Taxation of cryptocurrencies - a demise or a golden-mean to modern finance?
Cryptocurrency – an enigmatic discovery of XXI century that evokes some heated discussions all around the world. Some people find it too obscure and leave the topic behind, whereas others perceive them as the milestone for the future of finances. Still unpopular in many countries, the issue of cryptocurrencies is slowly becoming more visible in both media and press. As a result, various governments plan to decide on imposing a duty on cryptocurrencies which begs only one question – will it become a demise or a golden-mean to modern finance?
Cryptocurrency is a digital or virtual currency that is designed to work as a medium of modern exchange. Basically, it makes use of cryptography in order to secure and verify any transactions – in other words, they might be referred to limited entries in a database that cannot be changed unless some required and specified conditions are fulfilled. Cryptocurrencies are perceived as the newest invention of modern finance that will allow fully secure banking and legal, international transactions. They might be used as a circulating medium or become a high-risk investment.
As cryptocurrencies such as BitCoin, Ripple, Ethereum or LiteCoin are becoming more mainstream, governments and various law enforcement institutions worldwide are trying to define their place in already existing legal regulations and frameworks. Considering the still growing popularity of manifold cryptocurrencies and the profits that might be generated by them, the concept of taxation comes into the light.
The situation arises differently in other countries all around the world; in Bangladesh, Bolivia, Ecuador, Kyrgyzstan and Vietnam they became outlawed. The government of the USA treats this phenomenon as a “property” (just as gold or real estate) and Polish tax system, for instance, also perceives it as a part of “property law”, obligating the taxpayer to account for personal income tax on net profit generated on trading cryptocurrencies.
The idea of taxation arises many debates – the proponents claim that is might only increase the level of users’ trust, encourage even more people to mine currencies and invest in them and what’s most important – it will make the most modern finance transactions fully legal. On the other hand, some significant number of people concerned believe that assessing cryptocurrencies might destroy the idea of “cheap and low cost” transactions and put the stimulus for financial innovation to an end. The future of BitCoin and other cryptocurrencies is still unknown, however one is sure – this is an undeniable breakthrough in modern finance and its lot lies in our hands.