Tangential question: could this, paradoxically, make Bitcoin a better medium of exchange, even if it becomes a bad speculative investment?
Since the IRS is now imposing a capital gains tax, that penalizes speculators. One of the issues with Bitcoin right now is that so many people are speculating (myself included) that it probably increases the volatility. If people are encouraged to spend, invest, or convert BTC into fiat currency ASAP, the price of a BTC should go down and remain very stable. In this scenario BTC becomes a decentralized money transfer network, for the most part.
The only issue is going to be doing all the accounting for the government, but that seems eminently doable since every transaction is perfectly recorded.
I'm not very experienced with financial matters, so perhaps someone can correct me.
I think most people with tax knowledge expected Bitcoin to be taxed in this way in the us. To think the us would give Bitcoin some sort of special treatment is absurd.
People will gamble on anything, as long as the price isn't fixed (and it will never be), there will always be those willing to throw money at it and dream big.
Keep in mind: Big players haven't really yet bought in yet, Bitcoin is currently inflationary, and so on. Bitcoin certainly has little hope to become stable any time soon.
The IRS now treats bitcoin as a property asset, very much the same way they treat stocks, and not all stocks are prone to speculation. So this is expected news for those who hold bitcoin as an investment.
The major impact of this decision will be on consumer adoption. Now, every time I want to make a transaction, I need to keep track of my taxes. I know that some wallet services are already developing ways to keep track of this automatically, but that's just an extra headache for the average consumer. This in essence will force consumers to think of bitcoin more as an investment, rather than a "currency" they can spend, and that will impede adoption.
I know nobody here likes to hear it, and I feel like a lot here in SV are tuning this out, but bitcoin is really, really struggling to find a relevant use case with consumers. Regular consumers have absolutely no reason to use bitcoin. The "1-click" payment and 1% price discount are not appealing enough to the average Joe who already gets 1-2% cash back, airline miles, and consumer protection on his credit card (and 1-click checkouts on many e-commerce platforms). And more regulation isn't helping the "crypto-anarchist" decentralization angle either. Add price volatility to that and it kills the consumer use case.
Bitcoin is great, FOR MERCHANTS. But consumer adoption is going to determine whether or not it succeeds on a grander scale. Unfortunately, Bitcoin does not solve a problem for consumers. Especially with tap-tap mobile payments around the corner.
When it comes to money, consumers want to be insured and cuddled and protected and not run the risk (however small) of being criminally liable for transactions and have someone to speak with if they make an erroneous transaction or have their card stolen. And they can already do all that, which makes it tremendously difficult to compel them to change the habits they've had for in forever to adopt a system that does not provide them with significant advantages.
I've been in bitcoin since 2011 and used to be a big believer, but I don't see bitcoin gaining traction with consumers, in part because of the huge regulatory risk. Any significant threat to the banks' business will be met with harmful regulatory control (friendly reminder: Wall Street banks fund the largest political lobbies in Washington). It could be destined to eternally remain an investment instrument (like gold) or find very targeted applications (like machine-to-machine payments). The underlying blockchain technology could be of more use (if adopted by the banking system, for example) but that is still far in the future.
Bitcoin will always have value as a new way to think about money. It has started some really smart people thinking about the next system - this is really the norm for any major breakthrough. Nothing is ever perfect the first time or doesn't evolve as things change. I think that given how good bitcoin is has led some people to believe it is perfect.
I agree. But it's very difficult to find a system that is so appealing to consumers that they'll make the switch, simply because consumers don't have a payments problem. Incremental reductions in friction (e.g. the consumer won't have to enter their credit card details, or, the consumer will save a percent on their purchase) are certainly not compelling enough to justify changing a deep and old habit.
And a new system would have to figure out a way to mitigate the regulatory risk.
The "one-click" payment and 1% price discount is not gonna appeal enough to the average Joe who already has 1-2% cash back, airline miles, and consumer protection on his credit card (and 1-click checkouts on many e-commerce platforms).
Yes! The credit card is an amazing tool for consumers, and I won't be giving mine up unless I get something significantly more amazing in return (Merchants would need to offer 5-10% discounts on purchases with bitcoin, for me to begin to be interested).
Not sure how it relates to bitcoin, but Visa and Master Card will pull a merchants account if they give cash discounts. They do this, ofcourse, to make cash and cards equal in the eyes of the consumer even though the merchant takes a pretty sizeable hit.
"Now, every time I want to make a transaction, I need to keep track of my taxes. I know that some startups are already developing ways to keep track of this automatically, but that's just an extra headache for the average consumer."
Fortunately we have machines that are really good at keeping track of numbers and adding them up.
I expect Bitcoin wallets will just calculate your taxes for you automatically.
I agree, but it just adds friction. Already, consumers are very comfortable using their credit cards. If you add the mental cost of thinking about taxes, especially when you have to pay capital gains when you pay for something (!!), that's a deterrent for most regular consumers.
Exactly. Many people have never had to fill out a Schedule D before and have no idea what long-term vs. short-term gains are, how to compute capital loss carryovers, etc. So their taxes would suddenly become more complicated just because they had a few dollars worth of capital gains/losses from Bitcoin.
Unless they had an enormous amount of personal information, Bitcoin wallets couldn't possibly calculate your taxes for you automatically. At best, they might be able to calculate the potential trading gains and/or losses of your Bitcoin transactions (and even then there would be issues about how you divided your Bitcoin purchases and sales into lots and ...).
perhaps this is what you meant, but isn't the major impact that the stated price is potentially different from the bitcoin price? in other words, buying something for $10 might actually cost $12 because of capital gains. i agree that wallet software can track tax data automatically, but it seems like the true impact is that consumers won't know what price they're paying unless wallets compute a real-time real price. unless bitcoin prices stabilize within a very tight band, it seems like this issue is what would impair consumer adoption the most? i'm new to bitcoin, so please lemme know if i'm missing something.
> buying something for $10 might actually cost $12 because of capital gains
No. The cost of goods isn't affected by your taxes. You simply have to realize that your Bitcoin stash is pre-tax just as your 401k is pre-tax; spending it incurs a taxable event that means it's time to pay taxes on your gain, those taxes were always going to be due, the good didn't cost more, you're just paying your income taxes late since you haven't paid them yet.
> Unfortunately, Bitcoin does not solve a problem for consumers.
That's not true. It took a while to convince my friends, but now we normally use bitcoin to settle restaurant bills and other debts that used to be difficult to keep track of and error-prone. It's not a godsend from heaven, but it works and is much better than what we used to do.
That's not the problem, it's more about remembering debts later, or needing to split the bills (wasting extra time) and/or not having the right cash denominations.
And there are plenty of other situations where you might owe each other money.
If the problem is sending money to your friends electronically (otherwise I'm nto sure how Bitcoin solves the problem of remembering debts or splitting bills), this is a solved problem for some people.
My credit union lets my transfer money to any other member of the credit union instantly with no fees. As it happens, nearly all my friends are members of this credit union (it's local and offers a much better deal than the banks) - and they have a mobile app so you can do it from your phone.
They've just added a general ACH function to it, to transfer to any account, but I haven't used it so I don't know if there are any associated fees. It doesn't mention any, but I associate the word ACH with some kind of fee.
So to me, this isn't a "find a new currency and financial system" problem, it's a "find a better bank" problem.
Could some of the multiple people who down voted battani's comment please explain why?
For the application in question (settling restaurant bills among a group of friends), Venmo looks ideal. No transaction fees, easy to use and flexible, no exchange rate issues, it's operated by a company that is actually licensed as a money transmitter in every state of the US, and no tax collection or reporting issues.
I don't know, those services are probably good, but Bitcoin works perfectly and we don't mind the volatility, and I kind of enjoy it.
There are plenty of minor reasons to prefer Bitcoin, like how nobody can prevent you from accessing your funds for something like "suspicious activity".
But there are a some bigger reasons - if you're good with your security, you don't have to do things like check another statement every month to see if someone stole your account information.
Venmo is unavailable outside the USA (or at least, it's not available in my area).
Splitwise appears to be just a web2.0 accounting type app? I didn't see any mention of actually moving money around. Bitcoin isn't actually that great for splitting bills at the moment because wallets don't have Splitwise type features. But in theory once added it should be quite convenient, assuming you can tolerate the usual Bitcoin downsides.
I think you're right that currently there's not a whole lot of incentive for people to use Bitcoin in the USA, especially for local transactions. But the system is still very new. It's hard to know how things will work out in future. All we do know is that the payments market, especially the American payments market, is extremely stagnant. The USA is stuck in a timewarp from most of the worlds perspective despite a proliferation of little startups that try and do something hip with magstripe cards. I mean, this is a country where people still routinely use cheques. So it may well be that Bitcoin, as it matures and adds features, finds a way to be competitive against credit cards, especially now the rules forbidding price differentials are being struck down.
The IRS decision is a problem for sure, but it's also specific to one geography. The UK tax authority decided the same thing (Bitcoin is not a currency) and then changed their mind shortly afterwards. Bitcoin quite clearly IS currency by any reasonable definition that doesn't boil down to "a currency is whatever the government says a currency is", and so hopefully at some point the IRS decision would be changed in favour of common sense.
And when BTC's price changes by 20% to 30%, do yall still pay each other back in BTC or do you convert into USD before paying each other back?
Or... you can be like everyone else and just have a guy go to the bank and grab a bunch of $5 and $1 bills when you know your group is getting together. CASH is the easiest way to settle debts and keep track of payments.
I am pretty surprised that the price of BTC fell after the IRS issued guidance. Like asperous mentioned, most people with tax knowledge (myself included) expected Bitcoin to be taxed this way, and this is what we were hoping for. The author discusses how people now have to "decide whether to report the income and pay steep capital gains tax, or submit fraudulent tax returns." But the thing is, we knew all along that tax would have to be paid. It was simply a matter of whether it was taxed at higher ordinary income rates, or lower capital gains rates.
do you mind elaborating why you hoped for this tax ruling? currency seems like bitcoin's most powerful application, but this ruling cripples its currency applications -- not because of documentation purposes (since wallets can easily record tax data), but because now each transaction contains a potential bitcoin capital gains cost. in other words, buying a camera for $200 might cost more than $200 because of capital gains. unless the price of bitcoin completely stabilizes, doesn't this ruling hurt bitcoin as a currency?
let's say that i purchase a bitcoin for $150. this is my cost basis. the next day, the bitcoin appreciates in value to $200. i use this single bitcoin to purchase a $200 camera. in this transaction, i have spent $200, but i only paid $150 for it. this means that i have essentially received $50 for free. the IRS wants to tax this "free" income. under IRS guidance, this additional $50 that you got "for free" is taxed at a capital gains rate (which is up to 20%). if the IRS had declared bitcoin a currency, this $50 in gain would be taxed at ordinary income rates (which is up to 39.6%). since we'd ideally like to be taxed at a lower tax rate, we wouldn't want it to be considered a currency for tax purposes because currency is taxed at the 39.6% rate.
it's also REALLY important to note that the way currency is defined in the tax code is different than how currency is defined for other parts of government, be it another arm for the treasury department (fincen for instance) or even the SEC. so even though bitcoin is not considered a currency in the tax code specifically, doesn't mean that it should be considered less of a currency. am i just talking in circles now?
> let's say that i purchase a bitcoin for $150. this is my cost basis. the next day, the bitcoin appreciates in value to $200. i use this single bitcoin to purchase a $200 camera. in this transaction, i have spent $200, but i only paid $150 for it. this means that i have essentially received $50 for free. the IRS wants to tax this "free" income. under IRS guidance, this additional $50 that you got "for free" is taxed at a capital gains rate (which is up to 20%).
There's one huge problem with your example: you have a short-term capital gain, not a long-term capital gain. Short-term capital gains are taxed at the same rate as your ordinary income.
This a huge accounting nightmare for businesses and individuals to deal with. It is also likely to act as a precedence for other tax authorities. The real value of bitcoin is in the low transaction friction (in theory more than practice for most non-tech people). All this accounting is basically undermining this.
The chart with a 0 y-axis is even uglier, actually. It more clearly shows that the price of Bitcoin has broken through a key support level. If this were a stock chart and you were trading the technicals, you'd be contemplating a short position here.
The IRS's decision, if actually enforced, is going to make legitimate transactions with bitcoin almost impossible. Filling out a 1099 is a pain in the ass, even with relatively light trading, in which you might buy a block of 1000 shares at 55 dollars, and sell two blocks, one of 600 at 57.568 and another 400 at 57.569. Try doing that with the fluctuations in currency markets. If you buy 10,000 dollars worth of bitcoins, you'll need a new entry for every time you spend them, with a different price for each.
And, if they enforce wash sale laws, you could be liable for totally innocent trades. That probably won't happen though.
Not surprised. The accounting nightmare that results from this means I'm basically done with cryptocurrencies. As a user trying to buy stuff with it I have no interest in dealing with keeping track of every transaction for the purposes of tax reporting, and neither is anyone else except for hardcore supporters.
> The accounting nightmare that results from this means I'm basically done with cryptocurrencies.
This was the expected outcome, if you didn't see this from the beginning, maybe you shouldn't be investing to begin with. I mean seriously, what did you think, that the IRS would allow untaxed gains to be kept?
I want to use it as a currency to buy things, not an investment. If all you're doing is investing, this is easier to keep track of. If you want to regularly be buying goods and services with cryptocurrencies, it becomes much more difficult for the average person to keep track of.
I'm not being an ass, I'm saying this is exactly the tax treatment that was expected, to bail now means you didn't see this coming. Did you honestly think the IRS was going to declare Bitcoin a legal tender currency on par with the USD in regards to special tax treatment? Who didn't know Bitcoin was going to be subject to capital gains tax? Everyone who groks taxes knew, and not just knew, but expected it. The IRS clarification was not in any way surprising. Something isn't a currency just because you want it to be, things don't avoid tax laws just because people wish they did.
No one could have seriously thought the government would treat crypto-currencies like real currencies. The same people who all think cryto is going to displace fiat are all up in arms about crypto not being treated like fiat; it's a joke.
Since the IRS has given a statement on BTC, people who had bought it last year and sold near the peak for USD or products/services have now realized that they owe a significant amount of taxes. So they now have to sell more BTC to get enough cash to write a check to the IRS. Thus the supply of BTC will increase and the price goes down.
The smarter thing would have been to sell the BTC and then put away X% in a savings account (or a stable investment) with a plan to pay that money to the IRS. Then the (100-X)% could be spent freely without issue.
Regardless of how the IRS was going to do things, you were going to owe significant taxes anyway.
There were only two choices: Tax BTC as property, or Tax BTC as currency. In both cases, you owe somewhere between 15% to 30% of your earnings to the IRS.
The article is interesting, but the writer's main point seems to be lacking much evidence. The normally volatile Bitcoin price actually remained flat for days after the IRS announcement - because it wasn't a surprise.
The article briefly mentions a much more plausible reason for the sizable price drop, which occurred later: China cracking down on bank to exchange deposits. The writer just sort of handwaves it away.
There's no evidence that the IRS ruling pushed the price down, in fact there's plenty of evidence that it did not: the fact that the price did not move.
Meanwhile, there's plenty of evidence that China's action did affect the price. As soon as rumors began to spread, trades on the Chinese exchanges were happening at prices far below those on outside exchanges.
The Chinese exchanges led the market down every step of the way. (Naturally a price fall in China soon began to pull down prices everywhere, due to arbitrage, and an understanding that the probable withdrawal of Chinese money was very bad news for anyone speculating on the short term price).
I tend to agree with you on the immediate cause of the fall, but I do think the friction that will result from the IRS decision really damages the value of Bitcoin as a low transaction cost mean of exchange.
>I do think the friction that will result from the IRS decision really damages the value of Bitcoin as a low transaction cost mean of exchange
It doesn't seem to make much difference. In its current form, Bitcoin already suffers from a lot of friction when used as a means of exchange. For the average consumer, buying it is difficult, storing it is difficult, the value isn't stable, using it for physical retail purchases can be very clunky.
It's a beta. A lot of things would need to work better for it to really succeed. In that context, the rather clumsy reporting requirements of the IRS ruling are yet another minor speedbump, which needs to be either ironed out or worked around.
57 comments
[ 9.9 ms ] story [ 130 ms ] threadSince the IRS is now imposing a capital gains tax, that penalizes speculators. One of the issues with Bitcoin right now is that so many people are speculating (myself included) that it probably increases the volatility. If people are encouraged to spend, invest, or convert BTC into fiat currency ASAP, the price of a BTC should go down and remain very stable. In this scenario BTC becomes a decentralized money transfer network, for the most part.
The only issue is going to be doing all the accounting for the government, but that seems eminently doable since every transaction is perfectly recorded.
I'm not very experienced with financial matters, so perhaps someone can correct me.
People will gamble on anything, as long as the price isn't fixed (and it will never be), there will always be those willing to throw money at it and dream big.
Keep in mind: Big players haven't really yet bought in yet, Bitcoin is currently inflationary, and so on. Bitcoin certainly has little hope to become stable any time soon.
The major impact of this decision will be on consumer adoption. Now, every time I want to make a transaction, I need to keep track of my taxes. I know that some wallet services are already developing ways to keep track of this automatically, but that's just an extra headache for the average consumer. This in essence will force consumers to think of bitcoin more as an investment, rather than a "currency" they can spend, and that will impede adoption.
I know nobody here likes to hear it, and I feel like a lot here in SV are tuning this out, but bitcoin is really, really struggling to find a relevant use case with consumers. Regular consumers have absolutely no reason to use bitcoin. The "1-click" payment and 1% price discount are not appealing enough to the average Joe who already gets 1-2% cash back, airline miles, and consumer protection on his credit card (and 1-click checkouts on many e-commerce platforms). And more regulation isn't helping the "crypto-anarchist" decentralization angle either. Add price volatility to that and it kills the consumer use case.
But... micro-payments? Consumers have always hated them. http://www.openp2p.com/pub/a/p2p/2000/12/19/micropayments.ht... (Shirky, 2000)
But... international transactions? Hard to beat the fees at https://transferwise.com.
Bitcoin is great, FOR MERCHANTS. But consumer adoption is going to determine whether or not it succeeds on a grander scale. Unfortunately, Bitcoin does not solve a problem for consumers. Especially with tap-tap mobile payments around the corner.
When it comes to money, consumers want to be insured and cuddled and protected and not run the risk (however small) of being criminally liable for transactions and have someone to speak with if they make an erroneous transaction or have their card stolen. And they can already do all that, which makes it tremendously difficult to compel them to change the habits they've had for in forever to adopt a system that does not provide them with significant advantages.
I've been in bitcoin since 2011 and used to be a big believer, but I don't see bitcoin gaining traction with consumers, in part because of the huge regulatory risk. Any significant threat to the banks' business will be met with harmful regulatory control (friendly reminder: Wall Street banks fund the largest political lobbies in Washington). It could be destined to eternally remain an investment instrument (like gold) or find very targeted applications (like machine-to-machine payments). The underlying blockchain technology could be of more use (if adopted by the banking system, for example) but that is still far in the future.
And a new system would have to figure out a way to mitigate the regulatory risk.
Yes! The credit card is an amazing tool for consumers, and I won't be giving mine up unless I get something significantly more amazing in return (Merchants would need to offer 5-10% discounts on purchases with bitcoin, for me to begin to be interested).
But thanks for that, I wasn't aware.
Fortunately we have machines that are really good at keeping track of numbers and adding them up.
I expect Bitcoin wallets will just calculate your taxes for you automatically.
If anything, using bitcoin that have appreciated in value probably reduces the perceived cost of the item.
No. The cost of goods isn't affected by your taxes. You simply have to realize that your Bitcoin stash is pre-tax just as your 401k is pre-tax; spending it incurs a taxable event that means it's time to pay taxes on your gain, those taxes were always going to be due, the good didn't cost more, you're just paying your income taxes late since you haven't paid them yet.
That's not true. It took a while to convince my friends, but now we normally use bitcoin to settle restaurant bills and other debts that used to be difficult to keep track of and error-prone. It's not a godsend from heaven, but it works and is much better than what we used to do.
And there are plenty of other situations where you might owe each other money.
My credit union lets my transfer money to any other member of the credit union instantly with no fees. As it happens, nearly all my friends are members of this credit union (it's local and offers a much better deal than the banks) - and they have a mobile app so you can do it from your phone.
They've just added a general ACH function to it, to transfer to any account, but I haven't used it so I don't know if there are any associated fees. It doesn't mention any, but I associate the word ACH with some kind of fee.
So to me, this isn't a "find a new currency and financial system" problem, it's a "find a better bank" problem.
For the application in question (settling restaurant bills among a group of friends), Venmo looks ideal. No transaction fees, easy to use and flexible, no exchange rate issues, it's operated by a company that is actually licensed as a money transmitter in every state of the US, and no tax collection or reporting issues.
There are plenty of minor reasons to prefer Bitcoin, like how nobody can prevent you from accessing your funds for something like "suspicious activity".
But there are a some bigger reasons - if you're good with your security, you don't have to do things like check another statement every month to see if someone stole your account information.
Splitwise appears to be just a web2.0 accounting type app? I didn't see any mention of actually moving money around. Bitcoin isn't actually that great for splitting bills at the moment because wallets don't have Splitwise type features. But in theory once added it should be quite convenient, assuming you can tolerate the usual Bitcoin downsides.
I think you're right that currently there's not a whole lot of incentive for people to use Bitcoin in the USA, especially for local transactions. But the system is still very new. It's hard to know how things will work out in future. All we do know is that the payments market, especially the American payments market, is extremely stagnant. The USA is stuck in a timewarp from most of the worlds perspective despite a proliferation of little startups that try and do something hip with magstripe cards. I mean, this is a country where people still routinely use cheques. So it may well be that Bitcoin, as it matures and adds features, finds a way to be competitive against credit cards, especially now the rules forbidding price differentials are being struck down.
The IRS decision is a problem for sure, but it's also specific to one geography. The UK tax authority decided the same thing (Bitcoin is not a currency) and then changed their mind shortly afterwards. Bitcoin quite clearly IS currency by any reasonable definition that doesn't boil down to "a currency is whatever the government says a currency is", and so hopefully at some point the IRS decision would be changed in favour of common sense.
Or... you can be like everyone else and just have a guy go to the bank and grab a bunch of $5 and $1 bills when you know your group is getting together. CASH is the easiest way to settle debts and keep track of payments.
> I know nobody here likes to hear it,
For what it's worth, I do like to hear it! I have a very small amount of Bitcoin but just for fun, really.
That said, I'm not sure that "machine to machine payments" is all that small of a market, in the world that we're apparently hurtling towards.
it's also REALLY important to note that the way currency is defined in the tax code is different than how currency is defined for other parts of government, be it another arm for the treasury department (fincen for instance) or even the SEC. so even though bitcoin is not considered a currency in the tax code specifically, doesn't mean that it should be considered less of a currency. am i just talking in circles now?
i hope this answers your question.
There's one huge problem with your example: you have a short-term capital gain, not a long-term capital gain. Short-term capital gains are taxed at the same rate as your ordinary income.
but if you understand tax, then instead of, "the next day," my example should say, "a year and a day later."
Also -1 for disabling zoom on mobile devices.
http://www.coindesk.com/price/#2013-01-01,2014-03-31,close,b...
Edit: Or it would have been if the link worked.. But put the start date at 2013-jan-01.
And, if they enforce wash sale laws, you could be liable for totally innocent trades. That probably won't happen though.
It might discourage users from using their own wallets for transactions, but that's all.
And you don't have to do it at all for payments tendered for merchandise, or almost any payment to corporations.
http://www.irs.gov/instructions/i1099msc/ar02.html
who is living in the United States.
This was the expected outcome, if you didn't see this from the beginning, maybe you shouldn't be investing to begin with. I mean seriously, what did you think, that the IRS would allow untaxed gains to be kept?
Don't be an ass.
No one could have seriously thought the government would treat crypto-currencies like real currencies. The same people who all think cryto is going to displace fiat are all up in arms about crypto not being treated like fiat; it's a joke.
The smarter thing would have been to sell the BTC and then put away X% in a savings account (or a stable investment) with a plan to pay that money to the IRS. Then the (100-X)% could be spent freely without issue.
There were only two choices: Tax BTC as property, or Tax BTC as currency. In both cases, you owe somewhere between 15% to 30% of your earnings to the IRS.
The article briefly mentions a much more plausible reason for the sizable price drop, which occurred later: China cracking down on bank to exchange deposits. The writer just sort of handwaves it away.
There's no evidence that the IRS ruling pushed the price down, in fact there's plenty of evidence that it did not: the fact that the price did not move.
Meanwhile, there's plenty of evidence that China's action did affect the price. As soon as rumors began to spread, trades on the Chinese exchanges were happening at prices far below those on outside exchanges.
The Chinese exchanges led the market down every step of the way. (Naturally a price fall in China soon began to pull down prices everywhere, due to arbitrage, and an understanding that the probable withdrawal of Chinese money was very bad news for anyone speculating on the short term price).
Chart showing price remaining flat for 2 days following the IRS announcement on 3/25, and then falling sharply on firm news from China (Caixin report 3/27): http://bitcoincharts.com/charts/bitstampUSD#rg60zczsg2014-03...
It doesn't seem to make much difference. In its current form, Bitcoin already suffers from a lot of friction when used as a means of exchange. For the average consumer, buying it is difficult, storing it is difficult, the value isn't stable, using it for physical retail purchases can be very clunky.
It's a beta. A lot of things would need to work better for it to really succeed. In that context, the rather clumsy reporting requirements of the IRS ruling are yet another minor speedbump, which needs to be either ironed out or worked around.