I've written about Bitcoin in the past, always to make a single simple point: As cool as the technology might be, government agencies will not allow it to thrive in the manner that its biggest fans might hope. Over the past few months, numerous enforcement actions and bankruptcies around the globe have added flesh to my admonitions. Yesterday the IRS added enormous fuel to the fire when it announced that Bitcoins are property, not currency. Why does that distinction matter? Because anything that you exchange for property is a barter, and thus a taxable event. Any transaction involving Bitcoins now incurs non-trivial bookkeeping and reporting requirements.
So what does this ruling say about the broader economy?