Our latest Blockchain offering

My RMIT colleagues Chris Berg, Jason Potts and I have another paper up at SSRN.

Distributed ledger technology emerged in 2009 as the protocol behind bitcoin, a cryptocurrency with origins in the ‘cypherpunk’ community who sought to use cryptography to secede from government control of money. Bitcoin’s pseudonymous inventor, Satoshi Nakamoto said Bitcoin would be “very attractive to the libertarian viewpoint” and many in the crypto-anarchist community saw, and still see, cryptocurrencies as a means to free citizens from the monetary depredations of governments. But from these revolutionary secessionist origins, it has become apparent that not only are there many possible use cases of distributed ledger technology for government, but that government action through both regulation, legislation, and public investment might be a key factor in the adoption and development of this technological innovation. Governments can use blockchain technology to exploit the service efficiencies they may bring. But also, and perhaps counter-intuitively given their revolutionary origins, blockchain applications are likely to need government cooperation to facilitate adoption and the development of the blockchain economic system.

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8 Responses to Our latest Blockchain offering

  1. Ƶĩppʯ (ȊꞪꞨV)

    Anchor link #1

  2. struth

    All I see is a howl from governments about this being mass tax avoidance and the lefties will scream their tits off.
    It actually could be just the instigator needed for governments looking for control of the internet.

    If not careful, could it possibly be that you make matters worse?
    No government is going to let that fly.
    I admit to being ignorant of the fine details, hence I could be wrong, but these sorts of things with varying levels of technology through the years, seems to be driven by brainiacs with limited understanding of just what the world is all about, and what government would never allow in a month of Sundays.
    I think, and as I said, I could be wrong, but someone trying to sell me an idea like this, thinking the government/s will put up with it, and let it go, isn’t going to get an easy job of selling it to me.
    You may be the most brilliant minds there has ever been.
    Or else you are incredibly Naïve.
    Some early starters always make money out of various Ponzi schemes (not saying this is one) but trying to sell me a currency free of government, well , lets face it, how do we really see this ending up?

    Again, I could be wrong, and that’s why I have waited a long time before commenting.

  3. flyingduk

    There is zero chance the government will ‘shut down’ the internet because so much of modern life is tied to it (electrical systems, commerce, banking, communications, paging, hospital records, etc etc etc) that to do so would, literally, cause mass mortality. They might, however, try to control crytpocurrencies by controlling the internet. This too will fail, because the key property of the ‘distributed ledger’ computer networks which are the foundation of the cryptos is that they cannot be shut down because there is no central point that controls them. To shut a distributed ledger down would require that you shut down *every single* computer on the network, wherever it is in the world. If even one of the thousands of computers in the network is still up, the network is still up.

    I don’t doubt that governments will make increasingly intrusive efforts to skim profits from holders of bitcoin (and other cryptos) but what it new now is that to do so will require the consent of the owner: for the first time in history they cant just reach into your bank account or your safe and take it. If they become too predatory, you have the option of leaving the country and your bitcoin will be there when you get to Singapore or Hungary or whichever haven you have gone to.

  4. rickw

    I’m in the Republic of The Marshall Islands, first country in the world to acknowledge bitcoin as a legitimate currency. yay….

  5. Tel

    They might, however, try to control crytpocurrencies by controlling the internet.

    Coindesk handed over data on user transactions to the IRS going back several years, so now the IRS can knock the door and ask about capital gains. Oh thoooose bitcoins, no I never realized I was supposed to pay any tax on them, how silly!

    Just saying.

    Here’s the beauty of it: when the crypto bubble crashes the people who LOST money can’t ask the IRS for their share of that tax collection, but the people who MADE money on the way up sure have to pay what they owe in capital gains. Cunning huh? Government “protects” people by taking a substantial share of whatever is going down.

  6. OldOzzie

    The taxman had his sights on Bitcoin, and there was no shortage of conversation about cryptocurrencies and the taxing thereof.

    Opinionator waded in:

    “If Bitcoin is a currency, any appreciation in its value is not a capital-gains tax event. If the Australian dollars strengthens, we don’t pay CGT on the capital gain do we? PS I don’t own any Bitcoin.”

    Paul posited:

    “If it is not issued by the government of a nation state it is not a currency. A government has the law which in turn is backed up by force of arms, they decide what is a currency and what is not. No government is going to allow a parallel currency to run alongside the system, outside of their control.”

    David was distraught:

    “The example given in the paper this morning was of a hypothetical investor who paid $1000 in 2011 and sells today for $10m. He has to pay nearly $3m in tax, which leaves him with only a $9m profit. I wept over my breakfast for the poor fellow.”

    Ken cautioned:

    “Calling bitcoin punters ‘investors’ is a laugh. They are investing in air, the greatest fraud in history. I guess the ATO wants to give punters a tax deduction when they lose all of their money. Train crash in slow motion.”

    Silly, said Tilly:

    “The ATO does not give investors a tax deduction for losses, they give you credits on future capital gains so you can reclaim your losses that way. This means most people are not able to claim it. It is not like NZ where a loss is deducted from future tax.”

    Travel, said Tristam:

    “Those with significant gains might consider relocating to Portugal or Slovenia, where bitcoin gains are not taxed. The negative consequences of this sort of policy include capital flight from Australia and should be properly reckoned.”

    Domenic was delighted:

    “Bitcoin and other cryptos are moving into the mainstream. This is good for the nascent crypto market as it further legitimises the sector.”

    Each Friday the cream of your views on the news rises and we honour the voices that made the debate great. To boost your chances of being featured, please be pertinent, pithy and preferably make a point. Solid arguments, original ideas, sparkling prose, rapier wit and rhetorical flourishes may count in your favour. Civility is essential. Comments may be edited for length.

    JASON GAGLIARDI

  7. Jobson Grothe

    Sinclair, a more relevant offering would be a “blockhead” one.

  8. OneWorldGovernment

    Sinclair,

    Personally I am pleased to see.

    It may look like a bit of an offside but I saw this the other day and thought it worth consideration given that it talks about ‘Custodial Services’.

    https://www.wired.com/story/why-a-tiny-kentucky-firm-rules-a-corner-of-the-crypto-market/

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