Bits And Pieces

By Global Tax Weekly

Singapore has issued some quite sensible guidance on tax aspects of bitcoin transactions, which suggests that there must be a fair amount of bitcoin activity there. The first Asian bitcoin conference was held in Singapore last year, at any rate. Bitcoins join Uzbekhistan on the list of subjects on which I am passing ignorant. I keep trying and failing to understand the phenomenon of bitcoins. Theoretically one should be in favor of a virtual currency with, so to speak, monetary limits (unlike existing national paper currencies, which are being inflated out of sight by central banks who want to keep interest rates low), but I question the usefulness of a currency which by definition can never exist in large quantities. On the other hand, other, similar currencies could exist in large numbers. If there is a bitcoin, why shouldn’t there be a bitcoin2, and so on? So in the end that would be just as inflationary as a normal fiat currency. For a while it seemed as if securitization was going to provide the answer to the value of money conundrum, and it may yet do so: if all real estate (to pick one sector of the economy) is securitized, and all real estate transactions take place using “real estate units” (we will call them) then there is an automatic cap on the money supply. A real estate company can sell its stock of real estate units for cash, but it can only create more such units by building; the supply of land is finite (more or less, unless you are a fish). Don’t get scared: they aren’t going to let me anywhere near the money supply, so you’re safe with your bitcoins for a while yet.

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