A chance discussion with James Duncan in which he raised the potential impact of Bitcoin on taxation made me go and map out the value chains around money and look at some things in more detail.
Bitcoin is truly marvellous as a concept and it is far more than just another currency. If we examine the value chain associated with money we have higher order systems for transfer and storage (banks) along with taxation (Government funding).
Bitcoin's effect is not just to act like a form of cash but to decentralise the transfer systems. By doing so, it impacts our ability to tax. If we can only see what is transferred but not to whom then we cannot in effect tax without the voluntary participation of those involved. But our market economic system is based upon greed and without adequate means of detection a flourishing alternative market will grow. Hence our taxation systems would have to adapt to some other commodity where the transfer mechanisms cannot be hidden so easily. But to what? Land ownership? Residency?
If the burden of the entire governance system is placed on land ownership then some will be forced to sell but to who and what of the subsequent burden of social housing and how will that be funded? But what of residency, can't we use that?
Alas, greed again plays its role because if the wealth is hidden then everyone can say they earn nothing and have no wealth. You cannot provide for the exception as all will claim it. Government has to assume everyone has wealth but some won't and you will not be able to distinguish. So what do you do when someone claims they cannot afford residency? Force them to work? Evict them? Gaol them?
It's greed that will drive the growth of Bitcoin. It's greed which will prevent the ability to tax. The beauty and horror of Bitcoin is that ultimately through the very thing that drives it (Greed) it will bring about the destruction of the capitalist system by the dismantling of the very thing that capitalists tend to dislike - taxation and the state. Bitcoin will become the cancer of the capitalist system. It is truly stunning in simplicity, unstoppable and alas Pandora's box has been opened. What a marvel of ingenuity it is.
As you can guess, I'm not a fan of Bitcoin. Left unchecked then I find it will undermine the importance of Government which is actually not good for competition and the market. However, don't confuse my disdain for Bitcoin with opposition to the technology behind it. The Blockchain has huge and positive potential in many industries. I'm a fan of the Blockchain, I just can't stand Bitcoin.
As you can guess, I'm not a fan of Bitcoin. Left unchecked then I find it will undermine the importance of Government which is actually not good for competition and the market. However, don't confuse my disdain for Bitcoin with opposition to the technology behind it. The Blockchain has huge and positive potential in many industries. I'm a fan of the Blockchain, I just can't stand Bitcoin.
