Well, here’s something we didn’t expect this early in the century. Ohio’s state government is now accepting Bitcoin and Bitcoin Cash via its payment portal, serviced by BitPay.
As CCN.com reported:
“Ohio will become the first state in the US to officially accept tax payments in bitcoin, according to a Wall Street Journal report. Beginning this week, businesses who plan to make settlements for their taxes with bitcoin can visit OhioCrypto.com and register to pay all their corporate taxes to the government in BTC. The state government has partnered with crypto payment processor BitPay to handle the payment in crypto and conversion to dollars for the tax office.”
Now, let’s talk terminology.
Throughout its history, Bitcoin was not truly a currency, even though it had most properties of currency, because it could not be used to pay taxes. This was one of the first things we come to understand about it, and is at the heart of why it had been regulated as a security or investment asset class. In the same way that you can’t take a few pounds of gold or a dozen Walmart gift cards to the tax office, you previously could not pay your taxes using Bitcoin.
Except now you can, in at least one state, which happens to be where the most proactive congressman on the issue of cryptocurrencies and blockchain, Warren Davidson, comes from.
Which raises the question: is Bitcoin now to be considered a “real-deal” currency?
Well, it’s hard to argue that the ecosystem is fully matured enough. While Bitcoiners in Ohio now have a convenient way to turn over precious coinage to BitPay, who’ll convert it to dollars for the state, how many landlords in the region are accepting Bitcoin for rent? Can they pay their utilities with it? These are important metrics. Because if people can stay completely within the crypto economy, from getting paid in BTC all the way to paying their taxes in it, then we’ve essentially got a competing currency. If we get that far along, this author for one expects some backlash. Violent backlash, even.
Bitcoin fails the means test if the definition of currency requires that it be issued or controlled by a central authority, this much is true. While Ohio and other states, as well as countries in the EU, definitively want to attract Bitcoiners with moves like this, the fact is that we’re only getting started. There will be plenty to go around, and it seems that if blockchain is truly as transformative as it promises to be, then eventually the primary purpose of fiat money will, in fact, be to simply pay taxes, while most of daily life is transacted by other means, be they cryptocurrencies or notes pinned to them.
At this point, the safest route of interpretation is that Bitcoin remains a cryptocurrency. After all, the Ohio government didn’t announce any plans to stockpile it.
However, on that note, the move does demonstrate the essential payments superiority of cryptocurrency: fees are much smaller here. Anyone who’s dealt with state governments knows they don’t like to pay processing fees, and often enough there’s a $2-3 charge, sometimes more (sometimes even a percentage), when trying to pay debts and fees to the government. We’ll have to watch Ohio for other developments which might transform the rust belt state into a true haven for cryptocurrencies and development.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.com.
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Last modified: May 20, 2020 2:19 PM UTC