Why Bitcoin can bypass taxes (Why Bitcoin is irreplaceable)

08/13/2023 10:23 • Blockchain Buzz • 101 views

Why can Bitcoin bypass taxes? Why can Bitcoin avoid taxation? First, let’s take a look at how Bitcoin avoids the tax burden of the United States Internal Revenue Service (IRS). In the United States, over 1 billion dollars can be extracted from personal wallets (i.e., through cryptocurrency exchanges) and, according to inheritance laws, these funds cannot be used as property or other assets for a certain period of time. However, if non-cash methods such as “digital gold” are used, capital gains tax and taxable income need to be paid.

Due to reasons such as the large number of Bitcoin holders and low costs, most people do not report their wealth to tax authorities. Although some businesses have shifted investment income to overseas investors, some companies are unwilling to pay their tax liabilities, which prevents them from enjoying the benefits of profits, forcing them to pay up to 20% in interest to the government.

When you purchase Bitcoin, your tax base decreases. Even those who hold a large amount of BTC can convert their principal into fiat currency. In this case, if you do not have your own private key, you cannot retrieve your held Bitcoin.

Generally, if a person wants to gain substantial investment income, they must pay an additional part of the income tax, such as real estate development costs and a 30% tax rate on stocks. In other words, “you spend all your time buying houses,” which is referred to as “capitalization” by traditional financial institutions.

Another example is that the IRS in the United States may not allow individuals to directly sign contracts with customers and transfer them to third-party companies. For instance, when a listed company sells shares of the company to shareholders, interests are generated. At this time, it can choose to accept money from customers or use it as collateral. Then, based on the credit ratings of both parties in the transaction, it sells the equity to another acquirer, thereby earning more income.

However, Bitcoin does not do this: “As long as users deposit Bitcoin, they can participate in mining activities. They will be incentivized regardless of the price.” In other words, as long as investors hold less than 100 coins, they can become “agents and beneficiaries.”

So why can Bitcoin be tax-free? First, if investors want to buy Bitcoin, unless they actually hold a token without pre-mining or unissued token risks, they can only decide whether to retain the remaining value or set up a new reward pool or choose to withdraw until all circulating Bitcoin is locked for a certain period of time. Second, if holding $10,000 to $50,000, Bitcoin belongs to “traders” instead of ordinary taxpayers who have to bear corresponding losses when buying and selling. However, this is not the case at present. If a Bitcoin holder’s net assets reach $10 million, there is no obligation for taxpayers to return, as only holders can guarantee that they will not be detained.

Lastly, despite the high nature and scarcity of Bitcoin, its potential for appreciation is still enormous. If someone wishes to hold it for a long term,

Why Bitcoin is irreplaceable

According to CCN, many cryptocurrency investors believe that Bitcoin can replace the US dollar as a safe store of value due to its increasing correlation with other major currencies. However, due to the growing demand for stablecoins in the market and increased interest from regulatory agencies in cryptocurrencies, it has become one of the irreplaceable asset categories. So why is Bitcoin currently the least accepted investment choice by the public? The answer is simple: because of its slow transaction speed and low transaction fees, not many people are willing to use Bitcoin as a fiat currency to exchange goods and services.

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Why Bitcoin can bypass taxes (Why Bitcoin is irreplaceable)

Why Bitcoin is irreplaceable

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