Cryptocurrencies – A Blast of Reality!

Old Masters - The Threatened Swan - Jan Asellijn circa 1650
Spring sunshine morning here. Makes everything and everyone seem better after a freezing snowy fortnight.

I was housebound, and when I did venture out I got stuck on an ice patch on the pavement – Like - a friend said, - ‘A Stranded Vale’ –. My surname being Vale.

When we had our restaurant the Chinese owner of the shop next door used to call me Mr Whale, because he had difficulty with his Vs.

From time to time I give some thought to the puzzle of governments unconcern with the threat of de-centralized independent Cryptocurrencies ending their previously unchallenged control and monopoly.

All the claims of Cryptos being independent of government and bank control and bringing the first ever serious challenge, and the ways and means to end their dictatorship, seems not to faze them one jot.

Why – because I think they are confident they will be able to control with regulation almost all activity in the currency.

I say almost all, because human nature is such that there has always been and will forever be some who will seek to beat whatever system. Smuggling. Money Laundering. Black Economy. Nothing changes there.

Already we see Financial Exchanges requiring a licence to carry out cryptocurrency buying and selling, so records must be kept, and monthly or quarterly returns made under severe penalty for not complying.

Person to Person transactions – money transfer unseen by the prying eyes of our lords and masters, is possible of course, and originally, I thought the same with purchases from shops and businesses too.

Peer to Peer independence is possible there, but just as government have hogtied the Exchanges by requiring a licence to operate, so businesses will have to keep financial records, as they do already, but with an additional requirement for Cryptocurrency dealings recorded.

Think VAT & Sales Tax. Separate records must be kept, and regular returns made now. So it is a short step to applying a similar recording system for ins and outs of cryptocurrency .

When our government decided to charge Vat on hot take way meals, with cold left Vat free, I thought how on earth are they going to check the validity of the returns on that?

We could record all take away (To Go) meals as cold and return no tax to HM government.

But they control by exception. Most humans are honest and law abiding, so a pattern is established by businesses trading in the same sector i.e. hot and cold take away food.

The same applies to businesses big and small, and to all goods and services. Parameters are established, with deviation below average for the industry, flagging an alert requiring closer inspection.

Returns from businesses that show exception from the average for their sector,will stand out like a sore thumb. They will then be under a scrutiny order, with plain clothes inspectors covertly observing footfall and sales activity.

If their observations suggest further scrutiny,a visit from a tax inspector to examine books and records comes next.

And that is something businesses don't want ! Because even if there is no wrong done and nothing to fear,it is a totally disruptive experience.

So, to Jeff, and others, believing that Cryptocurrency will bring about a Rule & Regulation free Utopia – I say - dream on! - Government legal protection racket will continue.

Big Brother, I feel, is Forever.