The Elite Are Going To Use Bitcoin Against Us

“If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered”. - Thomas Jefferson

MOAR BITCOIN!

As we move faster into the fully digitized age, dollar bills will eventually fall out of circulation completely as a new decentralized system dependent on digitally based blockchain technology takes its place. This technology will be a “rebirth” of fiat currency but each transaction will be easily trackable. This will make the new blockchain system more sustainable compared to the central banking system, primarily because of its ability to function and operate without a single point of failure (decentralized), which hackers and bad actors like to target. The centralized nature of the Federal Reserve means that if the country which upholds it fails, the currency dies. A decentralized blockchain currency is not dependent on a government or corporation, though, so there is no event that could happen that could kill the currency’s value in a single shot. Its value is always dependent on the perspective of its users, rather than a single entity determining and manipulating its value that the users of the currency submit to.

On Feb. 19, Jameson Lopp, the lead engineer at multi-signature Blockchain security firm BitGo, noted that during a holiday in the US, local banks closed down, failing to provide financial services to individuals and businesses that could be in urgent need of financial settlement services to process payments. This is an example of a single point of failure that takes the whole system down.

Non-custodial cryptocurrency wallets enable users to remain in full control over their funds, by only allowing users to gain access to their private keys and no other centralized entity or platform. As such, Bitcoin wallets like Blockchain, Trezor and Ledger cannot refund transactions or recover user accounts once the private key is lost, encouraging users to be more financially aware and responsible. As emphasized by Bitcoin analyst and RT’s Keiser Report host Max Keiser on several occasions, financial freedom and independence provided by Bitcoin and other cryptocurrencies in the market are largely beneficial and crucial for individuals and businesses operating in regions wherein government entities control banks and financial institutions.

BUT IS IT SAFE?

Last year, Saudi Arabian billionaire Prince al-Waleed Bin Talal was arrested by the government of Mohammed Bin Salman, who is expected to take control over Saudi Arabia and become its ruler, as the most powerful figure in the Middle East. The government of Salman initiated an anti-corruption purge, arresting 11 Saudi princes and 200 businessmen. At the time, The Wall Street Journal reported that the government of Saudi Arabia had asked for 6 billion dollars for the freedom of Bin Talal, who has garnered a net worth of over 25 billion dollars from his investments in Twitter ($300 mln), CitiGroup ($550 mln), AOL, Apple, MCI, Motorola, Fox Broadcasting and many more.

On the Keiser Report, Keiser criticized the previous remarks of Bin Talal, who had called Bitcoin “Enron in the making”. Bin Talal on CNBC’s Squawk Box said, "It just doesn't make sense. This thing is not regulated, it's not under control, it's not under the supervision of any central bank. I just don't believe in this Bitcoin thing. I think it's just going to implode one day. I think this is Enron in the making”. Criticizing Bin Talal, Keiser stated, “He said Bitcoin was no good because there is no central government and no central bank. And then a week later, the central bank and the central government rips out all of his net worth. If he had them in Bitcoin, he wouldn’t have that problem. He is like a poster child for why you should buy Bitcoin. Anyone who is thinking about should I buy Bitcoin, look at [Talal] sleeping on a mattress of a rich hotel under house arrest. Furthermore, he is overrated as a money manager”. In November 2017, the Saudi government cracked down on private bank accounts and froze the accounts of prices and businessmen. Keiser noted that could have been avoided if the wealth of these individuals were stored in a decentralized store of value, like Bitcoin.

The offshore banking industry, which is dominated by influential financial institutions like JPMorgan, is structured around large banks that are able to clear big sums of money in an efficient and secure manner. But, the transfer of millions to billions of dollars require significant manual labor including transaction verification, Anti-Money Laundering (AML) checks and payment clearing. Cryptocurrency-focused hedge fund Blocktower executive Ari Paul stated that cryptocurrencies have the ability to address the offshore banking industry that supersedes that of major banks, “Cryptocurrency is trying to be the offshore banking system, I think. At least some of the cryptocurrencies. Most of the financial luminaries, I think genuinely, don’t understand what it’s trying to be. Jamie Dimon is an exception. By all accounts, I know people who spoke to him about cryptocurrency four years ago before I was really in the space. He understands it. I think he sees it as a competitor against JPMorgan,” said Paul during an interview with Business Insider.

Regarding transaction settlement, offshore banking, and financial freedom, centralized systems of banks fall significantly behind major cryptocurrencies, which can offer all three services with low costs and a robust infrastructure. Conclusively, cryptocurrencies like Bitcoin and Ethereum have significant advantages over banks in a number of areas, including security, borderless transaction settlement, efficient payment clearance, and lack of dependence on centralized service providers or entities. Although the offshore banking industry is valued at 32 trillion dollars and the valuation of the cryptocurrency market remains below half a trillion, the above-mentioned advantages could allow cryptocurrencies to compete against banks across many sectors.

HOW IT WORKS

The structure of cryptocurrencies, when more fully implemented into the economy, will be closer to the structure of gold-backed currencies than government-backed fiat currencies. This “gold,” though, will be virtual and part of an overall network of connected virtual gold nuggets or “blocks”. This instead of physically sitting in a vault across the country. These “pieces of the gold puzzle” connected via a “chain,” or master transaction record, only maintain their worth as long as the overall connecting chain is not broken. As long as the chain holding together the transactions is never broken, the system will continue to exist. I personally call this the “Magic Circle of Cryptocurrency,” but we’ll talk more on that later.

One may also think of Bitcoin and other popular virtual currencies like land ownership. Each time a new blockchain-based currency is created, its creators are essentially declaring a new piece of land as their own. The planet on which the land exists, however, is the human consciousness. The only way anyone will “invest” in a cryptocurrency is if they trust the landowners and the land itself. For example, the Inland Revenue Department of New Zealand (IRD) is explicit that cryptocurrencies are not really currencies at all, saying that “for tax purposes, cryptocurrency is property, not currency”. The specific reason for this distinction is that “this means foreign currency gain or loss provisions do not apply”. The IRS takes the same view. Both provide clear question-and-answer guidelines on the tax status of transactions undertaken using cryptocurrencies. By viewing cryptocurrency as property, both the IRD and IRS consider holdings just like any other asset. When cryptocurrencies are acquired for the express purpose of selling or exchanging them, then proceeds from the sales are taxable. Likewise, receiving cryptocurrencies as payment for goods or services is taxable if it is business income. This is because “bitcoin and similar cryptocurrencies generally don’t produce an income stream or provide any benefits, except when they’re sold or exchanged. This strongly suggests that cryptocurrencies are generally acquired with the purpose to sell or exchange them”.

The New Zealand IRD, however, goes further than the IRS by identifying that some people may purchase and hold stocks of cryptocurrencies as stores of value independent of currency values, in the same manner as gold bullion. Taxpayers are referred to a paper discussing the income status of proceeds from the sale of bullion to determine whether a tax liability may exist. While the IRD recognizes that in most cases gold purchased in bullion form will be purchased for the dominant purpose of disposal, so that income derived will be taxable, there may sometimes be situations in which the commissioner may accept that the dominant purpose in acquiring gold bullion is to retain it for reasons other than eventual disposal. For example, there may be circumstances in which bullion is acquired for the dominant purpose of building up a diversified portfolio of property that the person will not necessarily realize, or as a long-term investment that the person will not necessarily realize. In such circumstances it may be that the taxpayer can show that the bullion was not purchased with the dominant purpose of disposal.

Ultimately, the onus is on the taxpayer to keep the relevant records and accurately report the economic effects of all taxable transactions, regardless of the currency in which they are transacted. Using cryptocurrencies in the hope that unobserved transactions are untraceable (and therefore untaxable) is simply tax evasion. It is no different from conducting transactions in cash or barter to avoid tax liability. Ironically, the questions surrounding taxes and cryptocurrencies arose in New Zealand when it was reported that employers could be paying employees in cryptocurrency and that this could threaten tax revenue in the same way that internet sales of digital goods consumed in New Zealand have threatened the country’s ability to collect a Goods and Services Tax (GST, a consumption tax). Similar concerns have also arisen regarding the ability to collect GST on items bought online from overseas firms that are not required to collect and pay the tax in the same manner as New Zealand firms that are losing sales to overseas rivals not facing the 15 percent tax liability. The latter situation mirrors the challenges US state governments face collecting sales tax on interstate purchases.

The real problem the IRD and IRS face is not simply emerging technologies such as cryptocurrencies, but rather the internationalization of transactions and the fragmentation of the classical employment relationships. It is not unrealistic to expect that in the near future, the average taxpayer may not be an individual with a single employment relationship with one firm, but rather a portfolio worker who has different sources of income originating from activities in many different countries and who buys goods and services from providers over an even wider range. Historic systems may not be fit for revenue collection in this future reality.

While both agencies clearly state that taxpayers are obligated to declare their liabilities and pay the correct tax, the systems they have used in the past to both collect payments (e.g., payroll and sales taxes) and furnish information to verify taxpayer statements of liabilities have relied on their legislated powers to compel employers and retailers within their own legal jurisdiction to act as their agents. To the extent that sovereign countries can use reciprocal agreements with other countries, some information and funds can be collected by foreign revenue collectors and repatriated to the country where the liability lies. But where no such agreements exist, or if it is far from clear who controls the entity that could furnish the information or act as collection agent, there is no option but to rely on the taxpayer’s word that the proffered returns are accurate. That is, obligations currently required of taxpayers to track and report cryptocurrency transactions and the associated liabilities may become the norm rather than the exception. Already, we are observing new firms and applications emerging to help taxpayers track cryptocurrency transactions and report liabilities. This raises the question of how long it will take for revenue agencies to adjust their systems and processes to account for this new reality and the different relationships by which information will be furnished and funds will be collected.

Along with the technology used to build and support the blockchain system, the value of each “block” of virtual gold is wholly dependent on the reputation of the creator/distributor of the overall “network of virtual gold blocks”. Imagine this network as being a pile of golden nuggets stacked up in a vault that different people put their names on as they purchase them. The creators of cryptocurrencies are creating their own metaphorical vaults, each with unique technology and features. Once the initial hurdle of customer adoption is overcome (either through supply/demand marketing or forced government coercion), the worth of the virtual cryptocurrency is generally stabilized with its value then solely being determined by the wills of its customers. For example, if the world suddenly decides that the Bitcoin “vault” is worthless, it becomes worthless. If the world suddenly decides a cryptocurrency “vault” like Ethereum is the best, it then usurps Bitcoin. The trick is convincing everyone that a specific cryptocurrency is the best and that the others are worthless. As more people jump onboard whatever cryptocurrency is being marketed to them, that cryptocurrency’s value will increase substantially until it levels out (usually through a bubble like the Dutch Tulip Mania). This means we are in the midst of a brand new type of market unique to the societies of the world.

BANKS, BLOCKCHAIN, AND AI, OH MY!

One way to shape this brand new volatile market will be through government intervention (forced coercion) with a government-issued currency that comes with “updates” as tech evolves. In this case however, if the primary government-issued blockchain currency loses its foundation (whatever that foundation may be), other virtual systems (government backed or not) will arise and take its place. This may mean blockchain will better enable corporations to take control of the economy as governments collapse (as governments alone aren’t enough), but we will see how the United Nations works through this to ensure there isn’t too big of a struggle among the titans. Corporations, as a result, may simply just merge with governments, creating a synthesized corporate-government culture for everyone to follow. This idea is echoed in a new 2019 videogame called The Outer Worlds, which depicts a post-apocalyptic future with corporations defining the core values of various societies. In 2019, blockchain is continuing to be implemented by corporations first as corporate executives realize the advantages of basic transactional tracking through blockchain. It is likely that governments will follow the corporations’ lead as the applicable parts of this technology are applied and tested (corporations acting as the beta testers). We could even say that we are in the DOS stage of blockchain’s evolution, just like we are with artificial intelligence. With the United States spending as much as it does each and every year to keep its bloated system afloat, it is only a matter of time before the Band-Aids wear away and the boat sinks. Blockchain technology may be a true solvent for various issues we see in the system today, but it certainly isn’t the ultimate solution to fixing the system as a whole.

“We don't have a trillion-dollar debt because we haven't taxed enough; we have a trillion-dollar debt because we spend too much”. - Ronald Reagan

We can see now how there is a significant amount of power in the hands of the central banks. The banks have historically flexed their power more and more each and every year since their inception, creating imaginary money from nothing and ruining the value of the dollar. Just a couple wrong moves by those in control can take down the centralized system we have today entirely. Blockchain technology, on the other hand, has the ability to decentralize this system considerably – shifting power away from the select few to the hands of the people. Because of this fact, though, we can be sure that the controllers of the current system are going to jump on this monetary technology to control its growth, rather than just let it evolve independently. We can be sure this same tactic is going to be used by governments when AI becomes more powerful, with regulations likely getting passed to control its development. Increased taxation and extreme spending has allowed the government to become so bloated that it can no longer support itself. This chain of dependence makes its way down to the citizens, in that many are also are unable to support themselves without government assistance – whether that be through fiat currency or welfare. Though the economic systems of the United States government appear to be on the verge of collapse, it also appears that this system was infiltrated long ago and was purposely structured to get to where it is today. Even though this may be the case, most are no longer concerned with the heart of the problem and are only attempting to patch the leaking holes. Moves have been consistently made by the infiltrators to shift power from the people to the government, in turn giving the most power to the central banks who effectively own the governments they lend money to. We live in a country on the verge of suicide, where the heart of the problem, is the problem of the heart. Nobody really cares about fixing the system at all. Where do we go from here?