Property or Currency: The Tax Dilemma behind Bitcoin
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PROPERTY OR CURRENCY? THE TAx DILEMMA BEHIND BITCOIN
Scott A. Wiseman*
I. INTRODUCTION
As a result of monumental improvements in technology, a significant amount
of currency is spent across the globe in daily transactions made on the internet. A
recent trend in American culture is brick and mortar businesses shutting down in
favor of online counterparts.' Some of the many possible reasons behind this online
movement may be a decrease in overhead, a convenience factor for consumers, and
a drastically expanded market of consumers. In the third quarter of 2015, Americans
spent an estimated $87.5 billion dollars on online shopping.2 These e-commerce
transactions comprise an impressive 7.4% of total retail sales made in the United
States. This figure has increased dramatically from the 2.6% of total retail sales
made in the first quarter of 2006 and continues to steadily rise.4 Aside from the major
financial implication from online purchases made in America, the global market for
e-commerce is astronomical. Since it is next to impossible to pay on the internet with
cash, bank-issued credit cards are the predominate method of payment. With credit
cards, currency can be exchanged on the internet in the blink of an eye. However,
there are several drawbacks associated with the global use of these credit cards
including fees imposed by major credit card companies and the high risk of credit
card fraud. With a continually growing global economy that is largely fueled by
internet transactions, the world could benefit tremendously from a safe and
inexpensive globally accepted method of payment.
In 2009, the increase of global demand for e-commerce spurred a
programmer-or group of programmers-operating under the name Satoshi
* C 2016 Scott A. Wiseman. J.D. 2016, S.J. Quinney College of Law, University of
Utah. I would like to thank the editorial board and staff of the Utah Law Review for all of
their thoughtful comments and hard work throughout this process. Go Utes!
' For one of the many examples of businesses shutting stores to go online, see Jim
Kinney, UMass Replacing On-campus Textbook Store with Amazon, MAssLIVE (Jan. 13,
2015, 12:34 PM), http://www.masslive.com/business-news/index.ssf/2015/01/umass_
replacingon-campus bookstore.html [http://perma.cc/MYP9-TQ7Z].
2 Press Release, U.S. Census Bureau, Quarterly Retail E-Commerce Sales: 3rd Quarter
2015 tbl.1 (Nov. 17, 2015), http://www2.census.gov/retail/releases/historical/econm/15q3.
pdf [http://perma.cc/7JYK-E2FG].
3Id.
4 Press Release, U.S. Census Bureau, Quarterly Retail E-Commerce Sales: 1st Quarter
2006 tbl. 1 (May 8, 2006), http://www2.census.gov/retail/releases/historical/ecomm/06ql.
pdf [https://perma.cc/P64T-5ZAT].
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Property or Currency: The Tax Dilemma behind Bitcoin
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