Tax Attacks Won’t Kill Bitcoin: Regulators Must Learn To Accept New Technology

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This is an opin­ion edi­to­r­i­al by Conor Chep­enik, an orga­niz­er for the Mas­sAdop­tion Bit­coin meetup.

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Con­gress­man Brad Sher­man’s recent tweet attack­ing Bit­coin­ers as “tax evaders” is a prime exam­ple of how Bit­coin has become a main­stream phe­nom­e­non. It’s iron­ic that politi­cians like Sher­man, who have sworn an oath to uphold the Con­sti­tu­tion and the pre­sump­tion of inno­cence, are so quick to label Bit­coin sup­port­ers as crim­i­nals with­out any evi­dence. Such remarks under­mine the fun­da­men­tal prin­ci­ples of jus­tice and fair­ness that under­pin our legal system. 

The fact that politi­cians like Sher­man are attack­ing Bit­coin serves as a sig­nal to those on the fence that there may be some­thing to this “free­dom mon­ey” that is con­stant­ly under attack by those who are cor­rupt and com­pro­mised by lega­cy sys­tems. In a way, even those who attack Bit­coin may be unwit­ting­ly work­ing for its suc­cess and adoption.

And clear­ly, politi­cians are expect­ing Bit­coin­ers to shoul­der some kind of tax bur­den that they do not impose on any­one else.

Imag­ine if a politi­cian tried to tax peo­ple for using com­pu­ta­tion­al pow­er to do math or use Eng­lish to express their views. They would be ridiculed and mocked because, on top of that being an insane pol­i­cy, both of these sub­jects are essen­tial to a func­tion­al society. 

Instead of impos­ing arbi­trary tax­es, the gov­ern­ment should focus on cre­at­ing a reg­u­la­to­ry envi­ron­ment that sup­ports inno­va­tion and eco­nom­ic growth. Unfor­tu­nate­ly, in oppo­si­tion to that seem­ing­ly-obvi­ous edict, the Biden admin­is­tra­tion has pro­posed a 30% tax on Bit­coin min­ing, which is not only unfair, but also hyp­o­crit­i­cal to the val­ues that make the Unit­ed States great. 

If a mar­ket par­tic­i­pant has paid for their ener­gy, they should be free to use it as they wish. So, why is Bit­coin min­ing being tar­get­ed when oth­er indus­tries, such as pornog­ra­phy, video games or gam­bling, also use ener­gy to allow peo­ple to indulge in their vices online? I’m not vying for a tax on oth­er indus­tries. I firm­ly believe that if a mar­ket par­tic­i­pant has paid for their ener­gy they can do what­ev­er they want with it. My intent is to point out that this pro­pos­al seems to be a clear exam­ple of gov­ern­ment over­reach and inter­ven­tion in the pri­vate sector. 

Reacting To Change

And it’s not just Bit­coin min­ing that is being tar­get­ed. It is the entire Bit­coin net­work. When new and inno­v­a­tive ideas chal­lenge the sta­tus quo, both humans and tech­nol­o­gy can exhib­it resis­tance or embrace the change. Tech­nol­o­gy mim­ics many things about human biol­o­gy, includ­ing the way we respond to change. Estab­lished indus­tries or enti­ties may resist new tech­nolo­gies to pro­tect their own inter­ests, just like how our immune sys­tem responds to for­eign pathogens to pro­tect our body. How­ev­er, just as humans can adapt to chang­ing envi­ron­ments, tech­nol­o­gy can also evolve and adapt to bet­ter serve our needs. Peo­ple can either fight against Bit­coin or embrace it, but either way, this tech­nol­o­gy is chang­ing the world rapidly.

It’s impor­tant to remem­ber that new tech­nol­o­gy, includ­ing Bit­coin, is not inher­ent­ly bad, but rather a tool that can be used for both good and bad pur­pos­es. Instead of fight­ing against progress, we should embrace the oppor­tu­ni­ties that new tech­nol­o­gy pro­vides and work togeth­er to shape a bet­ter future. Sher­man’s tweet may not win him any votes, but it shows his lack of under­stand­ing and respect for the rights of his constituents.

The com­par­i­son between a tech­nol­o­gy net­work and human biol­o­gy may seem uncon­ven­tion­al, but it pro­vides valu­able insights into the evo­lu­tion and growth of new tech­nolo­gies like Bit­coin. Kevin Kelly’s book “What Tech­nol­o­gy Wants” high­lights the impor­tance of this. There are three quotes that real­ly stood out to me:

“Tech­nolo­gies do not exist in iso­la­tion, but rather in net­works that ampli­fy their pow­er and reach.” 

“Inno­va­tion is a team sport, and the best inno­va­tions are pro­duced by net­works of peo­ple work­ing together.”

“The more inter­con­nect­ed our tech­nolo­gies become, the more emer­gent prop­er­ties they exhib­it, and the hard­er they are to pre­dict or control.”

Tech­nol­o­gy is always evolv­ing based on human needs. It starts with a small idea and then grows into some­thing larg­er than any­one could have imag­ined. This evo­lu­tion is not always lin­ear, as new tech­nolo­gies often emerge from exist­ing tech­nolo­gies. These net­works grow expo­nen­tial­ly faster as new tech­nolo­gies enable stuff we nev­er thought pos­si­ble. Face­Time would seem mag­i­cal to some­one 100 years ago in the same way that a med­ical device that can regen­er­ate limbs for peo­ple would seem mag­i­cal in the mod­ern day. I assume that type of tech­nol­o­gy will come some­day and with it many more inno­va­tions that I could nev­er have hoped to imag­ine until I saw them.

But, just like humans, tech­nol­o­gy has its own set of rules and laws. We have to fol­low these rules to make the most out of technology’s poten­tial. Imag­ine if some­one called a con­fer­ence about TCP/IP a “con­fer­ence for gang mem­bers.” It would seem ridicu­lous. Espe­cial­ly from a politi­cian who should be encour­ag­ing inno­va­tion in their district. 

Attack­ing peo­ple because they enjoy using a pro­to­col is insane. How­ev­er, if your job was ded­i­cat­ed to main­tain­ing lega­cy tech­nol­o­gy and adopt­ing new tech­nol­o­gy could make you irrel­e­vant, I sup­pose you would­n’t react favor­ably toward the new tech­nol­o­gy either.

Embracing The Evolution Of Technology

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In the end, we are all part of the net­work of tech­nol­o­gy, whether we like it or not. We must embrace the evo­lu­tion of tech­nol­o­gy, and under­stand its poten­tial to shape the world for the bet­ter. We are at the begin­ning of all the things that will be built on these new pro­to­cols, so it is up to us to har­ness their pow­er and make the most out of their potential. 

I can’t say I know for a fact that bit­coin is going well above $1 mil­lion, but I think it’s pret­ty damn pos­si­ble and that, as more net­work effects get added, both in meat­space and cyber­space, the more like­ly it becomes.

“When zero reached Europe rough­ly 300 years lat­er in the High Mid­dle Ages, it was met with strong ide­o­log­i­cal resis­tance. Fac­ing oppo­si­tion from users of the well-estab­lished Roman numer­al sys­tem, zero strug­gled to gain ground in Europe.” 

–Robert Breedlove, “The Num­ber Zero And Bit­coin

Now, the idea of not using zero in math is a non-starter. It seems high­ly like­ly Bit­coin will have a sim­i­lar fate as zero and the idea of not using Bit­coin and all the things built on top of it will be pre­pos­ter­ous. Just look at Nos­tr, for an exam­ple. There is no way the pro­to­col would have thrived had it not been for both Bit­coin and Bit­coin­ers bring­ing so much val­ue onto the network.

I believe a sim­i­lar effect will take place for more inno­va­tions around the world, whether reg­u­la­tors under­stand Bit­coin or not.

This is a guest post by Conor Chep­enik. Opin­ions expressed are entire­ly their own and do not nec­es­sar­i­ly reflect those of BTC Inc or Bit­coin Magazine.



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