Speculation: Internet Currency & Top Level Domains

FairWinds Partners —  May 10, 2013

By now you’ve hopefully filed your taxes and received your refund – and if you buy and sell BitCoins, you definitely filed that information and any losses or gains, right? Sounds wacky but Forbes explains in a recent article that the Financial Crimes Enforcement Network (FINCen) considers the online currency to be a traded and taxable good or service.

“The IRS already gets a piece where you swap one product or service for another, as the IRS explains at its Bartering Tax Center. Soon the IRS may have a Bitcoin Center too. The Treasury unit called FinCEN… already has rules about Bitcoin and the IRS is likely to follow.”

This may be due to all of the attention the digital coin has been getting recently as media outlets report wild fluctuations and question its value. The coins, which can be purchased on bitcoin.org, reside in an online wallet (like an online bank account) and a Bitcoin address is “the only information you need to provide for someone to pay you with Bitcoin,” according to the site.

Clearly users trust Bitcoin’s cryptography and the website itself in order for the currency to survive and thrive. Consumer trust is critical to the success of online banking as well – and bank IT security leaders work tirelessly to stay on top of or ahead of an endless barrage of cyber attacks, especially in the form of phishing. As recently as April 5, Ars Technica reported a phishing attack on Coinbase, a Bitcoin wallet service: “Someone has been sending e-mails to Coinbase users claiming that they need to log in to confirm recent transactions but directing them to a website not controlled by Coinbase.”

So maybe Bitcoin should apply for its own branded top level domain (TLD) .BITCOIN in the next round of applications? If Bitcoin operated a closed registry, meaning that it didn’t allow anyone else to purchase secondary domain names in the TLD, some phishers could be thwarted. IF enough consumers understand that addresses in the address bar cannot be spoofed, they will KNOW corp.BITCOIN can only be a Bitcoin site. Moving the currency to its own, more secure TLD may also please government officials, who are beginning to discuss regulating the purchase and trade of these cyber coins.

As Neil Irwin described the idea of bit coin in a recent Washington Post article, “There is a certain theoretical elegance to the idea of a borderless currency.” The same is true of the Internet itself: there is elegance to the idea of borderless communication, or transactions in the currency of information and knowledge. But the same issues that exist within boundaries and between countries exist in even a borderless cyberspace: issues of security, politics, culture, and governance. Online currency is in its infancy, but seems an inevitability – and also one of the ‘innovative business models’ that supporters of new gTLDs imagined when launching the new gTLD program.