Another indicator of wider acceptance: PCMag is accepting only BTC and ZEC as their cryptocurrency payment options. 

ZEC jumped a few days ago because JP Morgan is hiring the ZEC team to use the technology. This caused it to double but they will not be using the coins. Some say it just made more people aware of the technology. 

ETH jumped 3x on Alphabay news and XMR jumped 6x. Now ZEC is the 4th buying/selling option.

I agree with the previous poster: XMR head honcho insisting that it's not intended to appreciate in value has made followers unhappy, but it seems the real off-putting thing was dissing ETH. 

In other good news for Zcash: ZEC's clone zclassic did an ETH-type split, but some say it has had the effect of being a pump and dump since the best way into get in the new one was to buy the old one "but we'll support both". 

ZEC ranks #13 in market cap.  It should rank #8 beside Monero which would require a doubling.  Serious alphabay users should want Zcash over Monero due to mathematically provable anonymity verses Monero's security by obfuscation. But Monero's only 2% of Alphabay.  The BTC merchants and buyers should want ZEC for speed (2.5 minute blocks). 

Blockchain/Crypto technologies are not fixing the "trust" problem.  They are enabling the tying of contracts to enforcement via currency without the cost of lawyers, bankers, and sheriffs.  The problem in not achieving trust always comes down to getting the external world to merge with the blockchain contracts.  In other words, there is "trust" only inside the cyber system, not in the real world. Take the example of a crypto-currency. It is a specific and special type of contract that is between the blockchain and its users, whereas all the other contracts may not involve a fixed rule that is married to the blockchain protocol. The non-currency contracts are just interested in using the blockchain "protocols"/language to execute contracts.  Even when setting aside the problems of 51% attacks, inherent errors, lazy core developers, and rollbacks by core developers with or without consent of the community, we can't trust the value of bitcoin over time due to there being no external connection except users perception of its value on exchanges.  Even across space the value is not stable because a "dollar" is not worth the same in all places (purchasing power parity, McDonald's hamburger standard, etc).  This is not a problem the blockchain can solve without resorting to an M of N system that resorts to trusted oracles such as a basket of commodities as measured and reported by large exchanges, which is only a higher degree of trust rather than absolute, but still subject to political, technological, hacking, or financial influence affecting the oracles or the exchanges they are looking at in London, New York, Chicago, and Hong Kong.  

The trust issue can be solved if the cost of verifying transactions can be hard-coded into the blockchain protocol as a fixed percent of the value of the transactions.  The Fed thinks 2% annual inflation is a good thing, and actually since debt erasure has always been the solution to broken economies, 2% inflation as a slow debt erasure may not be a bad idea. Jews used "Jubilee" to do this every 50 years. New Kings usually came to power as a result of economic crises and immediately erased all debts to get rid of old power structures (like BANKS and existing GOVERNMENT, aka "lords"). It worked well for everyone at the end of WW2 and not doing it at the end of WW1 is what caused WW2.

OK, so 2% annual value of the total amount of transactions on the blockchain could be the "tax" imposed by the blockchain to support it's computational and security costs.  Not taken out of transactions, but new money created.  Transactions are free, but wealthy coin holders are taxed if they are just hoarding and not participating in the economy, as it should be.  Bitcoin idealism is a dream of the wealthy and a nightmare for the poor and indebted.   "Tax" is the right word because the ultimate goal is for the blockchain to replace government, banks, and enforcement personnel with a much smaller group of computer technologists, as is occurring in all other sources of employment because brains are the last remaining foot-hold humans have as useful entities in the free market.

2% inflation is actually a fixed value for the money if the transaction weighted volume increases 2% per year, as the economy improves, or adoption of the currency increases to a larger marketplace.  This assumes hoarding as a result of speculation in an big increase in future transaction volume is not occurring (as in bitcoin's history so far). This increase use of the currency by the marketplace has been the key to U.S. success since WW2, and its impending nightmare if all those dollars come home in a sovereign debt crisis due to our abuse of that power (ability to "enslave" other countries at a lower cost, thereby losing our real-world useful employment and switching to non-productive employment such as services, banking, military, and government).

Server node operating payments could be more or less than 2%, fixed to the expansion of the weighted transaction volume, so the technologists win or lose if the "economy as measured by transactions" wins or loses, and there would be no inflation or deflation.  This keeps contracts valid in terms of value for all future time, but this rigid enforcement of the "debt" of past blockchain contracts does not have any good historical precedents as I explained above.  To solve the problem of having to choose between inflation and lords, the measurement of the transaction action volume would need to be multiplied by happiness per median person, so that if happiness goes down, the wealthy lose. So they should spend their money on investments that increase the happiness of all.  The measurement of happiness would be another M of N system of contracts and oracles, that somehow strongly guards against political (money) influence.  In the real world we use a separate currency called 1 vote per person to try to make this happen. The only way I see to make this happen is for a biometric security device to lock each person's DNA to the awareness of the blockchain system of voting if not a wider range of contracts.  Voting would merely be saying if your happiness or unhappiness increased or decreased since the last vote, or by joining a separate DAO (local, regional, or state government).  In the nested hierarchy of competing governments, those improving their citizen's happiness the most could be copied, or expand in citizens directly.

Trust will be achieved if the median happiness per citizen of the DOA on the blockchain is increasing. Not if the wealthy are made more powerful as in the bitcoin and gold systems. Not if there is inflation such that wage and price contracts are invalidated over time (or space as in other countries).  Not if stable value is achieved at the expense of monopolies and externalities or an increasing wealthy class.

The amount of information in each sentence I wrote is a lot, approximately equal to a whole thread of conversation I see in this forum. I encourage both of you to put on your thinking caps and try harder with more patience.  My English is very clear.  The problem is that I am trying to convey too many ideas in a very small amount of space, even as it is a wall of text.

I just posted a 7 page article to the bitcoin developers forum but it is more properly placed here.  A link to that thread is below. Please comment if you have had similar thoughts. Regrettably, I've only seen one other person here who has been thinking along these lines, and none of the speakers in the bitcoin conferences seem to be aware of this bigger picture of where this technology is going.  Butrik's "distributed consensus platform" is true but so overly general that it turns out inadequate if not dangerously socio-pathetic in enabling destructive anarchy to its own detriment. The main video on the Ethereum web site has several errors. Not knowing the bigger picture also prevents an understanding of how initial coins should be distributed. The 3rd post in the link below should be read before the first 2.   

https://bitcointalk.org/index.php?topic=659131.0

In summary, I have felt some regret that M of N methods may be the only way to tie the syntax of Ethereum, etc to the semantics of the outside world, and in particular to our main interest, human society.  However, bitcoin is already based on a competitive M of N method. M of N forms a logic gate that is Turing complete when M of N "contracts" are "wired" together in a minimally sufficient way, which at least requires feedback and memory states before being provably capable of being a complete "computer".  But by not being as simple as a 2-input universal NAND gate, having more inputs, it is also fault tolerant and used extensively in recognizing patterns as in the brain, economics, evolution, and artificial intelligence.  (note for A.I. readers: Bayesian networks, Numenta's CLA, and Neural Networks are logically reducible to M of N and can be made Turing complete when feedback wiring is included. )  When tied to a currency that represents the total available resources falling under the jurisdiction of the legal system that the system of M of N contracts represent, the network of M of N contracts can be designed (via politics affecting the legal system) to evolve on its own to make more efficient use of the system's resources to make more agents behind the M of N contracts .  At the risk of off-putting the reader with an overly-grand suggestion, this might be the "meaning of life" or the "definition of intelligence".  The M of N contracts need to be enabled to competitively evolve, fed by the legal power over the real resources (represented by the currency) in order to make imperfect copies of themselves. I'll say more on this negative-entropy generation idea later.

In at least some of these intelligent networks of M of N of operations, the currency is not the only distribution of power.  There are also usually mechanisms to prevent the currency from being concentrated into the hands of a few M of N agents, which could act like viruses or cancers.  In society we use functioning democracies (arguably this does not include the U.S.) or advanced vote-like communism (arguably like China, whose government is economically empowering the people out of a fear of a USSR-like breakdown and real fear of the people themselves) to prevent kings and oligarchies. The purpose of 1 vote per person is to prevent legal power from being accumulated in the hands of a few white Christian wealthy men, as occurred in the past. By giving more power to women, blacks, non-Christians, and the middle-class (via progressive tax of the 1950's), democracy is able grow faster and overthrow other systems of governing via economic power.  In evolving artificial intelligence methods this is seen as a redistribution of computing resources if a few agents are acquiring too much computer power and thereby settling on a specific solution that may not be the optimum solution. In biological evolution species-diversification is regarded as healthy in finding future solutions to the survival puzzle.  The puzzle is really about acquiring as much energy as possible to make as many DNA-base pairs as possible.

Getting off the track of a summary in order to address something I've left out....

In order to tie the votes and thereby economic health to people in these M of N contracts, the individual agents behind the contracts (people) to which I assume all readers of this post ultimate care or should care about, it is necessary to prove the existence of specific people who are behind the contracts.  This is not only needed for voting, but for enforcement of the contracts.  This does not mean identities should be public, but only that the contract system itself should be aware of individual "IP addresses", unless a physical force needs to be applied (incarceration).  Some will want at least a portion of their cyber-identity (not necessarily their complete cyber or any of their physical identity) to be public in order to build trust as in name brands, selling stuff on ebay, getting a job, and dating.  In order to do all this, a physical device(s) is needed. It should be capable identifying a physical individual based on multiple bio-signatures before they can interact with the system of M of N contracts, including the currency which is in a sense a top-level M of N contract that runs parallel with intelligent and hierarchical voting M of N contract (but I do not advocate democracy as ideal) as a check and balance if not optimization process on the distribution of the currency, to not only see if the system is achieving its goal of maximum happiness per median person, but to optimize the process.  Competing, non-compatible systems of M of N contracts with different currencies would struggle for more citizens to leave other systems to join their own. Instead of fighting to keep citizens out or locked in, these "socio-economic-politico" governments would fight to provide the most benefits to the best and brightest.  There would be local competing governments like this that still fall under a more regional government, leading up to world government.  Without world government limiting the competition, we should be prepared for real war and more brutal economic competition for happiness and food. The world government would not let us be too lazy or local "viruses" and "cancer" will develop. Utopia is now technologically possible with world-wide communication to prevent war and reach agreement, even optimum agreement for all.

Getting back to a summary...

The ultimate goal of life is to extract energy to make copies. Although this increases entropy system-wide, the copies are a local increase in real physical and informational order (negative entropy) that is the foundation of what we perceive as "good" about life (a la Schrodinger's paper "What is life?).  Energy is converted to copies instead of being locked up in potentials or converted to waste heat. This is a rapidly growing re-interpretation of evolution.

The system needs an agreed-upon goal that the core programmers need to be thinking about if they want to avoid enabling just as many bombs as benefits.  This is arguable since nuclear weapons did not destroy us and the blindness of the internet protocol has served us well. But by being intrinsically capable of bombs much more than the internet, the acceptance and legitimate use of Ethereum or Zerocash -like methods may get backlash.

These are the highest-level ideas concerning where this technology is going, or should go, that I do not see written elsewhere, including Nick Sabo and Wei Dai.    

I can stuff 1,000 pounds of lead in a 1 pound sack of feathers...and keep the feathers inside.

An M of N system is a multiple-input AND gate operation with a threshold value of M that determines activation of the gate (logical output of 1). Likewise, synapses form an M of N operation on the segments of dendrites in neurons.  Numenta is using this in their A.I. modeling of the brain.  But this "voting" (M of N gate) is not limited to segments on dendrites. The chemicals in each synapse and group-level activation of neurons are also a "voting" schemes above and below the segments.  These voting schemes are hierarchically nested not unlike city/county/state/country/world politics and work-team/department/division/company/industry/country/world in economics.  If these nested AND operations are only semantically different from NAND operations, then a complete Turing machine can be implemented by these structures. Each system has different methods of "wiring" the flow of the decision-making 0's and 1's (or the analogous analog signals) but those signals are always of finite supply and represent the finite supply of real energy or materials of the system to get the computational work done. In a corporation and government its money. In a brain it's food energy. In a computer it's CPU power.  If you are writing an evolutionary A.I. program to maximize computing power, the algorithms compete to obtain "money" that buys more CPU time.  This is the purpose of a currencies, so it should not be forgotten when working on Ethereum and Bitcoin that the importance is of a cryptocurrency is to define what the coins are referring to.  In bitcoin it is total computing power wasted. It works only because humans are making this wasted computing power a fraction of the semantic real-world value (dollars) which will ultimately be connected to transaction fees.  But POW and POS are not ideal: proof of capability is ideal, and that the actual computing resources be used to provide the ethereum-like contractual development and computations that are enforced by the associated cryptocurrency (which is a contract itself, unique in that it is what holds all the other contracts together and in some sense the top level).  The nested hierarchy of contracts is an algorithm seeking an objective in a way that distributes the coins to those agents that are best helping the system achieve its goals. Agents given equal votes in the design of the system is another currency based that helps keep the coins from being concentrating into the hands of a wealthy few at the expense of the health of the system (1950's style democracy and taxation prevented our current system of capitalistic and financial system oligarchy). In human society the goal should be to maximum median happiness per person to prevent excess polarization of happiness and wealth but also to prevent overpopulation by making it per person rather than blindly maximizing total GDP which destroys the biosphere without regard to human happiness.  

The current finance and banking systems are a 51% attack on the flow of currency in democratic countries. They have control of the core developers who were voted into place (the government).

So yes, it is great Ethereum is Turing complete so that it allows the above. But there should be an awareness by those implementing contracts on top of it that  there should be an ecosystem of contracts, that M of N is possibly ideal, and that the fixed-quantity of currency should be normalized to the total capability of the contract ecosystem to compute.

* Notes: Although more complicated with inhibitory (NOT inputs) and other things, the segments of the dendrites and dendrites can be logically restated to an equivalent Boolean operation of NAND if not AND gates, because the difference between NAND and AND gates might be a semantic definition of "NOT" on the inputs.

Miners reaching agreement via POW or POS seems to be another M of N system based on competition.  This may be the best possible method of preventing "viruses" and being fault tolerant (via parallel checks) at all levels in this new technology, from individual contracts, to setting value (bidding on exchanges is a competitive M of N algorithm), to verifying the blockchain.  There seems to be no way of preventing "viruses" in computing systems that have the ability to evolve, so that core developers making unilateral and key decisions may always be needed.  They themselves are a competitive M of N system of evolving algorithms (brains).  Pattern recognition also uses a nested hierarchy of M of N competitors.  Life evolved patterns that "recognize" survival in this way from base pairs to triplets (amino acids) to proteins to cells to organs to bodies to species to ecosystems. Competitive evolution occurs at every level, not restricted to the "gene" level. Notice the lowest level stays around the longest without changing.  The mid-level changes the most rapidly.  The internet protocol has been the lowest level for copyable "public" bits and has survived well. The bitcoin and ethereum protocols for these amazing uncopyable "private" bits need to find agreement at some point (and maximum simplicity) before the marriage between the public and private bits can occur.  The ultimate goal for humans that want to engage with these systems is a better marriage between individuals and society for the benefit of both.  All for one and one for all, contractually defined, discovered, and enforced.  What else is society good for if not to reward individuals via various (crypto)currencies (political, financial, social currencies) according to various hierarchically nested competing sets of (crypto)contracts that together constitute a (crypto)governed-economy?  Each fixed-quantity currency represents the total value of the societal asset(s) that the governing set of contracts are competing to re-distribute among the citizens that have joined that governed-economic system.  Anarchic privacy may not be the most important end goal as Zerocash et al could achieve. Provable identities within the governed system might remain anonymous to others in the system, but not to the system of contracts. This might be a key to everything we want as social creatures.  Absolute anonymity is required by those wishing to profit without regard to the cost to society as a whole.  If we keep the system perfect and pure, the economic and governing systems that evolve from this internet-"bitcoin" marriage will not view humans any different from any other intelligent agents on the system. Humans are outdated. Companies are working fast and furious to replace them with machines. If our governing system becomes pure without regard to human status (and thereby eliminate many things from welfare to war), that desire to replace humans with more efficient machines can become system-wide.  Photosynthesis is 100 times less efficient than solar cells. The current 6th great extinction of episode we are in will continue as the biosphere is replaced with machines.  

Like bitcoin, Tellurium is distinct, rare, divisible, and supply-constrained.  It is more supply-constrained than gold, and it has a real-world use that determines its value in terms of joules of energy instead of personal opinion or speculation.  Unlike bitcoin which requires energy, it creates energy which determines its value. 1 gram Tellurium will help produce about 1000 kWh in the 30-year lifetime of a CdTe solar cell before needing to be recycled.  It is currently the lowest-cost method of producing energy in desert-like conditions.  Likewise, a gram of silver in the contacts is required to produce each 1000 kWh of silicon solar cell electricity. silicon solar is the low-cost leader on roof-tops and more northern latitudes. They have been looking for a silver substitute for 40 years but have not had any economic success with alternatives.  So silver and tellurium have equal energy-production value and therefore might arguably be justified in having the same price based on energy production, especially if silicon solar cells continue in their expansion. They will be 50% of silver's use in 5 to 10 years.  As copper mines switch to newer technologies, the older methods that allowed for tellurium extraction are no longer feasible.  Tellurium and silver supply (price) will determine how many solar cells are made for the next 20 years as other technologies take up the slack.  As solar cell production costs reach $0.05/kWh over 30 year lifetimes and if tellurium and silver consume 5% of this production cost, then 1000kWh*$0.0025/kWh = $2.5 per gram value of Te and silver based on their energy-production capability, about 5 times more than silver's current price and 20 times tellurium's. So this $130 bar I offer is arguably worth $2,600 in a real sense.  When bitcoin hits $10,000, I'll buy back my sold tellurium.  

I'll trade a 2 pound ingot bar of tellurium for 0.2 bitcoins. It's 99.7% purity, so it's currently worth in China and the U.S. roughly $110.  Maybe slightly lower in Europe. So my current bitcoin price is about 10% high.  On the other hand, there is probably not any other place to get small quantities of tellurium for this price.  It's toxic and should not be touched with bare hands or melted where vapors can be breathed. It is not considered as toxic as lead or cadmium, but you can safely touch lead. It seems to be usually safely excreted from the body like it's sister compound selenium.  Sign of exposure is garlic breath. Harm from exposure generally seems mild and not lasting, but exposure and epidemiological data is limited. It seems to not be cancerous and affecting the nervous system seems like it might require an extreme and unlikely form of exposure such as intense exposure to vapors during smelting.  If interested, send me a private message.  Tellurium is one the rarest elements, produced at about 500 tons per year, used by FirstSolar to produce solar energy from CdTe.  Tellurium is produced from copper mining which contains it at 100 to 150 ppm as an impurity.  If copper production tanks at the same time electrical energy from the desert is needed, then tellurium will increase in value.  A couple of years ago it was worth 4 times more than this price I'm offering, but in the distant past before firstsolar and the metal commodity increase since 2000, it was 1/10th as much.  

Is there a website that can help people trade like this?    It seems ebay and paypal are outdated.  Seller's reputation would be the only "recourse" a buyer has and sellers do not need recourse.  And by using coinbase, conversion to dollars is 1% instead of the combined 15% ebay and paypal charge.  An ebay-like website with bitcoin and using coinbase as the conversion to dollars should add another 1%, but still that's a lot cheaper than trying to be a seller or buyer on amazon or ebay.  Bitcoin should begin by replace amazon and ebay.

I'll trade a 2 pound ingot bar of tellurium for 0.2 bitcoins. It's 99.7% purity, so it's currently worth in China and the U.S. roughly $110.  Maybe slightly lower in Europe. So my current bitcoin price is about 10% high.  On the other hand, there is probably not any other place to get small quantities of tellurium for this price.  It's toxic and should not be touched with bare hands or melted where vapors can be breathed. It is not considered as toxic as lead or cadmium, but you can safely touch lead. It seems to be usually safely excreted from the body like it's sister compound selenium.  Sign of exposure is garlic breath. Harm from exposure generally seems mild and not lasting, but exposure and epidemiological data is limited. It seems to not be cancerous and affecting the nervous system seems like it might require an extreme and unlikely form of exposure such as intense exposure to vapors during smelting.  If interested, send me a private message.  Tellurium is one the rarest elements, produced at about 500 tons per year, used by FirstSolar to produce solar energy from CdTe.  Tellurium is produced from copper mining which contains it at 100 to 150 ppm as an impurity.  If copper production tanks at the same time electrical energy from the desert is needed, then tellurium will increase in value.  A couple of years ago it was worth 4 times more than this price I'm offering, but in the distant past before firstsolar and the metal commodity increase since 2000, it was 1/10th as much.  

Is there a website that can help people trade like this?    It seems ebay and paypal are outdated.  Seller's reputation would be the only "recourse" a buyer has and sellers do not need recourse.  And by using coinbase, conversion to dollars is 1% instead of the combined 15% ebay and paypal charge.  An ebay-like website with bitcoin and using coinbase as the conversion to dollars should add another 1%, but still that's a lot cheaper than trying to be a seller or buyer on amazon or ebay.  Bitcoin should begin by replace amazon and ebay.

Coinbase works smoothly.  If you do not trust that they are giving a fair price as reflected on bitstamp, then transfer the coins to bitstamp and do it there manually.  From what I can tell, they are doing at least that well, matching what I see on bitstamp.  I posted earlier that it seemed I could "game" them a little, but now it seems to working more smoothly and quickly.  But they should state what price per coin you got after the transaction's done.  You have to manually do the calculation.

No, I just gave an example where a lot of people were buying and selling last year, especially if they had a lot of bitcoin, and that they now owe a lot of tax if they use FIFO instead of weighted average trade, and therefore may need to sell BTC to pay taxes.  If they had the same crystal ball as me, then they would not be selling before April 15.  Sure, Gox and China has an effect, but those effects were strong as it happened, and yet uncharacteristically the price is staying low, and dropping lower even as Gox became old-news (more than a week). It's been 7 weeks since Gox imploded and the low from that was $500...then it rose to $700 before the official confirmation of China's position.  This latest news did not even seem like news to me.  It seemed like everyone was expecting it.  

It dropped to $350 just 5 days before checks to IRS are in the mail and is now rising up to $500, 5 days later as it is now too late to be cashing out and trying to get money in the bank before the IRS cashes your checks.  Big dummies. They shouldn't be using FIFO and not need to sell bitcoin to pay taxes.  Admit it.  I know some of you reading this have done just that, and now you have to watch it go back up to $800 in a month, double what you used to pay taxes, so instead of 28% tax rate you actually paid 56% tax rate.  Long-term trend for bitcoin is $800 as of today.

I've been very happy with coinbase's system for the opposite reason.  They were (at least when I was trading) matching in near-real time bitstamp prices and bitstamp would have these large swings up or down, usually corresponding to low volume ... lower than what I would buy at coinbase.  Working between the two, I got 5% excess profit 2 times last year, and someone had to absorb that loss because the volume I got at a low (or high) price was more than the volume that transpired on bistamp.  So coinbase and/or bitstamp had to absorb that loss.  Conversely when you lose on trades, one or both of them accidentally gain.  I was looking for it because after reading about their agreement with bitstamp, I wondered how they were going to be fair to everyone and keep their profit always at 1%.  The answer is that they can't.  They have to gain and lose on trades accidentally (beyond what their programming and agreement is able to deal with).  It is not possible for them to give the exact price on bistamp because they are not directly on the exchange.  This is why coinbase has a limit on trades. You've got 50 coins per day to use, if you want to "work the system" at someone's loss, you've got to make the right guess or be the loser yourself.  You can't do a bot at coinbase, so the competition in that type of "trading" environment is diffrerent. There would have to be a serious merger of the trades to get exactly 1% profit on every trade.  I trust they are trying to be as fair to everyone as possible.  

If you bought and sold a lot of bitcoin last year, then you know EXACTLY why bitcoin price has been falling and staying low the past 2 weeks and why today it is finally rising.  Anyone who has a lot of bitcoin relative to their income and net worth are going to have to sell bitcoin in order to pay taxes, and it is retro-active for past years.  If they're listening to half-educated professionals saying to use FIFO method (first-in first-out) instead of a weighted average of all their bought and sold trades....then they really messed themselves up.   Imagine someone unemployed or retired and bought 200 coins last year at $200 each, a "typical" $40k trade for a lot of the guys who are serious about bitcoin and keep silent.  The people posting here are more like $4k traders.  Then they sold last year at $1000 each because they are not stupid.  Then they bought back at $800 because they are not stupid.  So now they own $50k in taxes in addition to losing about $5k in deductions and credits, if they used FIFO instead of the averaging method for their trades.  Using the average method, they would owe only $10k in taxes (and their cost basis for the future is lower, so the tax burden is shifted to future years).   The reason for being allowed to choose between FIFO and average is just for cases like this: FIFO can be incredibly unfair if your trades are causing large swings in your adjusted gross income.

So if you want to know why bitcoin is falling, it's because large bitcoin holders are using FIFO instead of average method for their taxes.  Give it another month and it might be about $800, and still people will keep posting these threads, not understanding the tax consequences.

People are selling coins in order to pay their taxes.  It will probably go up after April 15.

Why do people keep repeating the coindesk hogwash that the tax rule is unexpected or bad?  This is the exact same treatment any other foreign currency gets.  It will probably even publish an official exchange rate on December 31, 2014 along with all the other currencies.  There are no taxes if bitcoin stops changing value relative to the dollar.  Why are people complaining about having to pay the lowest possible tax rate on getting profit for doing nothing?  And if you lose money from it decreasing, then it's a tax write-off.  In terms of taxes, this is win-win-win (lowest possible tax rate, deductible, and declaration that it is same as a currency). I am astounded by the stupidity shown in this forum.  Makes me want to sell my bitcoin.

I would like to point out a few things this thread is omitting.

1) I do not know why anyone would be surprised by the ruling because it is a limited-supply digital commodity AND digital currency. Read "digital" as "better" in terms of ease of exchange, as merchants get on board.  There was never any reason to think that it would not be treated like any other commodity or FOREIGN CURRENCY subject to normal capital gains.  The IRS publishes an official December 31 exchange rate on all currencies so that you can calculate your capital gains.  Currencies are commodities, subject to normal supply and demand rules. The only difference is that your government defines which commodity (currency) you must use to pay taxes in and therefore if you have capital gains or not (none in the case of the asset/commodity we call "dollars").  We used to pay taxes in silver, a era commodity that was historically also called a currency. The best currency is the commodity that can't be counterfeited, can be easily transported, and changes the least relative to a basket of the most common commodities so that true economic value remains unchanged since traditional commodities (physical or energetic as opposed to currency) are the fundamental inputs to society.

2) Therefore the IRS has declared bitcoin is the same as foreign currency.

3) I do not know why coindesk wants to keep slamming bitcoin over this *expected* tax clarification without any rational consideration, discussion, or explanation.

4) The current drop is partly due to people selling in order to pay their taxes. I am sure MANY bought below $200 sold a largish portion above $1,000 and therefore they are paying 50% taxes in terms of late-2013 bitcoins instead of 25% because the coins are now worth less than half of where they made the profit.  For example, if you bought 100 bitcoins "early" last year at $100 and sold 50 at $1000, you have $45k in short term gains, and used the money for something else. Today they would have to sell 25 coins to pay the taxes, a 50% tax rate in terms of bitcoins.  I'm holding at least until a few weeks after April 15.  

5) If a miner declares it a business, he owes 15% social security/medicare in addition to 33% in federal income taxes  (48% plus state taxes) if he made a substantial amount.  I don't know if he can do it, but it would be good to call the expenses a loss on the capital gain investment (cost basis) and get the 15% rate instead.  The only other way to lower the 48% is to declare it treatment like a C-corp with dividends and declare a low "salary" to get the self-employment tax down.  Or start a SEP IRA for the business and lock up to 20% of the profit in the IRA and not have to pay today's taxes on that portion (but taxed when withdraw at your "retirement" tax rate (without SE tax?).  Then don't forget you have to pay for your own health care and in some places your children's education to get something decent, and you can't really expect the social security retirement to ever come through, whereas normal countries offer these things in exchange for a similar tax rate.  All military-dominant societies like the US collapse like this: by using an excessively strong currency and debt structures (IMF/world bank) to force other populations into excessive labor and getting access to cheap commodities. The colonial slaves (Asia in our case) become the only experts as the empire citizens get too lazy. The slaves then can make better deals with the commodity producers (S. America, Africa, Arabic oil, and even Australia) so that the empire's currency is no longer able to get cheap access to even the commodities even if it tried to produce things again.

6) If its dollar value does not change there are no taxes owed.  Why is coindesk acting like making a PROFIT from doing nothing and having to pay taxes on it is a death blow to bitcoin as a currency which is not supposed to be increasing in value?  Even the sting of a loss on bitcoin is reduced by the tax deduction.  If you are willing to take the risk on it losing value, there is nothing new here except that the IRS has made the obvious and expected definition the rule.

Ethereum needs a generally-agreed-upon cryptocurrency to work hand-in-hand with each group of contracts that its users implement.  But if the contracts are going to be world-wide and if you are going to let contracts be "object-oriented" and thereby "cross borders" and "mix and match" with unknown or unforeseen contracts, then there needs to be a standard currency for all contracts in that overall legal structure, enabling object oriented capabilities.  It seems something like zerocoin and/or bitcoin may be needed to fulfill this function, but I can't think of a reason why the agreed-upon currency can't be another part of ephereum, as long as it can provide for limited supply of the currency.   The contracts could specify following a basket of commodities, but there might some details in indexing that may make this less than ideal, and without limiting supply of the currency, contracts simply making promises in terms of a basket enables debt-generation that can create a currency bubble .... unless the contracts are subject to a higher-level system of contracts (i.e. "governing law") that limits the total amount of currency available to all contracts in its jurisdiction to the physical amount of commodities and/or assets that are also under that legal system's domain. The goal for most contracts referencing a currency will be to select a currency of stable value and a basket of commodities has always been the preference from economists from virtually every field, from Keynes to Hayek. Currency expands only if commodities expand and contract if commodities contract. This prevents bubbles of many types and prevents deflationary spirals. Commodities are the basic inputs that enable everything else in society. By letting currency track the commodities, each market participant's currency assets control a small fixed percentage of the economy's basic inputs.  

It seems like to have a truly fair and communicative global economy based on Ephereum, the world's commodity and/or fixed assets need to be assigned to a single cryptocurrency, within Ephereum or not. Maybe "need" is the wrong word...it will naturally evolve to a dominant currency because that is more efficient. A single currency seems dogmatic and extreme very much akin to having a single God (religion was crucial to ancient economics as Dr Michael Hudson writes about), so there would seem to be a need for competing "Gods" (cryptocurrencies and associated crypto-contracts).  Crypto-contracts could specify bartering instead of an external currency or basket, but the whole purpose of a currency is for value to be able to cross the boundaries of all contracts within a single legal system of contracts.  To make the world the most efficient, there needs to be an evolution of competeing legal systems (governments) and their associated measures of value. Zerocoin will try to be the world's standard anonymous form of money. Bitcoin will try to be the standard public form. A standard is needed and it needs to be fixed quantity or track a basket of commodities so that all the world's assets can be divided up among everyone within each legal system living under a crypto-contract protocol like Ephereum. Law is simply contracts between peoples. Artificial intelligence algorithms are also a protocol for enabling higher intelligence, so law/contracts are A.I. algorithms for people. Joining a company, getting married, acknowledging friendship, or trading on a stock exchange are all A.I. contracts. The rules of a company and the government under which it operates can all be structured inside Ethereum, enforced by a limited-supply and generally accepted cryptocurrency, replacing politicians, lawyers, and financial experts with automatic algorithms accessible by cheap smart phones. So these crypto techniques are enabling programmers to represent the world's assets (zerocoin/bitcoin) and organize them according to rules people decide on (Ethereum). However, there is nothing to prevent A.I. programs from taking over the world if people begin to use these systems extensively. These crypo techniques depend on the internet, but this is much much bigger than the internet. This is going to transform humanity in positive ways no one can imagine. But it also lays the foundations for solar cells to replace farms because photosynthesis is 100 times less efficient than current solar cells in adding energy to our economic system. On an energy-usage basis, brains are about 500,000 times less efficient than 22 nm integrated circuits, partly because wet brains have to move ions, whereas circuits move electrons and the difference in weight is 50,000.  Muscles are about 20 times less efficient electrical motors. DNA-based replicators are woefully outdated compared to our machines in their ability to use energy to move mass to make copies of themselves.  This is the meaning of life: simply following the physics principle of least action ... the reason evolutionary processes exist, turning energy and matter into copies (creating spatial ordering of mass (i.e., copies) from previously untapped energy and random ordering of mass). Maybe in as little as 200 years, humans will be an after-thought compared to the economic self-replicating engine we are building.  Ethereum is the protocol on which our societal A.I. can run, tapping the world's resources. We only need to AGREE on the currency for each legal system Ephereum implements in order to enforce the agreements. Our agreement on currency representation is the enforcement.

I'm really just sending out another feeler to see if anyone's aware of the direct correlations between economics/government and A.I.  I've been trying to push the idea for years ever since I saw Eric Drexeler's Agoric papers, but there seems to be no real interest in autonomous adaptive economic agents.  One problem is that they go by too many different names.  For example Numenta's cells or segments fall under this general heading and the sum total of their permanence values above the connection threshold are just the currency of their HTM/CLA system, representing available computing resources.  Ephereum is evolving the ideas and protocol needed to more efficiently convert our social systems into A.I.  Currency in both A.I. and economics is a representation of the available resources, where CPU time is energy and hard drive memory is mass, in keeping with Landau and Bennett and the physical equivalence between mass/energy and bits, depending on erasure or reversibility (Maxwell's demon stuff).

Judging from the transcript below, the new zerocoin will be called "zerocash" and they do not appear as if they are completely abandoning zerocoin

(text below copied from http://pastebin.com/Dd60ZaT7 )

1.Summary transcript of Matthew Green's talk about Zerocoin/Zerocash at the Real World Crypto 2014 from Soundcloud: https://soundcloud.com/rdlmitedu/140113_0001-wav

3.* Bitcoin may not be particularly anonymous
4.* Zero-coin / Zero-cash to anonymize the bitcoin currency
5.* transactions recorded in public ledger; nothing sophisticated done with the ledger; people can identify and map your identity; if you're very paranoid you can prevent (maybe), but in general case hard to use bitcoin for privacy;
6.* this should matter to all of us; the technology behind bitcoin may be with us for a very long time; countermeasures are weak even in the face of unsophisticated attacks
7.* if we make bitcoin private, can possibly find applications beyond currency
9.* two approaches for anonymous version of bitcoin
10.* zerocoin - technique to implement electronic cash in bitcoin protocol
11.* zerocash - way to make zerocoin practical and deployable and usable as ecash currency
13.* zerocoin - join work with students and colleagues at John Hopkins (JH)
14.* bitcoin doesn't give us much privacy despite academic thinking from 1980s (esp. David Chong) to build untraceable ecash
15.* ecash tried to tackle one problem without thinking of all other practical concerns; nobody in the history of academic ecash managed to setup a working, centralized bank; chong's bank attempt failed
16.* bitcoin solved this problem of a currency take-off and early adoption; but we need a different technique to get rid of a centralized bank
17.* zerocoin new approach for ecash to get rid of centralized bank; basic idea is public ledger (constructed by bitcoin) blockchain; use this to wash bitcoins that does not require us to trust a centralized party; key ingredient (blockchain) is given by free by the bulletin board;
18.* zerocoin high-level intuition of original protocol: layer on top of bitcoin; i have some bitcoin; i want to break the link between my current address and a future address; take my bitcoin and turn into zerocoin; they get mixed up; all people making zerocoins will shuffle them together so no linkage with creation and redemption; at some future point, can redeem zerocoins into bitcoins ideally unrelated; breaks graph analysis; when disappearing into the zerocoin network minimizes/removes leakage;
19.* zerocoins are numbers; digital commitments to a large serial number; viewing the commitment, you should not be able to tell the serial number; once these commitments are minted (easy to create), you put them on the bitcoin blockchain; new instruction in the bitcoin system to produce a transaction that spends a bitcoin for a zerocoin; anybody that sees this transaction sees that this valid zerocoin is worth some money;
20.* at some point in the future, you redeem; you first reveal the secret serial number to make the first zerocoin and put into transaction; prove that the serial number corresponds to a zerocoin; then prove that the zerocoin is one of the set placed on the blockchain (which somebody paid money);
21.* zero-knowledge proof; prove statements without using any other information other than that the fact that the statement is true; "there exists some zerocoin in the set of zerocoins placed on the blockchain & the serial number we're revealing is the actual serial number in the coin";
22.* if the proof is valid, then double-spend is impossible since serial number would have to be revealed again;
23.* efficiency is important here! the approach used is the accumulator; collect all the zerocoins into the accumulator, then prove that the zerocoin you're trying to spend is contained in the accumulator; proof of knowledge is 4KB; the entire thing is 25KB after optimization; for crypto this is awesome!; but developers hated adding this much to the blockchain; so unlikely to happen in real world
24.* summary: zerocoin good first approach, libzerocoin; but the problem is that the proofs are just too big; and coins have all the same value; but this means that if you want to spend fractional amounts of bitcoin, then it won't work (have to translate back to bitcoin)
25.* new solution: zerocash
26.* presented in May and Bitcoin conference in San Jose; in both conferences with teams working on small zero knowledge proofs aka SNARKS; other cryptographers already had them ready;
27.* SNARK - Succinct Non-interactive Arguments of Knowledge; Bryan Harno (MS Research); basic idea is that you can prove arbitrarily complex statements in 288 bytes; in addition to having these efficient proofs, there are compilers that have proofs that the program executed correctly; we should simply take existing libzerocoin code and run through the compiler to produce these proofs; but these compilers produce large circuits; the time to make a small proof takes hours or days;
28.* co-authors have spent a lot of time optimizing these proofs; the right way is NOT to take existing libzerocoin, but throw away RSA and other cryptographic techniques and replace with components that are easier to prove such as hash functions like SHA256 and Merkle trees; easy to prove hash with small circuits e.g. sha256 in 30K gates
29.* each coin is really the hash of some randomness and the serial number = commitment. once we have these coins we put in the hash tree; 64-depth key (2^64); when want to redeem; reveal the serial number, and can reveal 64-hashes before in the tree;
30.* if these proofs are powerful and efficient; why need bitcoin? why not put entire system into zerocoin and make everything anonymous through generation, use, redemption of coins? the only information that makes it into the blockchain is the fact that a transaction occurred. just show that two new coins where the value totals the bitcoin that you're splitting; when we merge we spend two coins we prove that the two = same value of the new coin; transfers can be done completely anonymously without knowing who and how much.
31.* can encrypt transactions and hash the values
32.* transaction fees have to be public, but everything else can be anonymous
33.* name for this process; generic transaction is called "pouring coins"
34.* is this efficient? one detail - the problem with zerocoin 1.0 was that the proofs were huge and took 0.33s; these results mixed; to merge/make takes 87s-108s on a single core; but on bright-side bitcoin takes up to an hour for each transaction; verification time is in ms; comparable to bitcoin; verification is in the network; the catch is that to verify the proofs you need a large set of public parameters; 1.2GB in size
35.* best part of this is that you already need 16GB to store the blockchain, so to add this is around 7% increase in storage
36.* somebody needs to generate these parameters; trusted party; possible to find a dozen people that people trust to set up the parameters;
37.* system that is efficient; will be separate system released in May; real-world crypto; want to get people to use;
38.* release an altchain; client that implements all these things; put it out there; hope that nobody puts a lot of money in this because these are new techniques and might break down; idea is to test this in an environment separate from bitcoin so we don't break anything else while trying to make this work
39.* should we even be doing this research? lots of people criticizing us. this is important research not just because people want to commit crimes, but because when you spend money your transactions are hidden from neighbours, but with bitcoin people can see your transactions; important to get it out there.
41.Thanks.
. 

It sounds like he is implying a back door, but in another post he said "it's no one's business" which seems hard line enough to imply there is not a back door.  "Not to the public anyway" could also mean he does not expect their methods to be susceptible to common methods of discovery, but that he would not rule out the NSA or IRS from figuring methods out.  He is very much into the details of crypto and is NOT quick to say "no one can break this".