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Bitcoin exchanges gain • Investment products: Jia noted that bitcoin
and digital currencies are viable stored value
traction, dodge VAT products that investors can use as a hedge against
institutional risk. "It makes sense to have bitcoin as
an asset class in a diversified investment portfolio,"
he added.
he European Union's Court of Justice Advocate
exempted bitcoin trading from Europe's value- • Cross-border payments: Digital currencies are an
added tax (VAT). The Luxembourg-based tri- efficient mechanism for cross-border payments.
T bunal heard arguments from Estonia, Germany "Big enterprises operating at a global level can send
and Sweden before reaching the July 16, 2015, decision. mass payments using bitcoin as a rail," Jia said.
These parties and the European Banking Authority had "Cross-border transfers bypass the banking system
petitioned the court for guidance on taxing digital cur- and deliver money in local currency."
rencies. • Intellectual property registration: Melanie
Swan, author of Blockchain: Blueprint for a New
In the absence of an English trial transcript, analysts Economy suggested there are other use cases for
used Google translation tools to review the ruling. They the distributed ledger technology that underpins
concluded that European authorities could find no legal bitcoin and other digital currencies. "[A] standard
precedent for taxing digital exchange conversions between algorithm is run over a file (any file) to compress it
digital money and fiat currencies. The ruling stipulates into a short 64-character code (called a hash) that is
that digital currency products are created outside of the unique to that document," she wrote. "The hash is
traditional banking system and therefore not subject then included in a blockchain transaction, which
to the same rules as fiat currencies. The ruling further adds the timestamp [which is] proof of that digital
instructs European member states to render all virtual asset existing at that moment."
currency transactions tax exempt including "payments, Swan believes any digital asset, regardless of its
transfers, debts, checks and other negotiable instruments, size, could be registered in the blockchain, adding
but excluding debt collection." it to a public record and effectively protecting its
intellectual property.
This action is a big win for Swedish entrepreneur David
Hedqvist, who wanted to sell bitcoins on his website and Mobile web driving digital currency
initially asked Swedish tax authorities to clarify bitcoin's
taxable status. This matter and similar cases in Estonia Dr. Irving Wladawsky-Berger, Chairman Emeritus at the
and Germany were escalated to the EU when regional IBM Academy of Technology, attributes growing adoption
authorities in their respective member states failed to of digital currencies to the evolution of the Internet, which
adequately define taxation parameters. has transformed the way we communicate and conduct
business day to day.
US, Europe outpaced in bitcoin adoption
"Now we're in a major next stage in the evolution of the
Financial analysts expect the ruling to advance bitcoin Internet with digital money, digital payment and digital
adoption throughout the EU. Analysts and digital identity," he said, noting the disparity between banks,
currency stakeholders anticipate that growing awareness which are "conservative by nature, reacting at their own
of bitcoin's tax exempt status, combined with growing rate and pace," and technology companies that "move at
acceptance of bitcoin and other digital currencies at online the rate and pace of technology."
and brick-and-mortar establishments, will create a tipping
point for consumers and merchants. The cultural clash between slow-moving financial indus-
tries and fast-moving technology and telecommunications
Jack Jia, Operations Manager at San Francisco-based companies has been exacerbated by "the great new world
Snapcard has seen digital currency acceptance vary of cryptocurrencies" and their new infrastructures such
by region. Emerging economies have been faster than as blockchain. These digital currencies facilitate financial
developed nations to adopt bitcoin and digital currencies, transactions and payments without a central banking au-
he stated. "Credit cards are popular in the U.S., where thority. "Instead, the cryptocurrencies use very sophisti-
consumers get points, rewards and cash back," he said. cated peer-to-peer protocols to handle their transactions
"But in developing countries like Argentina and Brazil, in very different ways," he stated.
where currencies have been devalued against the dollar,
consumers find it useful to have a democratized currency Wladawsky-Berger also noted that bitcoin is the most
that is essentially free and supported by everyone." famous cryptocurrency and its standardized protocols
Blockchain: beyond payments and open source implementation make it widely accessible.
However, bitcoin is "only one of hundreds of such digital
While digital currencies are a relatively new phenomenon, currencies that are being invented all over the world," he
there is evidence of potential use cases for these said.
technologies beyond the payments ecosystem. Here are
several examples:
16
Bitcoin exchanges gain • Investment products: Jia noted that bitcoin
and digital currencies are viable stored value
traction, dodge VAT products that investors can use as a hedge against
institutional risk. "It makes sense to have bitcoin as
an asset class in a diversified investment portfolio,"
he added.
he European Union's Court of Justice Advocate
exempted bitcoin trading from Europe's value- • Cross-border payments: Digital currencies are an
added tax (VAT). The Luxembourg-based tri- efficient mechanism for cross-border payments.
T bunal heard arguments from Estonia, Germany "Big enterprises operating at a global level can send
and Sweden before reaching the July 16, 2015, decision. mass payments using bitcoin as a rail," Jia said.
These parties and the European Banking Authority had "Cross-border transfers bypass the banking system
petitioned the court for guidance on taxing digital cur- and deliver money in local currency."
rencies. • Intellectual property registration: Melanie
Swan, author of Blockchain: Blueprint for a New
In the absence of an English trial transcript, analysts Economy suggested there are other use cases for
used Google translation tools to review the ruling. They the distributed ledger technology that underpins
concluded that European authorities could find no legal bitcoin and other digital currencies. "[A] standard
precedent for taxing digital exchange conversions between algorithm is run over a file (any file) to compress it
digital money and fiat currencies. The ruling stipulates into a short 64-character code (called a hash) that is
that digital currency products are created outside of the unique to that document," she wrote. "The hash is
traditional banking system and therefore not subject then included in a blockchain transaction, which
to the same rules as fiat currencies. The ruling further adds the timestamp [which is] proof of that digital
instructs European member states to render all virtual asset existing at that moment."
currency transactions tax exempt including "payments, Swan believes any digital asset, regardless of its
transfers, debts, checks and other negotiable instruments, size, could be registered in the blockchain, adding
but excluding debt collection." it to a public record and effectively protecting its
intellectual property.
This action is a big win for Swedish entrepreneur David
Hedqvist, who wanted to sell bitcoins on his website and Mobile web driving digital currency
initially asked Swedish tax authorities to clarify bitcoin's
taxable status. This matter and similar cases in Estonia Dr. Irving Wladawsky-Berger, Chairman Emeritus at the
and Germany were escalated to the EU when regional IBM Academy of Technology, attributes growing adoption
authorities in their respective member states failed to of digital currencies to the evolution of the Internet, which
adequately define taxation parameters. has transformed the way we communicate and conduct
business day to day.
US, Europe outpaced in bitcoin adoption
"Now we're in a major next stage in the evolution of the
Financial analysts expect the ruling to advance bitcoin Internet with digital money, digital payment and digital
adoption throughout the EU. Analysts and digital identity," he said, noting the disparity between banks,
currency stakeholders anticipate that growing awareness which are "conservative by nature, reacting at their own
of bitcoin's tax exempt status, combined with growing rate and pace," and technology companies that "move at
acceptance of bitcoin and other digital currencies at online the rate and pace of technology."
and brick-and-mortar establishments, will create a tipping
point for consumers and merchants. The cultural clash between slow-moving financial indus-
tries and fast-moving technology and telecommunications
Jack Jia, Operations Manager at San Francisco-based companies has been exacerbated by "the great new world
Snapcard has seen digital currency acceptance vary of cryptocurrencies" and their new infrastructures such
by region. Emerging economies have been faster than as blockchain. These digital currencies facilitate financial
developed nations to adopt bitcoin and digital currencies, transactions and payments without a central banking au-
he stated. "Credit cards are popular in the U.S., where thority. "Instead, the cryptocurrencies use very sophisti-
consumers get points, rewards and cash back," he said. cated peer-to-peer protocols to handle their transactions
"But in developing countries like Argentina and Brazil, in very different ways," he stated.
where currencies have been devalued against the dollar,
consumers find it useful to have a democratized currency Wladawsky-Berger also noted that bitcoin is the most
that is essentially free and supported by everyone." famous cryptocurrency and its standardized protocols
Blockchain: beyond payments and open source implementation make it widely accessible.
However, bitcoin is "only one of hundreds of such digital
While digital currencies are a relatively new phenomenon, currencies that are being invented all over the world," he
there is evidence of potential use cases for these said.
technologies beyond the payments ecosystem. Here are
several examples:
16
