Transparency on Steemit provides a risk to security rather than a benefit
As we can see with the latest scam attempt, we see the danger of a totally transparent value exchange network like Steemit. On Steemit value is stored liquid in tokens either as "Steem" or "Steem Dollars". Steem Power isn't liquid but it shows how valuable each account is on Steemit complete with a $ estimation of the account value. How is the $ estimate of account value generated and why is it displayed to the public?
At the same time we don't have estimations in $ for the SBD we receive to help with tax compliance. So in a sense we get the worst of both worlds with regard to transparency on Steemit. We get extremely difficulty in compliance because we don't have any automated way to do accounting. This difficulty in compliance opens us up to potentially under or overpaying tax authorities and I understand it's not in Steemit's best interest to favor the $ values because people pay tax authorities all around the world but if this is the case why is the $ value displayed as an estimate for our account in the wallet section?
Steemit gives us the worst of the worst from transparency
We also get the worst in terms of the risk of attracting theft, scams, and targeted attacks against specific account holders. Steemit in a sense presents attractive information for the most predatory individuals by displaying how much each account is worth to the world. This information allows for the compilation of a "rich list" which can allow hackers, scammers, con artists and others to simply target the rich list. So the rich list is horrible for the security of account holders, the USD estimates in wallets are also horrible for the security of account holders, and finally the SBD presents a confusing presentation which could not only confuse those trying to comply but also confuse tax authorities into thinking accounts are worth way more than they can actually be sold for on an exchange.
Steemit needs privacy or it likely can't scale
Privacy in the right places on Steemit would allow Steemit to scale. The problem right now is Steemit bloggers (content providers) have the least security. Indeed if a Steemit account gets hacked the Steemit team has proven itself capable and willing to reverse the wrong. There is also a sophisticated account recovery mechanism built into Steemit which is nice as a safeguard against theft. They also is a mechanism in Steemit which allows account holders to delay the rate at which an account can be emptied in case of a theft.
Problems still remain because these problems don't actually provide security. It provides security on a superficial blockchain only due to the fact that sure the account may be technically more secure but in practice it's not. If an account on Steemit for instance is worth millions of dollars and the whole world can see which unique individual is the owner of that account then this makes that unique individual owner a real world target. Just as celebrities and rich people on the Forbes list are walking targets as people know potentially everything about them and know their net worth as well.
For medium to small account holders the risk isn't as big of a deal but for large holders I would think being on a rich list of any kind is not beneficial. Privacy can be implemented over Steem and should be in my opinion. The wallet should be something that individual Steemians should be able to make private and this is possible using ZKsnarks which is the same technology behind Zcash. I don't expect this change to be implemented of course but I don't see a good argument (security argument) for why it should be left as is.
Dana, do you feel the taxes would be simpler if Steemit issued 1099's to those who opted in? That would involve gathering US persons socials and other info (i.e. W-9 tax forms) but it is not impossible. In the US, it is certainly expected for a $300 million company (let alone $300 million cryptocurrency).
Steemit can't do that because not everyone is from the USA. I think the way to pay taxes or the way I do it is to calculate it at the exchanges like Bittrex or calculate it when it reaches my bank account. The weird USD values and SBD present inaccurate information which only makes it harder. If a CPA tells me I'm doing it wrong then maybe they should come up with some tool to help me do it right but as it is right now it's very unclear and very hard to calculate from information presented.
How much would you charge people to calculate it for them and prepare all of it from just the account info presented on Steem? I do think Steemit at times makes matters worse for themselves though because on one hand they present USD estimates but then on the other will try to claim they aren't responsible so why put USD info at all?
My view is, before charging to help people calculate their income, I would rather create a tutorial. I'm going to attempt to calculate my taxable income as a case study closer to the end of December when I have a full year calendar 2017. And make a post of it.
I would really like if Steem could make a few simple updates to their wallet (if this already exists I am unaware):
The USD amount they show in the wallet is largely irrelevant because that includes unrealized gains and losses. The taxable event occurs when the award is received in the form of Steem currencies; when the Steem is cashed out to USD that is a second gain/loss. Perhaps moving from SBD to Steem is a third gain/loss that happens before cashing out.
Although Steem claims no responsibility for our taxes, I'm not entirely sure that Steem as a company is not responsible to file forms to 1099 for US citizens; they very well could be. That is a good post idea I will look into it :) !
SBD is Steem so how can it be a gain loss when SBD isn't really anything more than a variable amount of Steem? The whole thing confuses me.
Hi, moving SBD to Steem is really not a significant step as long as SBD stably tracks to 1 USD, but SBD and pure STEEM are separate assets trading in Bittrex. In other words, if SBD lost stability and became a volatile token, trading from SBD to STEEM could create a more significant gain (or loss). The most two important tax events if SBD-USD FX is stable are (1) receipt of the SBD/SP reward and (2) cashing out to BTC/USD. This is all just my personal view of course.
I don't manage Steemit I only post, but you've got a point there, whether I have just little or a lot, being open does have it's problems. I leave it to the super Whales to sort that one! Thanks for the post.
You bring up some very interesting matters to consider. There are certainly many things to be sorted out in this new era of cryptocurrency.
You raise some good points here, certainly for those with substantial accounts it does make them quite obvious targets with account information so easy to access. I'm not sure the taxation is such an issue - maybe only if you explicitly state your holdings. Fortunately I don't have a pot to piss in - so anyone trying to hack me would need to bring their own pot so we could share streams - and the tax man is welcome to his share of nothing I will even put a bow on it for him!
Quite a morning here at steemit hehe, I took me 5 tries to upvote this post ?
I've never read a post about tax implications and watchful eyes. I suppose cashing out through an official exchange would almost necessitate filling the tax man in, In fact I've never been successful in my attempts to open an account linked to my bank with all the hoops to jump through. Money deposited into my bank would surely raise some flags somewhere.
My bitcoin dealer here in Panama ( officially licensed business ) has had bank accounts closed plus western union and moneygram will no longer deal with him ( send or recieve ). Now if I mention here how we get around that, would that avenue be blocked too? I like the transparency of blockchain but until we can bring the criminals to heel and stop them from profiting/stealing off us by draging them into the light that's where were at.
I prefer face to face transactions and it's a great way to meet fellow crypto enthusiasts but that's not always convienient or even possible.
The future looks bright but much work to do yet :-)
Thanks for raising these important issues.
hmmm
Excellent post. Posts like this will help the platform grow. I Agree with you that there needs to be some level of privacy around the wallet/account and the value of said wallet/account.