So, Joe decides to go on a long deserved holiday to Lovelyland, and purchases $2,000 Lovely dollars for $2,000 of his country's fiat dollar.
He returns from his Lovelyland holiday and goes to sell his remaining Lovely dollars, $1,000 as things were cheap and he was frugal. Much to Joe's suprise, oil, gas, diamonds, and the cure for cancer were all discovered in Lovelyland while he was away, and the Lovely dollar rose nicely. Joe end up recieving $2,000 of his country's fiat dollars for his $1,000 Lovely dollars.
1) Does Joe have to pay capital gains tax?
2) How is bitcoin different? (For those that purchase and are not professional traders.)
Not cap gains tax, regular income tax.
In the U.S. Joe has to consider all incidental gains on currency exchange over $200 to be regular income which is taxed at far higher rate than capital gains. There is only a short paragraph devoted to this topic.
Only trading forex gains and losses are subject to cap gains rates and then only if you opt for that treatment in advance of your trade. But taking that option may also cost you... There is a whole section devoted to this topic.