Domain Name Wire | Domain Name News
Domain Name Industry News
by — May 11, 2021 Domain Sales
There are few legitimate reasons to use cryptocurrency in domain transactions.
I’ve been thinking a lot about cryptocurrency as a payment and disbursement option for domain transactions. The key question is why someone would buy a domain or accept payment for a domain in cryptocurrency, and if marketplaces and escrow services should support it.
I’ve come up with three reasons someone would want to use crypto rather than fiat for a domain transaction.
To avoid taxes. As in, cheat the taxing authorities.
Tax laws vary from country to country, but in the U.S. and some other countries, buying something with a cryptocurrency or selling something for a cryptocurrency is a taxable event. So there’s no tax advantage of using cryptocurrency for a domain transaction…unless you intend to cheat by hiding it.
If you pay for a domain in bitcoin, you have to realize the gain or loss on that bitcoin at the time you acquire the domain. If you sell a domain for bitcoin, you have to recognize the value of that crypto you receive when you sell the domain.
(The same goes if you buy an NFT with crypto or trade into a different cryptocurrency, by the way.)
So there’s no real tax benefit to buying or selling a domain with crypto compared to fiat. I suppose if you want to take a loss on crypto you could do it through a domain transaction, but you could also do this by just selling the crypto for fiat and using that.
To be untraceable. Cryptocurrency transactions are generally irreversible. They also have a degree of anonymity. So if you want to sell a stolen domain, this is how you want to get paid. It’s also helpful if you’re laundering money.
For more convenience. Transferring money between banks can still be a slow(ish) process. Depending on the amount and jurisdiction, it can take a couple of days. Cryptocurrency transfers can be quick. Also, since they generally aren’t reversible, it might give the domain seller comfort in a transaction.
This convenience can also be a way to avoid government transfer restrictions. But using crypto to bypass government restrictions means someone breaking the law.
I can think of few legitimate reasons that someone would use cryptocurrency to pay for a domain name unless they are in a jurisdiction that treats it favorably from a tax standpoint. So I’d be very cautious if your counterparty in a transaction requests to use cryptocurrency. It’s not a deal killer but think hard before completing a transaction if the counterparty insists on using cryptocurrency.
May 11, 2021 at 12:00 pm
Timely article for us because we’ve just received our first offer in Bitcoin for our LasVegasJackpot.com. Didn’t agree on a price, but it’s an odd coincidence.
May 11, 2021 at 12:34 pm
I think there’s less to be concerned about on the sell-side. But you should consider why the other party wants to do this.
May 11, 2021 at 12:04 pm
I just paid for a pricey .ai drop auction using Bitcoin because I had more Bitcoin available than USD at the time. That’s the only reason.
May 11, 2021 at 12:33 pm
So it falls under the convenience side, I suppose. The net impact to you is one less currency transaction, but the taxes will be the same.
May 11, 2021 at 1:07 pm
So zero personal experience or real knowledge of all the great benefits of holding and trading cryptocurrency, but out the gate you shoot with the broad and repeated assumptions that they must be criminal? The writer must be a real treat at parties. In domaining speak, this translates as: GoDaddy must be losing business to crypto folks | activate protocol 15 of talking heads.
News flash: many cryptocurrency holders own it because they INVESTED in it. They rode their gains upwards as pioneers and innovators. They recognized the advantages cross country and cross platform, outside of irresponsible centralization that can often blow like the wind based on who is in control. The type that wraps mutual funds and lifetime retirement savings into “blue chip” stocks like General Motors, then wipes the slate clean for political favors and “sustainability” overnight, ruining millions of livelihoods and future security positions along the way. Before comforting everyone involved with golden parachutes to pad their way down.
I so wish we had more positive editors, writers and contributors to this industry, that didn’t have to view every aspect of it from the position of manipulative bias. This reeks of the exact type of entitlement and privilege that drove millions to the streets over 2020. Complete disconnection with the reality, hardships, and suffering of so many. In all fairness, your article may be the single most ridiculously uneducated piece of nonsense I believe I will set view to this week. Just saying. ?
May 11, 2021 at 6:32 pm
Check out my reply to the thread below.
May 11, 2021 at 6:38 pm
Go easy on him Denise, he is like 40.
May 11, 2021 at 1:26 pm
Too much paperwork when you file taxes and it raises a big red flag.
Filling taxes is a f waste of time.
May 11, 2021 at 1:46 pm
it’s not a red flag at all for my sales, in fact I much prefer it. A lot of my buyers have a lot of crypto so it just makes sense to use it – they have it, it’s faster, it’s easier. All around it is much better than using USD. I don’t see it as a red flag at all.
For crypto people to use USD instead would mean 1) sending crypto to an exchange, 2) selling and incurring fees, 3) transferring USD to bank, 4) setting up escrow, 5) transferring from bank to escrow, 6) etc.. way more work / time / fees.
Whereas you can simply send crypto / the transfer code and be done in minutes.
May 11, 2021 at 1:50 pm
“in the U.S. and some other countries, buying something with a cryptocurrency or selling something for a cryptocurrency is a taxable event. So there’s no tax advantage of using cryptocurrency for a domain transaction…unless you intend to cheat by hiding it.”
If people want to pay because it is more convenient, then sure…but this is a key point. Since crypto is considered property, not currency, any time it is exchanged for anything of value it becomes a taxable event.
Using crypto as a means of exchange is inefficient with a tax system that treats it as property.
I suspect this is going end up getting a lot of people in trouble with the IRS. Blockchain is great, until they can tie you to a wallet and see the public record of transactions.
May 11, 2021 at 1:57 pm
as seller you get taxed the same either way, so there is no difference at all if you are a seller.
May 11, 2021 at 2:48 pm
according to “THE ECONOMIST”, the usa plans to launch either govcoin or fedcoin as its govcrypto in 2022 or 2023, as europe launches e-euro and china yuancoin
but i suppose that defeats the main value prop of crypto: decentralized non-fiat currency
May 11, 2021 at 7:10 pm
Just saw this. See my reply below too, Steve.
May 11, 2021 at 4:24 pm
The most common one is unlicensed online casinos. They pay in Bitcoin because they have extremely limited access to the regular banking system. (ie operating illegally).
May 11, 2021 at 6:01 pm
I would echo the first sentence by Denise above. You sure seem to be leaning far too heavily in the negative direction, Andrew, and going too far with this closing remark:
“I can think of few legitimate reasons that someone would use cryptocurrency to pay for a domain name unless they are in a jurisdiction that treats it favorably from a tax standpoint. So I’d be very cautious if your counterparty in a transaction requests to use cryptocurrency. It’s not a deal killer but think hard before completing a transaction if the counterparty insists on using cryptocurrency.”
And as I’ve occasionally mentioned before, I’m even a former fed. The kind who dealt with financial issues in fact. ?
Yes, there are bad apples and bad motives and bad practices, but using crypto for domains can be really great.
The smoothest and most streamlined domain sale I ever had was selling two for $xx,xxx in Bitcoin about five to six years ago in fact. The only thing that even comes close to how great that went is using the Epik escrow platform for both buying and selling.
So here’s how it went: we negotiated the price, including that I required a BTC premium above the price in USD to cover the possibility of price volatility during the transaction. As I recall, it had even been my idea to use Bitcoin if he wanted and was able, and then after we agreed to everything to my surprise he turned out to be someone who was heavily into Bitcoin and even said (after we had already agreed to it all) he would even have insisted on using Bitcoin. But it was clear this had nothing to do with anything negative, but rather that Bitcoin was practically some kind of zealous and loving “religious faith” for him. So he paid me, including the premium, and the whole transaction was done lickety-split. The only meaningful delay was the speed of the Bitcoin brokerage platforms themselves. And he simply paid me first on faith and trust without any escrow. In fact I had to nudge him afterward to even take possession of the domains.
It was really great, and he was really great. He was even so benevolent and “quasi religious” about it he even tried to persuade me to keep the Bitcoin and not cash them out, along with a speech about his faith in their future. But I cashed them out almost immediately instead (long story based on Bitcoin’s history till then). They were only about $2k each then, but would be worth quite a nice small fortune now.
Aside from transactional convenience, the best “legitimate” reason I can think of now would be cash availability. If someone is cash strapped but has Bitcoin, I’ll take it any day of the week. For now, that is. I’m definitely not a crypto fanatic myself, though I regret not jumping in early when I could have, and I am one who even strenuously argues that government can actually kill Bitcoin any time it wants and will *never* tolerate any competition for control of “money,” contrary to the “quasi religious” dogma about that.
And speaking of true “religion” by the way, check out Revelation 13:7 in the Bible and then contemplate what I just said there in the previous paragraph above. ?
May 11, 2021 at 6:27 pm
Correction: check out Revelation 13:16-17, not 13:7.
May 11, 2021 at 6:36 pm
How long until we all have a .Crypto Domain/Wallet …. the future is waiting
May 11, 2021 at 9:51 pm
It doesn’t matter to me if the buyer wishes to pay in either bitcoin or ethereum (the only 2 cryptos I’d accept) or via escrow or paypal or sedo or afternic.
But what are the ramifications of a launch of FEDCOIN or GOVCOIN, if for instance, you negotiate a deal in installments (which happens all the time, mostly for tax purposes and/or not taking the bulk of the runway of a funded startup for the sale)?
Could these so-called “GOVCOINS”, “FEDCOINS” impact valuations of BTC & ETH?
May 11, 2021 at 10:39 pm
Good question. Not sure, but the dollar is already primarily “digital” to begin with. I would suggest the issue is not so much whether a new digital US currency can “affect” the price of BTC and other crypto, as compared to the simple power of the government to effectively kill its value any time it wants. It simply doesn’t want to now.
The government is essentially owned and controlled by “Wall Street” and the various other rich and powerful special interests. For the time being “Wall Street” wants to milk the Bitcoin and crypto gravy train. Hence, government is allowing that for the time being, for a “season.” The moment it is time to kill it they can and will do so. In the meantime, it’s a wave to ride as long and far as possible. Fortunes have already been made, and there are doubtless fortunes that can still be made by some, not to mention also losing one’s shirt.
May 12, 2021 at 3:14 am
John, I believe you may be spot on. Just a matter of how long the finance titans, banks, hedge funds, and govt, allow it to continue: 1, 2, 5, 7 yrs – who knows?
May 11, 2021 at 11:45 pm
I would actually be more suspicious if they wanted to pay in gold and diamonds, doesn’t happen often but by the way.
May 13, 2021 at 2:43 am
Well that is equally suspicious. It is like people who buy new cars with bank notes. They are normally drug dealers or avoiding tax in some way, but yes it could be potentially legitimate in some instances.
May 12, 2021 at 12:57 am
All these ransomware hijacking asking to be paid in bitcoin…the hospitals getting hijacked, the oil companies…by the dark web hackers
if bitcoin does not exist, this extortion will never happen.
anybody dealing with the untraceable currency should be prosecuted and go to jail.
money laundering, illegal currency, extortion and kidnapping!!
May 12, 2021 at 4:09 am
You see a few trees, but you don’t see the forest. If you saw the forest you would see that any such crimes are not even the equivalent of a single molecule of water compared to all the unjust misery, suffering and death caused by the evil policies and deeds of governments around the globe.
But you have nothing to worry about because there has been a war on cash going on for a long time, as well anything resembling “money” that government can’t completely control, and we will eventually and ultimately get to the monetary state described in Revelation 13:16-17 someday whether in our lifetimes or not. Even now it is already technologically feasible, which it wasn’t when that was written. As for whether you will be happy then, that is for you to ponder.
May 12, 2021 at 7:32 am
As a seller, if I am not using an escrow service for the deal, then the transaction fee is always an issue. Paypal and other payment services are around 3%, and wires are not practical for deals under $1000. Plus, sending a wire is a lot of trouble to go through for many people. I don’t want to hold crypto, but if a buyer paid me with it, I would immediately convert it to US dollars using Coinbase Pro where the fee is only .5%.
May 12, 2021 at 7:06 pm
This is a very negative and unwarranted view.
– Without any intermediary (no receiver which didn’t get the money and both parties are each asking to their financial institution where the money is. Each bank rejecting the problem on the other, etc.)
– Without any foreign currency change (not everybody uses US dollars. People in Europe have the EURO, the GBP in the UK, etc.): Buyer and seller agree on a price in crypto and that’s it
– Secure and irreversible
– And you can easily make yourself your own escrow for free by using a multisignature wallet
The real question is why you would NOT use it.
This kind of post and a counterparty NOT wanting to immediately accept to use crypto or having negative views like this is the REAL red flag.
This site uses Akismet to reduce spam. Learn how your comment data is processed.
Domain Name Wire | Domain Name News