(Seems like a world changing enough thing, but who knows what year? Its already started)
Copied from my thread in Bitcoin forum: http://forum.bitcoin.org/index.php?topic=20497.0
"Buying new armor in World Of Warcraft should be taxed in real dollars"
Rediculous, but World Of Warcraft Gold is a real currency, like Bitcoin (http://en.wikipedia.org/wiki/Bitcoin), just implemented a different way and connected to a game before it became a real currency. Want to buy some? http://warcraftgoldstore.com
This currency is normally used to buy things in the World Of Warcraft online game, but since it can be exchanged both directions with dollars, it should be subject to the same laws as Bitcoin, and the last I heard, if you get paid in Bitcoins you are supposed to report it on your taxes.
Can anyone give me a good legal reason why Bitcoin and World Of Warcraft Gold should be taxed differently? If not, the next purchase of armor or a flying dragon to ride on, should be reported on your taxes. When the auditor asks, tell him "Yes, I bought a flying dragon for xx World Of Warcraft Gold, but I didn't get a receipt."
There is a contradiction here. Either we are going to have to start paying sales tax for buying an extra life in a game in a simulated economy with game money, and non-player-characters taxed for spending that same game money, or Bitcoin doesn't get taxed. Which is it?
Maybe that is why governments won't touch Bitcoin. They know they can't resolve the contradiction. They must be scared out of their minds.
Until such contradiction is resolved, I suggest trading your Bitcoins for World Of Warcraft Gold (through dollars as a middle step) so you can be legally taxed on less capital, and if that works, theres no reason it wouldn't work for dollars too.
This contradiction is going to rip a hole in the legal system that they can't patch, and theres nothing anyone can do about it. Actually, there is 1 thing they can do about it... Pretend Bitcoin and World Of Warcraft don't exist. If they admit they exist and start taxing even 1 of them, the next currency will be designed inside a game to get around that, and they'll have no way around taxing game money, since it is game money, used mostly in the game and some outside.
Governments would be wise to kneel down before their corporate masters and not do anything that might threaten their simulated economies in their virtual worlds. We all know who is really pulling the strings, and nobody voted for them.
Good things will come from this. After proving that game money is interchangible with real money, the Military Industrial Complex (http://en.wikipedia.org/wiki/Military_industrial_complex (http://en.wikipedia.org/wiki/Military_industrial_complex)) will be defeated by simulated weapons, through the simulated money they're bought with sucking the military budget and huge-government budget dry. Fight your wars in games, or we'll bring the game's simulated war into your real battlefield, economically. Don't forget, in World Of Warcraft, Blizzard Entertainment is God, and nobody would bat an eye if one of their characters walked on simulated water.
Do your lawyers dare tread in the World Of Warcraft? I really hope so, because one of those non-player-characters was racially discriminating in who he hired for his simulated dragon store. That racist a-hole said he wouldn't hire my character because he had green skin, a hump back, and large claws, which is typical of my simulated species. My whole simulated life, I've had to deal with discrimination against Orcs, and this is the last straw. I am suing for the lost potential World Of Warcraft Gold, in US Dollars please.
What we're seeing here is law hitting a brick wall made of a self-referencing logic paradox, and if you touch a paradox you are destroyed or randomized. Its all described in the Incompleteness Theorem, which applies to economic law because it applies to numbers...
http://en.wikipedia.org/wiki/G%C3%B6del%27s_incompleteness_theorems
QuoteThe first incompleteness theorem states that no consistent system of axioms whose theorems can be listed by an "effective procedure" (essentially, a computer program) is capable of proving all facts about the natural numbers. For any such system, there will always be statements about the natural numbers that are true, but that are unprovable within the system. The second incompleteness theorem shows that if such a system is also capable of proving certain basic facts about the natural numbers, then one particular arithmetic truth the system cannot prove is the consistency of the system itself.
Because of the self-referencing nature of simulations of economies in games in real economies, the Incompleteness Theorem is about to rip governments a new one, and every x force they push against it will be matched by x force pulling them deeper into the paradox until they can't even calculate the first digit of their taxes.
Governments are in over their heads, and they should be incredibly thankful that Bitcoin is here to save them from the legal requirement of simultaneously proving and disproving the Incompleteness Theorem just to pay their taxes, but I guess they didn't think ahead that far. A free market, or get rid of money completely, is the only way out.