Comment BitCoin is a bank (Score 1) 121
The IRS and many people, it seems, don't understand BitCoin. It doesn't help that the name also misleads in this way.
BitCoin is not analagous to actual coins, objects which can be exchanged. BitCoin is a distributed peer to peer bank.
Why is it a bank? A bank is no longer a store of actual physical objects, it is merely a transaction ledger. Transactions are logged that determine the number of tokens that a given account controls. Account balances and so on are merely a digest of this transaction log - the log is the thing.
BitCoin is likewise a transaction ledger. The rebuttal to the usual bone-headed arguments about people "copying" coins because they are just numbers reveals this. Unlike the transaction ledger of a traditional bank which relies on a lot of central security to prevent people writing to it, BitCoin welcomes people writing to it's ledger, and then farms out the task of deciding whether those transactions are legitimate to the network. Balances are again, merely a digest of the ledger.
A BitCoin wallet
A BitCoin is not an asset you hold. Transferring coins is a service the network provides (like any other bank). If your wallet is destroyed, no BitCoins cease to exist... but the network now has no way to transfer them (unlike a real bank, which can fudge it because it shares control of it's ledger with no-one).
BitCoin should really be BitBank
Your wallet should really be your "pass key".
But you can imagine how quickly the banks would have moved against it if it was called "BitBank".....
BitCoin are not assets. BitCoin is a service.