So, Bitcoin Is Not Real Money?
As the whole world talks about Bitcoin and more and more people are going crazy about this new kind of money, the Australian Taxation Office (ATO) decided to act like a wet blanket. In short, the ATO decided the crypto-currency is NOT real money and it should not be perceived and treated as if it is. Instead, Bitcoin is being compared to a barter transaction and should ultimately be treated as such. While all this may be very well for the ATO and their money regulation methods and processes, many ask themselves what the consequences will be.
According to the specialists, the new regulation will not affect individual Bitcoin users to a great extent, but it will have a serious (and absolutely negative impact) on the business, especially on those businesses trading with Bitcoin and earning from its growth. From now on, Bitcoin will experience the effect of the so-called ‘double-whammy’ GST payment. This means that businesses who trade services in exchange for Bitcoin will charge 10% GST on them, the same as usual. However, from now on they will have to pay another 10% GST when converting Bitcoin to ‘real’ money.
On the other hand, those who say that the individual Bitcoin users will not be affected are much mistaken. Of course, there are those people who use their personal computers to ‘dig’ for coins, but there are also those who have turned it into their main income. Some people have bought powerful computers with specific chipsets and motherboards, aiming to find as many Bitcoins as possible. Many have found out that an advanced system with powerful hardware can significantly speed up the process of finding the coins, resulting in bigger earnings. In order to convert them to normal currency, individuals will now have to pay 10% GST, which is certainly a heavy blow. Furthermore, people who want to enter the Bitcoin trade will meet greater costs than ever before, which is certain to decrease the number of newcomers to the market.
And while people all over Australia, starting with Bitcoin Association of Australia President Jason Williams, are openly opposing the decision of the ATO and complaining, there is the occasional ‘FOR’ comment. According to the opposing side, stating that Bitcoin is not real money is a new blow on Australia’s already struggling start-up sector and is certain to weaken the motivation, creativity and innovation in the business circles. The supporters, however, state that the ATO took the right decision and created regulations for a process that would have slowly killed the Australian economy,
There are always people ‘for’ and people ‘against’; we can’t help but wonder why so many leading economies in the world, including the USA and China, consider Bitcoin a real currency thus giving more opportunities to people trading with it, while Australia and the ATO took the best part of the whole process and put it in chains. Like it or not, Bitcoin will generate less money from now on, but hopefully those working with it will find new ways to make more profit and decrease the new regulation’s effect.