How to Accept Bitcoins Without Fees

http://blog.nameterrific.com/2012/12/the-complete-guide-to-accept-bitcoins-without-fees/

by zhoutong • 14 years ago

54 33 14 years ago

blog.nameterrific.com

hnolable• 14 years ago

This isn't entirely related but I'd be interested if anyone knows the tax implications of _spending_ bitcoins. What happens if you receive bitcoins when they're worth 10 USD and then spend them when they're worth 20 USD. What tax rules apply here?

ww520• 14 years ago

You pay tax with bitcoins?!

On the serious note I think the tax implication is similar to foreign currency income/investment. (Sorry I don't know the ins and outs of international commerce and can't give you a definite answer.)

zhoutong8• 14 years ago

Technically it's trivial to use Bitcoin to hide income. However NameTerrific is a GST-registered company so we (have to) openly collect taxes from Australian residents, even for Bitcoin payments.

zhoutong8• 14 years ago

The same problem can happen with any foreign currency. So the normal foreign currency accounting rules apply.

IF you're operating as a business:

When you receive 1 BTC at 10, assuming your accounting currency is USD, you should record a 10 USD revenue and a 1 BTC cash inflow (shown as 10 USD in balance sheet).

If the value of 1 BTC rises to 15, for example, you need to make an adjustment to the Unrealised Foreign Currency Gains and Losses account to reflect the change. The BTC cash account should be shown as 15 USD in balance sheet (with the same 1 BTC holdings) and there's an unrealised foreign currency gain of 5 USD (a temporary contra-expense account in equity section).

When you finally spend the Bitcoin at 20 USD, close the "unrealised" account to the "realised" account, and increase the realised gains to 10 USD. Now you should have a 20 USD expense, 0 USD cash balance and a 10 USD realised foreign currency gain. That's 10 USD worth of "net" expense.

So, 10 USD revenue and 10 USD "net" expense. Everything is balanced. That's 0 USD closed to P/L.

IF you're a consumer:

It should be treated as 10 USD capital gain because you disposed the asset at a higher value than the cost base. Equivalently, you can claim a capital loss if you dispose the asset at a lower value than the cost base. However, whether this is acceptable in your country depends on your actual circumstances.

betterunix2• 14 years ago

The same rules that apply to barter.

barmstrong• 14 years ago

Worth noting that Coinbase also does not have a fee to accept merchant payments (and keep them in bitcoin):

https://coinbase.com/docs/merchant_tools/payment_buttons

If you decide to cash out to USD the fee is 1%.

zhoutong8• 14 years ago

Thanks Brian. Coinbase is really cool and I also recommend it to everyone who plans to accept Bitcoin online, especially US merchants.

There are many services in the Bitcoin world with highly similar features and it's great to see a healthy competition in such an early stage.

mtgx• 14 years ago

Can Coinbase use recurring payments? Is that even possible with Bitcoin?

StavrosK4• 14 years ago

Their merchant page says "coming soon".

justinkelly2• 14 years ago

hey zhou, what % of purchases use bitcoin?

zhoutong8• 14 years ago

Currently about 20% of NameTerrific payments are made in Bitcoin. Credit card is expected to be the dominant payment method anyway.

justinkelly2• 14 years ago

thanks, thats higher than i expected

are you specifically targeting the bitcoin crowd with nameterrific?

lucb1e• 14 years ago

> However, processing Bitcoin payments is a completely different experience. There's no paperwork (just code), no set-up cost and everyone can get started in no time.

So true. That's what I love about Bitcoin: once you understand the technical working, there is nothing to it. It's all simple rules instead of fees, interest rates and chargebacks. And all that you own is actually really and truly yours. No bank could possibly take it from you when they go bankrupt.

TazeTSchnitzel3• 14 years ago

There's something rather special about effectively hosting your payment processor (the Bitcoin RPC server) yourself.

StavrosK4• 14 years ago

I recently moved my domains to NameTerrific, and I would definitely recommend them. I love the management interface and they're very simple. Much, much better than the bloated GoDaddy.

zhoutongd3• 14 years ago

ZhouTong is a thief and con man.

https://bitcointalk.org/index.php?topic=95738.0

He WILL steal your money.

Do not trust him.

StavrosK4• 14 years ago

I don't understand this, it seems to be posted all over this thread, but it doesn't make much sense. Did anyone get it?

zhoutongd3• 14 years ago

ZhouTong founded bitcoinica.

Bitcoinica was an advanced bitcoin trading platform.

Zhou Tong stole customer funds.

That link has all the evidence you need to make up your own mind.

kgo• 14 years ago

There's a lot in that thread to sort through, but...

The exchange that zhou founded had about 60,000 bitcoins stolen in two instances. Plenty of evidence pointed to an inside job, probably by zhou himself.

This link provides Zhou's explanation of what 'really' happened, where he claims a Chen Jianhai, Chinese multi-millionaire with ties to organized crime who hunts for ancient relics and artifacts in his spare time, was the 'real' thief.

https://bitcointalk.org/index.php?topic=95795.0

I'll leave it to others to assess the plausibility of this scenario.

logn2• 14 years ago

Without Fees? Nice try. The article doesn't cover this at all. I think it means "Without the High Fees of Credit Cards". Bitcoin has fees and the article mentions this. If anyone would actually like to write an article about avoiding BTC fees, I'm interested in that.

TazeTSchnitzel3• 14 years ago

Yes, Bitcoin has fees, but they're transparently, voluntarily paid separately by the customer, not automatically deducted.

logn2• 14 years ago

In practice it's not easy to avoid the fees. Maybe I need a custom client? Not sure. But I know what you're saying is true. If someone could explain how that would be awesome.

DiabloD32• 14 years ago

Flagged.

zhoutong is a known scammer. Do not do business with him. He needs to be banned on HN as well.

Edit: I'll quote what I said in reply to someone else:

Zhoutong is a scammer, he operated an illegal bucket shop known as Bitcoinica and tried to hide the true nature of the operation just so he could close it down at its peak and steal several thousand BTC from customers trading futures on his platform,

He then tried to cover up the theft by selling it to the people who run Intersango and tried to blame them for the missing Bitcoins. He also tried to blame "hackers" for it.

In addition, users are suing him for close to half a million dollars for his lies. His defense is hes claiming he was 17 at the time (early 2012).

http://arstechnica.com/tech-policy/2012/08/bitcoinica-users-...

dmix• 14 years ago

Thanks for the heads up.

Seems legit. Flagged as well.

zhoutong8• 14 years ago

It's really unfortunate that the link you referenced contained too many wrong understandings and misrepresentations. A little research can make the following clear:

1. Bitcoinica was a regulated financial service provider before closing down.

2. I sold 100% of it in October 2011, ~5 months before the first breach.

3. There has been no conclusive evidence about the last hack.

4. I was not a defendant of the said lawsuit. I have not provided any defence regarding the lawsuit.

You're a credible person, but I hope you have credible sources to post here.

I have tried my best to discountinue my involvement on Bitcoin projects while keeping supporting the currency. I'm genuinely creating value through startups and you should be able to see this through my effort in NameTerrific.

zhoutongd3• 14 years ago

You're a con arstist.

Nothing more.

How to Accept Bitcoins Without Fees

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