Bitcoin for Good: A Digital Currencies 101 for the Social Sector
Bitcoin and other Virtual Currencies' Tax FutureA brief history in time ... New virtual currency...
Transcript of Bitcoin and other Virtual Currencies' Tax FutureA brief history in time ... New virtual currency...
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Bitcoin and other VirtualCurrencies' Tax Future
August 2014
www.pwc.com
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Virtual currenciesPro’s and con’s for customers
August 2014Bitcoin and other Virtual Currencies' Tax FutureSlide 2
Link: BTC Echo
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The rise of virtual currencies1800 billion marketWorld Retail Banking Report 2014 (CapGemini) - negative client experience 60.5%
- generation Y
Facebook applied for e banking license in IrelandAmazon opening Amazon account for third party payments“M-Pesa” – SMS payment (2/3 of all adults in Kenya)
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The rise of virtual currenciesA brief history in time
• Alipay (part of Alibaba), launched in 2004 with no transaction fees
• Biggest market share in China: 300M users & it controls approx.50% of the Chinese online payment market * (* Credit Suisse –Feb. 2014)
• Provides an escrow service – payment only released to seller if thecustomer is happy with the goods purchased
“If the banks don’t change, we’ll change the banks.”
Jack Ma, co-founder of Alibaba
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Virtual currenciesNew virtual currency
August 2014Bitcoin and other Virtual Currencies' Tax FutureSlide 5
Litecoins, Peercoins, Ripples, Dogecoins, Mastercoins, Nxts, Namecoins, BlackCoins,Bit-Shares-PTS, Quarks, Primecoins, Counterparties, Feathercoins, Marinecoins,Zetacoins, Vertcoins, Megacoins, DarkCoins, Novacoins, Infinitecoins,WorldCoins, MaxCoins, YbCoins, FlutterCoins, WhiteCoins, Ixcoins, Mintcoins,Billioncoins, Auroracoins, Devcoins, Anoncoins, PotCoins, Faircoins, Terracoins,Zeitcoins, CommunityCoins, Applecoins, Tickets, GoldCoins, Nases, Digitalcoins,Freicoins, HoboNickels, Unobtaniums, Particles, NetCoins, ECCoins, USDes,UltraCoins, Myriadcoins, NobleCoins, UnionCoins, Cryptogenic Bullion, CaiShen,Mona-Coins, AsiaCoins, SecureCoins, Einsteiniums, Coins 2.0, MicroCoins,FedoraCoins, BitBars, BBQCoins, Mincoins, Karmacoins, TagCoins, RedCoins,ReddCoins, Saturncoins, DigiBytes, HunterCoins, Sexcoins, Heavycoins, Kittehcoins,MemoryCoins, MazaCoins, Bitcoin Scrypts, Riecoins, Yacoins, Pawncoins, Mooncoins,Execoins, Hirocoins, Top-Coins, LottoCoins, Fastcoins, DopeCoins, EarthCoins,KlondikeCoins, Isracoins, FlappyCoins, Deutsche eMarks, 42 Coins, GroestlCoins,Pandacoins, Diamonds, Blakecoins, TeslaCoins, DNotes, etc.
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Virtual currenciesNew virtual currency
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• 19 August – first set of pre-mined 100.000 CZC offered to public(sold out within 9.5 hours!)
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The rise of virtual currencies - China
Key concerns of the Chinese government:
money-laundering,
capital controls,
lack of fundamental value,
extreme price swings
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No official VAT / tax treatment of virtualcurrencies in China
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The rise of virtual currencies
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Virtual currenciesParties involved &issues to consider
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Customer- Acquiring goods/services- Bitcoins as investments
- Verifying transactions- Generating new Bitcoins
Retailer/ suppliers- Pricing issues- Exchange for legal currency
Sale/Exchange of Bitcoins/legal currency- Anti-Money Laundering
- Bitcoin investment products
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Virtual currenciesHow does it work
• Bitcoin - first decentralized digitalcurrency (21 million coins)
• Value determined by the market
• Peer-to-peer network (no centralauthority; all functions performed bynetwork; anybody can join)
• All operations recorded in a publicdatabase called block chain
• New block added to the chain whencryptographic algorithm is solved byminers
• New Bitcoin generated to the minerwhen new block is attached to thechain
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VAT specific related issues to Virtual currencies
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Virtual currenciesPro’s and con’s for suppliers
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Virtual currenciesPro’s and con’s for customers
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Pro’s Con’s
No/low fees involved No central back-up
Fast international moneytransfer
High volatility
Account owner is unknown Irrecoverable if password islost
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Expansion
August 2014Bitcoin and other Virtual Currencies' Tax FutureSlide 14
Link: CoinMap
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Virtual currenciesPosition of official institutions – Governments
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• Legal acceptance & regulatory matters
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Virtual currenciesEcuador
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• Ecuador intends to introduce its own virtual currency which wouldbe however acknowledged as a legal tender
• Since 2000 Ecuador’s legal tender is the US Dollar (the original legalcurrency - Sucre was abolished after hyperinflation)
• New law introducing the virtual currency as a legal tender wasaccepted by the Parliament and now needs solely the President’ssignature in order to enter into force
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Virtual currenciesPosition of official institutions – Switzerland
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Virtual currenciesPosition of Governments
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If you are interested to know more on these topics
• http://ebiz.pwc.com/
• http://michaelamerz.org/
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