Did you sell any bitcoin (or other cryptocurrencies) in 2017? If you did, do you know how to pay taxes on the transaction(s)?
I’m going to guess that a lot of people in the US that fit in the category of having sold some bitcoin in 2017 haven’t spent a millisecond thinking about what tax they might owe. There are probably others who feel like they shouldn’t have to pay any tax because they believe bitcoin is outside the reach of the government. And then there are others who believe the theoretically anonymous elements of the cryptocurrency they are trading should prevent anyone – especially the government – from finding out about what they are up to.
Two interesting articles came out in the past week. The first, When Trading in Bitcoin, Keep the Tax Man in Mind, is an excellent overview that addresses the following questions.
- I sold some Bitcoin last year. What do I need to do?
- I bought a computer (or another product or service) using Bitcoin. Are there tax implications?
- I’ve successfully ‘mined’ Bitcoins. Now what?
- I was paid in Bitcoin. Are there any special tax consequences?
- What if I paid someone else in Bitcoin for their services?
- Can I reduce my tax bill by donating my cryptocoins?
- Will I receive any tax forms from my exchange? Do I have to track my own transactions?
The second article, Why the I.R.S. Fears Bitcoin, is an Op-ed in the NYT that I have mixed feelings about. While there are a number of scenarios about how to evade taxes, it ultimately leads to a proposal:
“A smarter response would be for the government to switch from taxing income when it is received to taxing income when it is spent. Many economists support moving to this kind of consumption tax, but it would require a major overhaul of the tax code.”
The “shift from a consumption tax” from an “income tax” is an endless debate that I’ve been hearing since I first started reading Forbes Magazine in college over 30 years ago. So, while logical, it feels like you could potentially compress the article into an argument for a consumption tax.
But, I loved the final paragraph.
“More generally, cracking down on tax evasion will require that the community learn to trust government. Since this goes against the very ethos of the cryptocurrency movement, it poses the most difficult — but no less necessary — challenge.”
The rabbit hole goes deep.
An adapted essay from Noam Cohen new book The Know-It-Alls: The Rise of Silicon Valley as a Political Powerhouse and Social Wrecking Ball showed up several weeks in the New York Times in the article Silicon Valley Is Not Your Friend. It’s an important one to read slowly and carefully as there are several key points in it.
In the last week, two early Facebook execs made remarkably critical statements about what they were involved in helping create. It started when Sean Parker talked with Axios about how Facebook exploits human psychology.
“I don’t know if I really understood the consequences of what I was saying, because [of] the unintended consequences of a network when it grows to a billion or 2 billion people and … it literally changes your relationship with society, with each other … It probably interferes with productivity in weird ways. God only knows what it’s doing to our children’s brains.”
Then, the other day, Chamath Palihapitiya gave a talk at Stanford Graduate School of Business where he said:
“I think we have created tools that are ripping apart the social fabric of how society works”
A decade ago at my MIT Sloan 20th Reunion, I gave a lecture where I said that “privacy was dead, we just don’t know it yet.” I had no idea how prescient that statement would be, but even in 2008, I had a deep unease that we had no real idea what the next decade would bring.
It’s here. When Web 2.0 began in the mid-2000s, there was incredible enthusiasm about how technology was going to change everything. Google’s “Do No Evil” mantra was on everyone’s lips as a rallying cry for Silicon Valley entrepreneurs to “change the world” and “make a dent in the universe.” Twitter was becoming the world’s town hall and helping facilitate revolutions like the Arab Spring.
Amy and I were sitting in front of our computers on Sunday working on some stuff. During a pause, we started talking about how different things are from when we first started dating 28 years ago.
I woke up thinking about that this morning. Now that the five most valuable companies in the world are tech companies (Apple, Alphabet, Microsoft, Amazon, and Facebook with Tencent and Alibaba coming on strong) and the total market cap of cryptocurrencies also being in that league, it’s hard to deny the extreme influence of these companies on our society. As I sit at my desk, typing on my Apple Computer into WordPress in a Chrome browser, listening to music I asked Amazon to play throughout my house, well, you get the idea.
The blog post title is a rhetorical question, so I’ll let you answer it in the comments if you want …
The word “platform” used to mean something in the technology industry. Like many other words, it has been applied to so many different things to almost be meaningless.
Yesterday, when I started seeing stuff about the MacOS High Sierra blank root password bug, I took a deep breath and clicked on the first link I saw, hoping it was an Onion article. I read it, picked my jaw up off the floor, and then said out loud “Someone at Apple got fired today.”
Then I wondered if that was true and realized it probably wasn’t. And, that someone probably shouldn’t be fired, but that Apple should do a very deep root cause analysis on why a bug like this could get out in the wild as part of an OS release.
Later in the day, I pulled up Facetime to make a call to Amy. My computer sat there and spun on contacts for about 30 seconds before Facetime appeared. While I shrugged, I once again thought “someone at Apple should fix that once and for all.”
It happened again a few hours later. Over Thanksgiving, I gave up trying to get my photos and Amy’s photos co-managed so I finally just gave all my photos to Apple and iCloud in a separate photo store from all of Amy’s photos (which include all of our 25,000 or so shared photos.) I was uninstalling Mylio on my various office machines and opening up Photo so that the right photo store would be set up. I went into Photos to add a name to a Person that I noticed in my Person view and the pretty Apple rainbow spun for about 30 seconds after I hit the first name of the person’s name.
If you aren’t familiar with this problem, if you have a large address book (like mine, which is around 20,000 names), autocomplete of a name or email in some (not all) Mac native apps is painfully slow.
I opened up my iPhone to see if the behavior on the iPhone was similar with my contacts and it wasn’t. iOS Contacts perform as expected; MacOS Contacts don’t. My guess is totally different people (or teams) work on code which theoretically should be the same. And, one is a lot better than the other.
At this point, I realized that Apple probably had a systemic platform layer engineering problem. It’s not an OS layer issue (like the blank root password bug) – it’s one level up. But it impacts a wide variety of applications that it should be easily abstracted from (anything on my Mac that uses Contacts.) And this seems to be an appropriate use of the word platform.
Software engineering at scale is really difficult and it’s getting even more, rather than less, challenging. And that’s fascinating to me.
We live in a digital world with a false sense of security. While watching Blade Runner 2049 I smiled during a scene near the end where Deckard says to K, “What Have You Done?!?!?” I expect that this false sense of security will still exist in 2049 if humans manage to still be around.
The first big piece of security news this weekend was ‘All wifi networks’ are vulnerable to hacking, security expert discovers. It only a Severe flaw in WPA2 protocol leaves Wi-Fi traffic open to eavesdropping, but, well, that’s most Wi-Fi networks. If you want the real details, the website Key Reinstallation Attacks: Breaking WPA2 by forcing nonce reuse goes into depth about KRACK Attacks. And yes, KRACK is already up on Wikipedia.
Here’s the summary, which is mildly disconcerting (that’s sarcasm if you missed it …):
The weaknesses are in the Wi-Fi standard itself, and not in individual products or implementations. Therefore, any correct implementation of WPA2 is likely affected. To prevent the attack, users must update affected products as soon as security updates become available. Note that if your device supports Wi-Fi, it is most likely affected. During our initial research, we discovered ourselves that Android, Linux, Apple, Windows, OpenBSD, MediaTek, Linksys, and others, are all affected by some variant of the attacks. For more information about specific products, consult the database of CERT/CC, or contact your vendor.
I was cruising along in my naive security bliss this morning when I saw the article Millions of high-security crypto keys crippled by newly discovered flaw. It turns out that a key RSA library that is widely used has a deep flaw in it and has been being used to generate weak keys since 2012.
A crippling flaw in a widely used code library has fatally undermined the security of millions of encryption keys used in some of the highest-stakes settings, including national identity cards, software- and application-signing, and trusted platform modules protecting government and corporate computers.
The weakness allows attackers to calculate the private portion of any vulnerable key using nothing more than the corresponding public portion. Hackers can then use the private key to impersonate key owners, decrypt sensitive data, sneak malicious code into digitally signed software, and bypass protections that prevent accessing or tampering with stolen PCs. The five-year-old flaw is also troubling because it’s located in code that complies with two internationally recognized security certification standards that are binding on many governments, contractors, and companies around the world. The code library was developed by German chipmaker Infineon and has been generating weak keys since 2012 at the latest.
I’m sure there will be a lot more written about each of these flaws in the next few days. I expect every security vendor is hard at work this morning figuring out what to patch, how to do it, what to tell their customers, and how to get all the patches out in the world as fast as possible.
The constraint, of course, will be on the user side. A large number of customers of the flawed products won’t update their side of things very quickly. And many more bad guys now have a very clear roadmap for another attack vector with high vulnerability.
Be safe out there. Well, at least realize that whatever you generate digitally isn’t as safe and secure as you might think it is.
Among all the distressing news of the world, I heard today that AOL Instant Messenger is shutting down on 12/15/17.
AIM was the first instant messenger I used. My AOL account handle was bfeld, which stuck and is generally my handle for all things (like Twitter) unless someone else grabbed it, in which case it’s bradfeld.
On 9/11/01, I was in NYC. I had taken a redeye the night before so I took a nap in the hotel room after I checked in and slept through the first World Trade Center tower collapse. When I woke up I was disoriented from my redeye and totally confused (like many) as to what was going on. I called Amy and caught her on the way to the airport (she was heading to NYC) and had been trying to reach me but couldn’t. There were tears but we figured out enough that she turned around and went home.
That was the last phone call I was able to make for a while. I was in the Benjamin Hotel and the phone wasn’t able to dial out. My cell phone couldn’t get a signal. As a last resort, I turned on my computer to see if I could connect to the hotel Internet.
That worked just fine. All of my IM apps opened up (AOL, Yahoo, Microsoft, and ICQ). Email worked fine also.
So for the rest of 9/11, until I went to Jenny Lawton’s house in the evening with Paul Berberian and Nick Cuccaro to get Jenny’s car and drive home to Boulder, I hovered over my computer.
AOL IM was probably 10x more active than the other IM apps combined. Amy and I went back and forth in real time throughout the day. My Mobius partners were equally distributed across AOL and Yahoo and a few randoms were on Microsoft and ICQ.
The little yellow AIM man was burned into my brain that day. I can’t imagine getting through 9/11 without him – and AIM.
AIM – you served me well for many years. Thank you. May you rest in peace for all of digital eternity.
For starters, let’s look at some Golden Retriever puppies instead.
I watched most of the Apple announcement last week (I was on vacation and hanging out waiting for Amy, so I just plopped down on the floor and watched Special Events on the Apple TV channel.) I fell asleep for a few minutes part way through it. I turned it off about halfway through the iPhone X announcement.
I’ve been an Apple user for many years now. Every few years, I switch to an Android phone for a month (whatever the newest model is) but always end up going back to my iPhone. Whenever each new iPhone model has come out (for at least the past five years) there’s been a mad rush among my partners to make sure all of us have a new phone the day they ship. I even sported a rose gold one during one upgrade cycle just because I could.
When Amy and I went to lunch after the iPhone 8 and X announcement, she asked me if I was going to get a new iPhone. I said no. I realized I was profoundly uninspired – both by the new phone and the way the Apple team presented it. I’d go so far as to say I was bored, which as a lifetime nerd, is unusual when Amy lets me hang out and do anything related to computers (including watching TV about computers.)
Amy then said, “I didn’t mean the 8, I meant the X.”
For some reason, I’m completely uninterested right now in the iPhone X. I don’t know why. It might be the presentation. It might be that’s it’s not available for another few months. It might be that I just spend too much money and time fixing my iPhone 7+ screen (twice) after dropping it. Why twice? Because the first time I stupidly sent it over to one of the non-Apple “we can fix your iPhone for you for less money” stores who replaced the glass but totally screwed up a bunch of other things (the home button, the touch dynamics, and the edge feel of things.) That resulted in me buying a new iPhone 7+. Dumb Brad – just to go the Apple store even if it’s five miles further away and you have to drive instead of walk.
On the other hand, iOS 11 just installed on my phone while I was writing this post. A cursory glance shows that it’s working fine but other than different fonts, new icon styling, shading on an iMessage reply, and a different control center, it looks the same so far. At least I can play with fun new apps like Occipital’s TapMeasure to see how ARKit works.
I’m perplexed by the current Apple release cycle dynamics. I know they’ll mint money with the new phones, but my feeling of disappointment lingers as a user. Suddenly, I’m more inspired by Amazon’s new hardware.
At the Formlabs Digital Factory event in June, Carl Bass used the phrase Infinite Computing in his keynote. I’d heard it before, but I liked it in this context and it finally sparked a set of thoughts which felt worthy of a rant.
For 50 years, computer scientists have been talking about AI. However, in the past few years, a remarkable acceleration of a subset of AI (or a superset, depending on your point of view) now called machine learning has taken over as the hot new thing.
Since I started investing in 1994, I’ve been dealing with the annual cycle of the hot new thing. Suddenly, a phrase is everywhere, as everyone is talking about, labeling, and investing in it.
Here are a few from the 1990s: Internet, World Wide Web, Browser, Ecommerce (with both a capital E and a little e). Or, some from the 2000s: Web Services, SOAs, Web 2.0, User-Generated Data, Social Networking, SoLoMo, and the Cloud. More recently, we’ve enjoyed Apps, Big Data, Internet of Things, Smart Factory, Blockchain, Quantum Computing, and Everything on Demand.
Nerds like to label things, but we prefer TLAs. And if you really want to see what the next year’s buzzwords are going to be, go to CES (or stay home and read the millions of web pages written about it.)
AI (Artificial Intelligence) and ML (Machine Learning) particularly annoy me, in the same way Big Data does. In a decade, what we are currently calling Big Data will be Microscopic Data. I expect AI will still be around as it is just too generally appealing to ever run its course as a phrase, but ML will have evolved into something that includes the word “sentient.”
In the mean time, I like the phrase Infinite Computing. It’s aspirational in a delightful way. It’s illogical, in an asymptotic way. Like Cloud Computing, it’s something a marketing team could get 100% behind. But, importantly, it describes a context that has the potential for significant changes in the way things work.
Since the year I was born (1965), we’ve been operating under Moore’s Law. While there are endless discussions about the constraints and limitations of Moore’s Law, most of the sci-fi that I read assumes an endless exponential growth curve associated with computing power, regardless of how you index it.
In that context, ponder Infinite Computing. It’s not the same as saying “free computing” as everything has a cost. Instead, it’s unconstrained.
What happens then?
My favorite Onion article of all time (from 2010) is U.S. Economy Grinds To Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion. It starts off with some Bernanke brilliance.
“Though raising interest rates is unlikely at the moment, the Fed will of course act appropriately if we…if we…” said Bernanke, who then paused for a moment, looked down at his prepared statement, and shook his head in utter disbelief. “You know what? It doesn’t matter. None of this—this so-called ‘money’—really matters at all.”
“It’s just an illusion,” a wide-eyed Bernanke added as he removed bills from his wallet and slowly spread them out before him. “Just look at it: Meaningless pieces of paper with numbers printed on them. Worthless.”
This is not a new idea. From William Gibson’s book Neuromancer, one of the most important sci-fi books ever which established the idea of cyberspace in 1984.
“Cyberspace. A consensual hallucination experienced daily by billions of legitimate operators, in every nation, by children being taught mathematical concepts… A graphic representation of data abstracted from banks of every computer in the human system. Unthinkable complexity. Lines of light ranged in the nonspace of the mind, clusters and constellations of data. Like city lights, receding…”
Back to the Onion article.
“Sen. Orrin Hatch (R-UT) finally shouted out, “Oh my God, he’s right. It’s all a mirage. All of it—the money, our whole economy—it’s all a lie!”
Now, ponder Bitcoin.
“I’ve spent 25 years in this room yelling ‘Buy, buy! Sell, sell!’ and for what?” longtime trader Michael Palermo said. “All I’ve done is move arbitrary designations of wealth from one column to another, wasting my life chasing this unattainable hallucination of wealth. What a cruel cosmic joke,” he added. “I’m going home to hug my daughter.”
“A few U.S. banks have remained open, though most teller windows are unmanned due to a lack of interest in transactions involving mere scraps of paper or, worse, decimal points and computer data signifying mere scraps of paper.”
I just read Kenneth Rogoff’s The Curse of Cash: How Large-Denomination Bills Aid Crime and Tax Evasion and Constrain Monetary Policy. I literally have zero cash in my wallet. On a daily basis, I’m dealing with very large sums of money across multiple companies, but it has completely become a functional abstraction to me.
As I did a fairly sophisticated transaction on my computer yesterday that moved cash into a cybercurrency, I had the phrase “money is a consensual hallucination” echoing in my head. Math and computers are helping reinforce this. And the government is watching.
My cell phone experience is so fucking miserable. As I drove home last night and tried to have a conversation, I had five drops during a 30-minute drive from downtown Boulder to my house on the edge of Boulder and Longmont. When I drive into my office this morning, on exactly the same route, I expect I’ll have five drops at exactly the same spots.
This happens every day I drive between my house and my office. There is a dead spot at the corner of St. Vrain and 36. There is another dead spot on Broadway just across the street from Amante. There are four more that I can name (one on St. Vrain, one on 36, and one on Broadway), but I don’t want to give away all of Verizon’s secrets.
It’s 2017. I think my Cellular One experience in Boston in the mid-1990s was better.
For a few weeks, I thought maybe it was that Verizon knew I supported Net Neutrality and was fucking with me. But I’m not a conspiracy theorist, so this is my inner sarcasm rising to the surface.
I sent out an email asking a bunch of local friends what they used and how they liked it. I got general bitching about Sprint, AT&T, and T-Mobile, so there wasn’t a clear answer.
So, I’ve decided to go on my own exploration. I’m going to get each service and try them for a week. I’ll put up with the nightmare of porting my phone number around, which I expect will end in tears, but fortunately, I use Google Authenticator instead of SMS for two-factor authentication, so at least that won’t be a miserable pain in the ass.
Or maybe I’ll just get a second iPhone, a new phone number, and use that as the test device. That sounds safer, but now I’ve got to figure out how to sync two different iPhones to one account so that the images on both iPhones is the same. A quick Google search does not reveal the magic trick, so I’m sure that will be entertaining.
Do I sound like I’m at the end of my rope on this issue? Please don’t ask me about CenturyLink and the Internet non-service at my house.
Pro Tip: If you are at CES today and want to connect, I’ll be hanging out at Eureka Park from 11am this morning (Friday) when I’m on a panel about diversity until I leave the premises at 2:30.
My dad and I left the Venetian yesterday at 8:30am to head over to the Las Vegas Convention Center. When I arrived back at the room at 10pm, I was done / baked / toasted / wiped.
For a number of years (somewhere between 5 and 9, according to the little badge they gave me), my dad and I went to CES together every year. In 2013, when I got depressed, I decided not to travel for a year. I punted CES that year and for the next few years, so this is the first time in four years we’ve done the drill.
We had a blast together yesterday. I think my dad was delirious by about 9pm when he left our party and went up to the room. And hour later when I checked in on him before going to sleep, he was flat on his back in bed pretending to be awake but was clearly out for the count.
We started at the LVCC. I saw a tweet from Dan Primack saying the North Hall was basically indistinguishable from the Detroit Auto Show. He nailed it – it was basically a takeover by the worldwide auto industry with a few startups sprinkled here and there. It felt like six months ago every CEO of a major auto company sent an email to the CMO that said
“We are going to be at CES. We need to show up three things: (1) Our EV prototype, (2) A completely new in-car electronics package that looks better than Tesla’s, and (3) something about autonomous driving. Your budget is $10 million. Don’t fuck it up.”
If any of this shit comes together, we are going to have completely different cars by 2020. If you are a VC and you haven’t placed your bets on this sector yet, good luck. And if you have, make sure you are spending lots of time with big auto corp dev / M&A people.
If you’ve been following any news about CES, you know that it’s been a huge Alexa takeover. Amazon’s move in the home is brilliant. I love Alexa and I’m amazed at how far ahead Amazon suddenly is. When I think of all the money, time, and energy Microsoft, Apple, Google, Nintendo, Sony, Samsung, and LG have spent in the home, I have one word for them. “Wasted.” As far as I can tell, I’ll be talking to Alexa in the future a lot more than I’ll be saying “Ok Google”, especially when I’m talking to a Samsung TV.
Several times an hour I bump into someone that I like. That’s one of the fun parts of CES – you are surrounded by 180,000 of your fellow nerds and you bump into Dick Costolo on the way to dinner. I ended up in a fifteen minute conversation with Josh Ellman. I could list another 20 serendipitous connections in random places but you get the idea.
After wandering through the Sphero secret rooms in their booth, I told my dad I thought it was the best booth experience I’ve ever had. Way more awesome than yet another random shag carpet open space with marketing displays.
Interviewing James Park at Eureka Park about the Fitbit story was fun. My experience with James, his partner Eric, and Fitbit continues to be one of the most rewarding and enjoyable – at all levels – professional experience I’ve ever had.
And then dad and I wandered around the Sands. It completely blew away the LVCC and was so much more interesting to me that I’m just going to spend the day at the Sands, wandering around startups, smaller companies, 3D printers, robots, and all kinds of stuff I like. There are zillions of CE startups in Sands. While 90% of them will fail, it’s pretty awesome to see what entrepreneurs are working on.
The only thing more baffling to me than the auto stuff were home robots. I think the 2017 crop of home robots at CES will be like the 2013 crop of 3D TVs. Kind of cool, but not commercially viable. We’ll get there, but it’s not this.
And – well – lots of chocolate ice cream. That’s one of the best things about Las Vegas. Chocolate ice cream is less than 0.25 miles away, no matter where you are.