I don't see how this doesn't cost us money unnecessarily, otherwise I wouldn't really care one way or another if we start accepting internet fun bucks.
The State is still going to do business in USD; looking at the volatility of USD/BTC exchange rate, exchange fees and infrastructure/training, I don't see how this is anything but a loosing proposition.
I don't see how this is anything but a loosing proposition.
Its a winning proposition to the third-party payment processor mandated to be contracted by the bill, and -- presuming the method of accepting bitcoins is that the payment processor takes bitcoins and provides the state with USD -- its not a losing proposition for the State so long as the bitcoin costs are set at a level such that the state always gets the full USD value of the taxes and fees.
So what happens when there is a massive fluctuation in price and that third-party payment processor declares bankruptcy? It's not like this is being backed by a major financial institution.
We're talking about a currency that could lose half it's value in a matter of hours. And when their total tax revenue is $3.2 BILLION, what third party processor is going to be able to soak up the potential losses?
Q: "So what happens when there is a massive fluctuation in price"
A: Nothing, as all bitcoins would be instantly converted into US Dollars removing all currency volatility risk. I directly made sure that was in the bill to address that concern.
Best,
Rep. Schleien
Prime Sponsor of New Hampshire House Bill 522
What can 'instantly' possibly mean in this context?
"Before the transaction with the State is legally considered complete and the taxpayers liability settled" would seem to be the relevant thing.
The taxpayer might lose in this case, but the State would not (and, the risk the taxpayer faces is pretty much the same risk as they would face holding money they need to pay taxes in bitcoins whether or not there was a standard payment processor for bitcoin-to-pay-taxes for the state.)
Using a payment processor like BitPay would allow this. Essentially you click to pay in bitcoin, you redirect to the BitPay site, you pay them bitcoin and they transfer the USD value to the recipient (in this case the state).
So an individual could pay $10k in bitcoin and the state would receive $10k in USD. BitPay currently offer their service for free that would meet these requirements.
So who is giving BitPay cash for the coins instantly? Are there literally buys just chomping at the bit, even when the market is in a downward trend, to buy coins from BitPay, for cash, instantly after they put them up for sale? At some point the piper has to be paid, and if it isn't a large financial institution, I'm still not seeing how this plays out. There has to be someone to soak up the massive loss in value...
As far as I can tell, BitPay has less than $100 million in investment, I don't see how that even comes close to covering the risk.
Bitpay uses exchanges such as Bitstamp to sell the coins immediately. There are plenty of buy orders there to cover these purchases. Note that this doesn't mean every tax bill is due to be paid by bitcoin but individuals could if they wanted to.
Perhaps you are unfamiliar with bitcoin, I'm not sure. For every seller on a exchange there is a buyer. Yes if there happened to be a flash crash this may be an issue but generally this hasn't been a problem. As an example, bitpay will lock in the dollar value for a 10 minute period, as long as you pay in that window they guarantee the retailer the USD value and the buyer the BTC price. To achieve this they would keep some funds in btc all the time, then when a sale like this comes in they sell the equivalent amount (or a part of it) to hedge against future fluctuations.
I think you are thinking that the states entire tax revenue would come via this method, currently I doubt there are enough BTC in that state to achieve that outcome. But anyway this proposal is feasible as it currently stands.
Effective January 27, 2013, this was no longer against the merchant agreements with Visa and Mastercard (it was previously).
Whether there is a state law forbidding the practice (or more likely, requiring specific language to advertise the 'cash discount price') is likely to vary by jurisdiction.
True, yet paying your taxes by credit card has always had fees, for the last decade or two. The government really has zero incentive to accept credit cards and eat the fees, so I'm guessing the credit card companies allowed it in this case.
Comments
I don't see how this doesn't cost us money unnecessarily, otherwise I wouldn't really care one way or another if we start accepting internet fun bucks.
The State is still going to do business in USD; looking at the volatility of USD/BTC exchange rate, exchange fees and infrastructure/training, I don't see how this is anything but a loosing proposition.
Its a winning proposition to the third-party payment processor mandated to be contracted by the bill, and -- presuming the method of accepting bitcoins is that the payment processor takes bitcoins and provides the state with USD -- its not a losing proposition for the State so long as the bitcoin costs are set at a level such that the state always gets the full USD value of the taxes and fees.
I don't see how its really a losing proposition.
So what happens when there is a massive fluctuation in price and that third-party payment processor declares bankruptcy? It's not like this is being backed by a major financial institution.
We're talking about a currency that could lose half it's value in a matter of hours. And when their total tax revenue is $3.2 BILLION, what third party processor is going to be able to soak up the potential losses?
Q: "So what happens when there is a massive fluctuation in price"
A: Nothing, as all bitcoins would be instantly converted into US Dollars removing all currency volatility risk. I directly made sure that was in the bill to address that concern.
Best, Rep. Schleien Prime Sponsor of New Hampshire House Bill 522
What can 'instantly' possibly mean in this context? The same day? minute? millisecond? Triggered by how big of a change?
"Before the transaction with the State is legally considered complete and the taxpayers liability settled" would seem to be the relevant thing.
The taxpayer might lose in this case, but the State would not (and, the risk the taxpayer faces is pretty much the same risk as they would face holding money they need to pay taxes in bitcoins whether or not there was a standard payment processor for bitcoin-to-pay-taxes for the state.)
Using a payment processor like BitPay would allow this. Essentially you click to pay in bitcoin, you redirect to the BitPay site, you pay them bitcoin and they transfer the USD value to the recipient (in this case the state).
So an individual could pay $10k in bitcoin and the state would receive $10k in USD. BitPay currently offer their service for free that would meet these requirements.
https://bitpay.com/pricing
so to answer your question instantly means instantly.
So who is giving BitPay cash for the coins instantly? Are there literally buys just chomping at the bit, even when the market is in a downward trend, to buy coins from BitPay, for cash, instantly after they put them up for sale? At some point the piper has to be paid, and if it isn't a large financial institution, I'm still not seeing how this plays out. There has to be someone to soak up the massive loss in value...
As far as I can tell, BitPay has less than $100 million in investment, I don't see how that even comes close to covering the risk.
Bitpay uses exchanges such as Bitstamp to sell the coins immediately. There are plenty of buy orders there to cover these purchases. Note that this doesn't mean every tax bill is due to be paid by bitcoin but individuals could if they wanted to.
Perhaps you are unfamiliar with bitcoin, I'm not sure. For every seller on a exchange there is a buyer. Yes if there happened to be a flash crash this may be an issue but generally this hasn't been a problem. As an example, bitpay will lock in the dollar value for a 10 minute period, as long as you pay in that window they guarantee the retailer the USD value and the buyer the BTC price. To achieve this they would keep some funds in btc all the time, then when a sale like this comes in they sell the equivalent amount (or a part of it) to hedge against future fluctuations.
I think you are thinking that the states entire tax revenue would come via this method, currently I doubt there are enough BTC in that state to achieve that outcome. But anyway this proposal is feasible as it currently stands.
Ah. I misconstrued the comment to mean the conversion would happen upon some massive fluctuation. Thanks for the clarification.
I've been in contact with BitPay directly. They would be in my view certainly suitable for this kind of thing.
And yes instantly means instantly.
Eric Schleien Prime Sponsor
Just seem this, good work on getting involved.
They charge extra to accept credit cards, they could easily charge extra for bitcoins to cover fees.
CC merchant contracts used to forbid this, IIRC.
Effective January 27, 2013, this was no longer against the merchant agreements with Visa and Mastercard (it was previously).
Whether there is a state law forbidding the practice (or more likely, requiring specific language to advertise the 'cash discount price') is likely to vary by jurisdiction.
True, yet paying your taxes by credit card has always had fees, for the last decade or two. The government really has zero incentive to accept credit cards and eat the fees, so I'm guessing the credit card companies allowed it in this case.