23rd November 2021 > > Taxation.

tl;dr

Cryptos will revolutionise global taxation to the benefit of all.

Market Snap

Market Wrap

It’s been five days since we have had a 6-handle for BTC.

Those who have been around in cryptos for a while, will recall that in early 2014, the largest crypto exchange in the world – Mt. Gox – was hacked, losing 850,000 BTC valued at $450mm at the time ($530 per BTC). After the hack, the price of BTC on Mt. Gox was less than a third of the market price so less than $200 per BTC.

Of the missing 850,000 BTC, 145,000 that have been retrieved are soon to be returned to the original owners. Those owners will now have an asset that is worth 20 to 60 times the value of the investment back in 2014. This is an $8bn windfall that is probably in very weak hands.

Curious Cryptos’ Commentary – A heart-warming story

Matt Blaze, professor of computer and information science at the University of Pennsylvania, registered the domain name crypto.com for free in 1993.

That was a far-sighted bit of work.

Curious Cryptos’ Commentary – El Salvador

All crypto enthusiasts are strong supporters of El Salvador’s adoption of BTC as legal tender, and the rollout of wallets with $30 of BTC to every citizen of what is generally recognised as one of the poorer countries on this earth.

President Nayib Bukele has announced plans to build a “Bitcoin City” powered by geothermal energy – the one thing El Salvador has in abundance is volcanoes. The project will be funded by a $1bn bond offering, of which some of the proceeds will be invested directly into BTC.

This approach is like that of MicroStrategy (MS), but whether El Salvador can get away with extremely generous terms given by bondholders to MS remains to be seen. If you recall, the convertible bonds issued by MS give all the BTC upside to equity holders and shares all the downside with bondholders.

What is even more interesting is that this new city will have no taxes apart from consumption tax, which we call VAT here in the UK.

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Readers with long memories will recall that the CCC has in the past made the case that the advent of the crypto epoch means that the world will be forced to move away from any form of taxation apart from consumption taxes.

The reason is simple - cryptos will mean that it becomes impossible for governments to collect any other type of tax. El Salvador is ahead of the game once again.

This revolution in the tax base will be of huge benefit to taxpayers and the state alike. Consumption taxes are very simple to administer, impossible to avoid, easy to understand, and if structured correctly, they provide the opportunity for the most progressive taxation policy possible.

Legions of tax lawyers and tax accountants need to start thinking about a new career direction.