Litecoin is one of the first open-source altcoins based on the original Bitcoin code. It was initially a strong competitor to the first cryptocurrency. However, as the cryptocurrency market expanded, Litecoin’s popularity gradually declined.
Cryptocurrency is a public way to avoid taxes
Competent holders of cryptocurrencies evade taxes, looking for new loopholes in the law, and the states do not have time to come up with appropriate measures. For the first time, rich people began to use offshore zones back in the 19th century. At that time, it was important to hide the real income from officials who collected tribute after the Napoleonic Wars. Nothing has changed since then. In the 21st century, states are adopting more flexible laws that allow key personalities and oligarchs to legally avoid some part of taxation.
In 2008, ordinary people had such an opportunity. With some technical knowledge, it became possible to create your own “mini-offshore” in cryptocurrency.
The creators of Bitcoin hinted at this at the very beginning, when the first mined block was called the message: "The time is January 3, 2009, the Chancellor is on the verge (edge of the abyss) for the second rescue of banks." From that moment on, people began to understand that cryptocurrency could become an alternative to banks. Bitcoin began to be actively used for illegal purposes, but later users noticed that each transaction is linked to a public address, and on an open blockchain this data is available to everyone, so there can be no question of anonymity.
Protecting privacy
In 2014, the crypto community took another step towards independence by creating the anonymous currencies Monero and Verge, and then Zcash in 2016. They could be called truly decentralized because they left no trace of transactions.
If cryptocurrencies do not provide anonymity, their benefits will turn in the opposite direction. Online platforms and applications will be able to get unhindered access to our financial data on a par with banks. For example, Facebook, which tracks customer behavior, will be able to track our spending habits and sell these data to advertisers for their marketing.
Anonymous cryptocurrencies help hide funds for criminal purposes, as well as from ex-spouses in case of divorce or collectors.
This race doesn't stop. Investors are constantly looking for new ways to protect their funds from the state, and it, in turn, is trying to solve issues with the regulation of cryptocurrencies. But there is one loophole that allows tax evasion and which the authorities have not yet reached.
According to US laws, there is a tax on cryptocurrency and all purchase/sale transactions, even if it is trading with short-term investments. Therefore, in order to avoid paying taxes, cryptocurrency lending was created instead of selling assets.
Japan has become the most progressive country in this regard, recognizing Bitcoin as a full-fledged means of payment. Everything related to cryptocurrency is tightly controlled here. The legalization of cryptocurrencies has led to the restriction of the work of exchanges with anonymous cryptocurrencies, and the state apparatus pursues individuals who have hidden their income from the tax.
The battle for privacy will continue. For example, such a controversial personality as John McAfee believes that cryptocurrencies will leave income tax in the past altogether.
Earlier we wrote: Cryptocurrency as a way to donate and how exchanges can legally exchange cryptocurrency in Ukraine.
