The Future of Payments and Open Source Support

http://lucumr.pocoo.org/2014/11/2/payments-in-the-future/

by kenny_r • 12 years ago

156 74 12 years ago

lucumr.pocoo.org

wdewind• 12 years ago

TLDR; there are two problems with tip4commit:

1. The obvious, that they are collecting funds on behalf of other people's work and then keeping them when the funds go 'unclaimed'

2. Even if you do want to claim it, they don't make it easy, and for someone in a complicated tax country (like the author, Austria) there is almost no way he could accept the money without incurring some kind of risk. So basically when they are keeping money that goes unclaimed it's very problematic because they don't make the money easy to claim in the first place. Obvious incentives issues.

Point 2 is what this article is about.

mike_hearn4• 12 years ago

I'm not sure it is. I'm not a huge fan of tip4commit either, I agree that it's opt-out model is bogus, but the fact that it uses Bitcoin seems irrelevant.

The author seems to believe he cannot accept tips, because of tax and regulation, but he doesn't point out what specifically would cause problems here. Obviously people make and accept tips using euros all the time, this is not illegal, so why it would be different using Bitcoin isn't obvious. You can declare tips as income, no problem.

The real cause of his discomfort is revealed later in the post:

Personally I believe that Bitcoin is a terrible currency ... If you have a completely broken piece of country then I can imagine that you are suspicious of regulation and this sort of thing, but for me regulation is what keeps my world running and working.

Also,

Bitcoin for me feels like a cult. The vocal people in the community seem like they don't actually care about Bitcoin, but they want to see it succeed so that their "investment" makes a profit

So he has a generalised feeling that Bitcoin is bad because it's popular and has vocal fans, and that regulation is good yet also complicated, so anything which seems simple must be unregulated and therefore bad.

I do not consider myself particularly libertarian, though I do use and work on Bitcoin. Regardless, this doesn't seem like a great set of arguments. Rather, the author has decided that because a lot of Bitcoin users don't seem to like government, and he likes government, he should not like Bitcoin.

pdonis• 12 years ago

The author seems to believe he cannot accept tips, because of tax and regulation

That's not what he said. He said that he doesn't want to deal with a system for accepting tips if the cost to him of the system (not just in money but in time and effort) is greater than the benefit. He mentioned two tipping systems (gratipay and bountysource) that, to him, don't have this problem.

the_mitsuhiko2• 12 years ago

author seems to believe he cannot accept tips, because of tax and regulation, but he doesn't point out what specifically would cause problems here.

JFTR: "accepting tips" for software is something that is not at all straightforward. The way bountysource and others get around that is through invoices once a large enough amount has accumulated. I have no idea how that works in other countries. Gratipay/bountysource solve this problem, no bitcoin service I have seen does.

Rather, the author has decided that because a lot of Bitcoin users don't seem to like government, and he likes government, he should not like Bitcoin.

I think you misunderstand something there: I am pointing out why Bitcoin is something that does not solve problems for me and I doubt I am the only one. The premise of tip4commit is that it helps Open Source projects. It's not just not helping me, it's making my life more complicated. In fact, right now, pretty much anything that has bitcoin involved makes it harder for me.

djur• 12 years ago

This may have changed in the last 24 hours, but last I checked tip4commit's opt-out model is "get stuffed". The original controversy was over their refusal to remove projects from the site on request.

I agree that Bitcoin is more or less irrelevant to the controversy, but like the OP says, the tip4commit defenders seem to have intentionally made it a pro/anti-Bitcoin conflict. Bitcoin advocates were mobilized to support the site.

geofft3• 12 years ago

The author seems to believe he cannot accept tips, because of tax and regulation, but he doesn't point out what specifically would cause problems here.

I'm in the US, not Austria, but from what little I've seen of even the US's legal and tax system, doing something with money that you don't fully understand is a risk. I am glad that there are people who are willing to take that risk in the name of improving society, and pioneer the use of Bitcoin and other alternative currencies.

But nobody should be obligated to take that risk if they don't want to. I would be completely unsurprised if some emergent behavior between the US tax code and other laws meant that if you were merely aware of people accepting tips on your behalf using your name, even if you didn't ask them to, there are tax or legal obligations. I would be completely unsurprised if the law says, if you ask them to stop and they don't, you're _obligated_ to initiate legal process to make them stop. I don't think the law says that, but it's certainly way less crazy than lots of funny corners of US tax and commerce law.

I would also be completely unsurprised if US tax code got complicated when you're accepting Bitcoin as payment. I'm dimly aware that the IRS or FinCEN or someone issued guidance recently that Bitcoin doesn't count as a currency but instead counts as a something-else... and not being a cryptocurrency user, I haven't bothered to learn what that something-else is and how you're supposed to report taxes on it.

If someone is willing to figure out how the law works, or pay their lawyer to, more power to them. But nobody should be _obligated_ to.

pron• 12 years ago

So he has a generalised feeling that Bitcoin is bad because it's popular and has vocal fans, and that regulation is good yet also complicated, so anything which seems simple must be unregulated and therefore bad.

The only (or at least, the main) argument we ever hear in favor of Bitcoin is that it's unregulated, and therefore it's liked by people who dislike regulation. Why, then, is it surprising or illogical for someone to dislike Bitcoin because they're in favor of regulation? Being in favor, or against, regulation is a matter of personal political opinion, and that, in turn, shapes one's opinion of Bitcoin. This argument makes just as much sense as those for Bitcoin.

cbsmith10• 12 years ago

The author seems to believe he cannot accept tips, because of tax and regulation, but he doesn't point out what specifically would cause problems here.

I should think that would be pretty obvious. Go ahead and try collecting regular currency for a charity of your choice without ever getting sign off from that charity and only ever giving them the proceeds if they ask. It will end very badly for you.

You can declare tips as income, no problem.

No, there are a lot of potential problems that stem from this. In particular, it raises lots of flags about whether those tips are accurate, whether it is some form of money laundering, and whether they are really tips or something more nefarious. Unlike in the US, in a lot of other 1st world countries, handling taxes is incredibly straightforward (less than an hour of your time a year and zero risk of liability), but once you throw tips in to the equation now it's as difficult as it is for many people in the US.

So he has a generalised feeling that Bitcoin is bad because it's popular and has vocal fans, and that regulation is good yet also complicated, so anything which seems simple must be unregulated and therefore bad.

No, he's pointing out that its vocal fans have a distorted perspective and often don't really buy in to its virtues... but those problems are not why Bitcoin is a terrible currency.

beagle3• 12 years ago

It is very far from simple anywhere, especially in the US: It isn't perfectly clear if you should treat bitcoins as commodity or currency. See [0] for more details.

As a general rule, if anyone tells me "but taxes aren't complicated" or "but what's the complication", I know they are talking from ideals and not experience.

The Federal US tax code, last time I looked at it (2009) was over 71,000 pages (add a few more thousands per state). It doesn't get shorter with time. Of those, "only" 20,000 or so apply to every individual (not the same 20,000). Other countries are better, but the shortest country tax code I've had the pleasure (?) of dealing with was only 4,000 pages of printed text.

Intrastate/intracountry transactions are usually complicated, but somewhat tractable. Cross-border transactions are usually ill-specified, can be classified in multitude of ways all technically legal - and yet, if the tax authorities in either country things you've done it wrong, you are assumed guilty until proven innocent.

Anyone who is not scared of the tax code has not had to wrestle it. You may win some battles after working hard. But you never want to go into this war.

[0] https://en.bitcoin.it/wiki/Tax_compliance

lnanek2• 12 years ago

I don't have any use for tip4commit, personally, and couldn't care less if it succeeds either way. I did read the GitHub site, though, and your case 1) is incorrect. They return the money if it isn't claimed.

japhyr• 12 years ago

Are you sure about that? They said they return it to "the project", but that in no way guarantees that the money will go to any developer.

The tip4commit people are clearly putting growth of their product above everything else, and that's generously assuming honorable intentions on their part. I couldn't see any clear strategy for getting money back to the original donors if a developer or project does not end up claiming the donation.

tzs• 12 years ago

In addition to tax issues, I'd also worry at least a bit about whether or not accepting money for your software might affect warranty disclaimers. I would not be surprised if in some jurisdictions it is harder for a commercial project to disclaim warranties, and for accepting money to cause a project to be classified as commercial.

geofft3• 12 years ago

I think what strikes me as the large-scale problem here is that some people are baffled by the concept that not wanting money might be a rational decision. As a completely different example of the same decision being rational, let's remember when Tarsnap wasn't accepting Canadian customers (despite a presumably sizable potential market) because dealing with Canadian sales tax law was too much overhead. Even if the path to accepting money legally is clear and well-documented, it still might not be worth it.

Not to mention I've heard stories of developers whose motivation to work on open-source projects has gone _down_ since getting paid, since it makes it seem like work instead of a hobby.

There is a worldview that seems to me to be prevalent in the cryptocurrency community (I don't know which direction causation runs, but there's certainly a bit of correlation) that everyone wants micropayments and microtips -- cf. the tip bots on Reddit. It's not uncommon to see the tipbots get downvoted, and the tippers to be completely confused why someone might think it unwanted or off-topic. http://www.reddit.com/r/dogecoin/comments/234ds8/tipping_in_...

privong• 12 years ago

Not to mention I've heard stories of developers whose motivation to work on open-source projects has gone _down_ since getting paid, since it makes it seem like work instead of a hobby.

I am having trouble finding a good link, but I believe this effect is well documented in several areas – where compensating someone for an activity winds up with them being less likely to do it.

freshhawk• 12 years ago

Dan Ariely talks quite well about the subject of social norms vs financial norms and how just assuming you can move an activity from one to the other is very ignorant.

http://danariely.com/the-books/excerpted-from-chapter-4-%E2%...

If some "pay for open source work" scheme got github level popular it would completely destroy open source for a long time. Right now there is more work being done than the community could pay for. But at the same time, it's handy to use bribes to get some necessary but boring stuff done.

cperciva• 12 years ago

Tarsnap wasn't accepting Canadian customers (despite a presumably sizable potential market)

FWIW, Canadians are about 2% of Tarsnap's customer base by revenue. This is a bit less than proportional by population, but not much; the USA is about 40% of Tarsnap's revenue, but that includes several large startups (like Stripe) and Canada is distinctly lacking in similar.

The extra 2% is probably worth doing the sales tax paperwork for... but only barely.

atmosx• 12 years ago

I envy this guy for living in a country where you can say things like that:

The reason I bring this up is because our taxes are very high, but I get something for that money. It might not be the perfect system and there are lots of things about it that make me furious, but I do not see a reason why I would want to stop paying taxes.

That must be one heck of a feeling. Gives me hope for the future.

chippidysan• 12 years ago

That quote makes it clear he really doesn't understand where his tax money goes.

ubernostrum2• 12 years ago

So what sorts of horrible, unbelievably terrible things do you think are being done with his tax money that would cause him to reject the tax rate if only he knew?

Nursie6• 12 years ago

It's not that unusual is it?

I hate the politics of my country (the UK) but it's not like I think stopping paying taxes would be a good idea. They cover roads, a social safety net, the nhs and so much else.

And I'm not exactly left wing.

muyuu9• 12 years ago

Sorry Armin/Mr Ronacher/Mitsuhiko but your "Bitcoin is Wild West" rant is unwarranted.

Your problem has little to do with Bitcoin and all to do with the fact that a bunch of guys signed you up to their payment service without your consent.

joshfinnie• 12 years ago

I agree except for the fact that his concern with tip4commit is that it wouldn't exist if bitcoin wasn't available. The fact that bitcoin is what is making tip4commit to run without much regulation is Armin's main point.

zanny2• 12 years ago

And what would he do about an international tip service that is not incorporated in Austria that pestered him like this?

The jurisdiction of almost any country besides the US in terms of what happens online is almost nil. I don't see the recourse an Austrian would take against an online tip service in China or South Africa that spams them with tip notifications.

muyuu9• 12 years ago

Hardly a justification for his rant.

Here's some other things without which it wouldn't have been possible:

- the internet

- computers

- life on planet Earth

cbsmith10• 12 years ago

Sorry Armin/Mr Ronacher/Mitsuhiko but your "Bitcoin is Wild West" rant is unwarranted.

Really? In what way would you say that Bitcoin isn't the Wild West (at least in the sense he intended)?

muyuu9• 12 years ago

I said unwarranted. As in, not justified and not related to his recent anecdote.

Animats• 12 years ago

Well, actually you can ignore Bitcoin.

unclesaamm• 12 years ago

A recap of some important facts about tip4commit that weren't clear to me when this all started:

1) That they collect a 1% service fee on donations.

2) That they donate 1% of a project's pool for any given committer, which leads to this exponential decay where they never quite have 0 balance for any given project.

If enough donors use tip4commit, that is potentially a lot of bitcoin pennies that is just sloshing around their server.

benologist• 12 years ago

3) unwanted / rejected / opted-out donations will be returned to the 'project pool' instead of the donor, it's unclear what happens in cases when a project has no participating developers (default), is itself opted out, or has all opted-out developers

4) donors are not informed that the projects they're supporting may not receive or accept donations this way

5) donors are actively lied to, see:

https://tip4commit.com/github/django/django

and

https://news.ycombinator.com/item?id=8545377

has a django rep trying to opt them out of the program, there is no ambiguity whether they like, let alone want to or will receive donations this way

exDM69• 12 years ago

If enough donors use tip4commit, that is potentially a lot of bitcoin pennies that is just sloshing around their server.

I recall reading that they have 55 BTC "sloshing around their server" at the moment (no easy way of checking this on their website but seems reasonable looking at the top projects' funds).

By todays exchange rate, that's 18k USD, which is being handled with very little actual transparency. It is a genuine risk that the people behind this project will run away with 18k$ worth of BTC (or claim they were hacked).

I don't like this idea very much and I certainly would not like my projects to be up there.

baddox• 12 years ago

The problem was on one hand something I did not opt into (and there not being a way to opt out of) this tipping system and that it's a completely unregulated space that can cause me troubles I could have avoided otherwise.

While I have no qualm about his desire to avoid tip4commit, I find the mention of "unregulated space" peculiar. It seems that he is worried, and probably prudently so, about the fact that this space is highly regulated, not that it is unregulated.

cbsmith10• 12 years ago

It's a matter of perspective. The bitcoin world is highly unregulated, and much like the black market, you cannot pull it from that space without bringing all the chaos, disorder and risk that comes with that. For a lot of people (and arguably for almost everyone), the benefits of the regulated world are terribly desirable.

freework• 12 years ago

I don't understand this whole controversy. The the amount of money donate to you is so small (like under a dollar over the course of a year) then you don't need to declare it on any tax forms. If a random person on the street gives you a quarter, you on't need to report that on taxes, nor do you have to report a 0.00017 BTC donation.

On the other hand, if the donation is big (say in the thousands USD), I can see why someone could decide to not accept the donation because they don't wan to report it on their taxes. An easy solution to this problem is to NOT TAKE THE DONATION. If you don't take the money, you don't have to report anything. The tip4commit site supposedly states if a developer doesn't accept a donation the money goes back to the 'project pool' where it will get donated to another developer on that project.

DanBC• 12 years ago

The tip4commit site supposedly states if a developer doesn't accept a donation the money goes back to the 'project pool' where it will get donated to another developer on that project.

So tip4commit is being dishonest -- if the project has said that none of their contributors will ever accept a tip it is dishonest to continue accepting contributions for that project.

cbsmith10• 12 years ago

The the amount of money donate to you is so small (like under a dollar over the course of a year) then you don't need to declare it on any tax forms. If a random person on the street gives you a quarter, you on't need to report that on taxes, nor do you have to report a 0.00017 BTC donation.

The confidence in understanding the intricacies of tax law in the world's 196 different countries (many of which have intranational differences in the tax code) exceeds that of any tax attorney I've ever spoken with.

anton000• 12 years ago

"The vocal people in the community seem like they don't actually care about Bitcoin, but they want to see it succeed so that their "investment" makes a profit."

Im into Bitcoin, and I agree with this view. Most specially the reddit based bitcoin community.

zanny2• 12 years ago

And so what? You believe in the promise, and putting your money where your mouth is is one of the most powerful market forces. People are putting their money in BTC because they believe in it.

jamespo• 12 years ago

And they are vocal about it because they want some people to get in under them in the pyramid.

firepacket3• 12 years ago

This was a painful read.

He says he "doesn't want to be educated about bitcoin" because "he's heard all the arguments", while at the same time claiming it's a "terrible currency (or not a currency at all)" without any further reasoning.

This poor guy needs to be educated if he thinks that avoiding taxes, regulations, and credit card fees are the only applications.

Common decency dictates that if you openly state you are unwilling to learn about something, you should refrain from posting opinionated articles about that thing.

cbsmith10• 12 years ago

This poor guy needs to be educated if he thinks that avoiding taxes, regulations, and credit card fees are the only applications.

I think he very clearly understands all the applications. The point is that _for his case_ it doesn't provide any value, and he believes in a lot of cases its drawbacks outweigh its advantages (which is an entirely arguably point).

Common decency dictates that if you openly state you are unwilling to learn about something, you should refrain from posting opinionated articles about that thing.

Again, I think you misread the article. It isn't that he is unwilling to learn something. He's learned a great deal and concluded that it makes his life more difficult. More importantly, he's pointed out a significant problem with it: there are a lot of things that can happen with Bitcoin that would otherwise be prevented and you'd want them to be prevented.

firepacket3• 12 years ago

I think he very clearly understands all the applications.

Really? And what are you basing that opinion off of exactly?

The only applications he mentions in his post relate to taxes and credit card fees. If he had any understanding of the other uses like multiparty transactions, timestamping, identity management, voting, derivatives, and trustfree contracts, then he failed to say anything to convey that awareness in his writing.

Again, I think you misread the article. It isn't that he is unwilling to learn something. He's learned a great deal and concluded that it makes his life more difficult.

I didn't misread anything. Rather, he miswrote by conflating his opinions of a single bitcoin service with the entire underlying protocol.

Nursie6• 12 years ago

Perhaps he doesn't want to be educated about Bitcoin because he already gets it and the last thing he wants is to have to endure more proselytising from well-meaning but ultimately quite predictable evangelists.

alexruf• 12 years ago

Since I am from Germany and our banking and tax system is quite similar to the Austrian, I totally agree with Armin in each single point!

Maybe not exactly what Armin described as a solution - but did you already check Flattr (https://flattr.com/)? This also might work for supporting OpenSource projects.

mangecoeur• 12 years ago

It's nice to see someone who isn't on a hype-high over Bitcoin for a change. I still don't see why people think that a new unregulated currency would be somehow free of all the problems and abuses that prompted all the regulation of existing currencies in the first place - y'know, tax, fraud, customer protection, money laundering, market rigging, etc etc...

The Future of Payments and Open Source Support

Related Stories