 Good morning. I'm Kristen Velletti and welcome to Newsdask on Silicon Angle TV for Tuesday, May 6th, it's Monday, May 6th, 2013. Since its creation, Bitcoin has come under scrutiny over its plausibility as a currency. Now Canada wants to deploy taxes on Bitcoin transactions. Join us now to provide his breaking analysis surrounding Bitcoin's infrastructure as Silicon Angle founding editor Marc Risen-Hopkins. Morning, Marc. Happy Monday. Just in time for Canadian tax season, the Canada Revenue Agency says that users of Bitcoins will have to pay taxes on their Bitcoin transactions, stating that there are two separate tax rules that apply to the electronic currency, depending on whether they are used as money to buy things or if they were merely bought and sold for speculative purposes. Marc, there's been a lot of debate about whether Bitcoin even counts as a legitimate currency. So what are your thoughts on the taxation of Bitcoins? Is it fair? Well, I mean, there's, I guess, a philosophical question as to whether taxes and income taxes are fair in and of themselves. I'll try to leave that aside for this conversation and just assume that taxes are fair at face value and talk about whether taxes are fair for Bitcoin. So any country presumably has the right to tax its citizenry and the money within its borders in the way that it sees fit, whether it be an income tax or some sort of a commercial tax or something like that, or taxes on business itself, or any of the thousands and thousands of taxes that exist, thousands of different types. So I'd have to say that it's fair for Canada to decide that it taxed it, just as it was fair when America said that. So America has initially made initial statements specifically to Bitcoin and what is fair to tax or what they intend to tax on Bitcoin. But the assumption that everyone that has operated with Bitcoin has worked with has basically said, hey, look, we're going to treat this as if it were any other type of currency income. And we're going to report our earnings. I mean, I guess there's people out there that are trading on Silk Road and buying and selling illicit substances that are not going to report their earnings. But I don't think they were going to, regardless of if they were using Bitcoin or not, vast majority of transactions on Bitcoin are legitimate. And most people that are doing transactions to a great enough value, i.e. the taxable amounts, are reporting that on their income. I know I did and I didn't really do a whole lot of Bitcoin transaction. But what little I did was included in my taxing income tax this year. So do we know how other countries have approached Bitcoin when it comes to taxes? Has there been a lot of talk about this? Oh yeah, it's something that was talked about very early on. And it's interesting because there was a story in Wired earlier today that it was called Bitcoin not as secure or safe from regulation as you thought it was. And basically it makes the point by, it was by Daniel Kaminsky who did a very good job kind of showing all the different aspects and strong points and weak points of Bitcoin. But one of the things he pointed out is, look, every transaction is done in public and if you dodge your taxes or avoid your taxes for long enough with Bitcoin to such a, into a great amount, it's not going to be a difficult detective work to try to track you down. It's only pseudonymity. So as soon as you make a purchase, you know, with a wallet that you own and they start to backtrack that to you, you know, it's only a matter of time before they figure out all the other little parts of your, your wallet on the blockchain and, you know, they could come after you for some amount of, of untaxed or income that hasn't been taxed and you're in all kinds of trouble, so it's better to be safe than sorry. Do you feel that the taxing of Bitcoins is a good thing or a bad thing? Does it give more weight and legitimacy to the currency or does it turn those users away who find the appeal of Bitcoin in its anonymity? See, I don't think taxing Bitcoins really airs out any kind of legitimacy. You can, you can tax a rock in this world. I mean, it's, you can, anything that has any kind of perceived value will end up getting taxed by the government and you don't even have to be alive to get taxed. So, I mean, I think, but it would be, I think what would lend it some more weight and legitimacy than Bitcoin currently has, I guess, would be for the IRS or the CRA to accept Bitcoin as payment for your taxes. As we talked, I don't know if we talked about it here on the show, if it was just on a blog post that we published, but there was a government agency, actually a government contractor that processes the municipal fines and payments for thousands and thousands of cities across America that is now accepting Bitcoin as payment, which did air some legitimacy or some additional legitimacy. I think as we see these types of things where governments are taking payment in Bitcoin increase, then we can talk about legitimacy, increase legitimacy for Bitcoin as a currency. A study of the Bitcoin exchange industry has found that 45% of exchanges fail. The study conducted by computer scientists Tyler Moore and Nicholas Christen followed 40 exchanges on the web and concluded that of the 40, 18 have gone out of business, 13 of which closed without warning and five closing after suffering security breaches and four other exchanges suffered serious attacks but remained open. MT Gox, the largest Bitcoin exchange is one of those exchanges recently falling victim to a huge number of DDOS attacks over the past month during a Bitcoin surge. Mark, do you think MT Gox is becoming a weak link in Bitcoin's infrastructure? So this is actually a hotly contested point within the Bitcoin community, within and without. Mostly because MT Gox handles as they say in their website, 80% of Bitcoin to dollar transactions. It's very difficult to say this is not a weak link. You're only as strong as your weakest link. Bitcoin itself is a decentralized currency. So technically MT Gox could go offline tomorrow and never come back and Bitcoin itself would not be fundamentally affected. Here's the problem though, Bitcoin has a liquidity issue. It cannot exist without, it cannot persist I should say without the existence of marketplaces like MT Gox. And because there's not a kind of a default way to transfer dollars to Bitcoin and back. Now there's a growing kind of secondary local market that is starting to take a lot more prevalence over some of the smaller centralized markets like MT Gox or a bit floor of these other ones that exist out there. But they kind of pale in comparison when it comes to transaction volume to MT Gox. So yes, it's a weak link. That doesn't mean that I think MT Gox is gonna go down tomorrow. They have amazing security and they've withstood every attack so far. There's a reason why they have 80% of the transactions in Bitcoin for Bitcoin to dollar. But yeah, they're a weak link. Anytime you have something centralized as a weak link and many Bitcoin enthusiasts and early adopters are calling for the creation of, if not necessarily make it part of the Bitcoin standard itself, but maybe the creation of a marketplace that is decentralized in the same manner that Bitcoin is. So there's not a central site that you go to but a protocol that you use. Mark, we know all investments inherently come with a deal of risk, but does Bitcoin come with more risks than potential rewards? And how is Bitcoin doing at the moment? So there was an interesting little writeup at the Wall Street Journal this morning about kind of like where some of the founders see Bitcoin, founders of the Bitcoin Open Standard and key contributors to see it going and see the benefits. Of course, the benefits are well known and talked about if you do any searches on the web for Bitcoin. I mean, it's decentralized, not controlled by a government and we can go on and on. We've talked about these things before. The risks are obvious. It's a volatile currency and it remains to be seen whether or not this volatility is inherent to the currency or if it's something that will dissipate over time. It's been I think three years basically, two or three years since I started tracking. So it's two and a half years since I started tracking the price index on empty Gox as compared to press mentions. And it's almost still to this day one to one. You can see the little knee of the curve as it goes up on the press mentions and the same thing on the empty Gox spot price. That's not a good thing when your currency can be manipulated by the press or by numbers of press mentions because ways of manipulating press mentions and press buzz are myriad numerous. They write books about it. So are the risks worth the reward? I think so. I personally think that despite all these risks and all these kind of weak spots in the early development of Bitcoin, there's still a lot more reward than risk because we don't have a template for this, right? There's no other decentralized currency not tied to a government that was ever kind of put out there that we can kind of follow a plan on like, what's the best way to launch this sort of thing? We're kind of a new territory. And I think if nothing other than the historical record of, hey, this thing that was tried once and succeeded to a certain degree, that's worth the risk of what we're all kind of kind of grouply experimenting here. Well, Mark, thank you so much for your comments this morning, great to have you on. Absolutely. And still to come on SiliconANGLE TV, Acer comments on plans for Windows RT and could you 3D print your own weapon? But first, Wikibon Chief Analyst Dave Vellante joins us from day one of EMC World in Las Vegas.