready for another round of retrospective opinion pieces like this one:-

• 2016-11-21: Bitcoin was supposed to change the world. What happened? (vox.com) • 'To a large extent, Bitcoin today is still used for the same applications -- illicit transactions and financial speculation -- that it was in 2014 and 2012.'

As for buying non-illicit stuff, here are two stories on the current state of affairs:-

• 2016-11-22: iPayYou Brings Bitcoin To Amazon (pymnts.com) • 'Bitcoin wallet iPayYou continues to work toward a future with bitcoin as the default currency. It was just announced that iPayYou has made a way for consumers to pay for items on Amazon with bitcoin, called Amazon Direct.'
• 2016-11-25: Bitcoin Black Friday Deals for the Digital Currency Enthusiast (nasdaq.com) • 'Here are a few options for anyone looking to get a good deal on some crypto-friendly merchandise this weekend. • Hardware Wallets • OpenBazaar Stores and Other Specialty Sites'

Getting back to that first story, the IRS and Coinbase, it sounds like every purchase with bitcoin might trigger a corresponding capital gain/loss. What am I missing?