It looks like Michael Saylor, the chairman, president and CEO of MicroStrategy, does not quite understand how Bitcoin works. Saylor, who has become infamous for putting a percentage of MicroStrategy’s funds into BTC; and recently, he made a few inaccurate comments during an interview regarding how Bitcoin works in regard to the government and taxation.
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In the interview, Saylor addressed BTC and described it as one of the only assets that an individual could own millions of dollars worth of, take personal custody of, and move it anywhere on the earth with the confidence that it can’t be taken from them. However, Saylor’s claims are not necessarily true, and in Dr. Craig S. Wright’s latest blog post, “NanoStrategy,” Dr. Wright explains where Saylor goes wrong.
“Saylor makes the false claim that banks will compete to the bottom,” says Dr. Wright. “He says that if a New York bank refuses to take your bitcoin, you could go to Singapore, and a bank there would take it. In his misleading analysis, he is encouraging the avoidance of tax and other financial frauds. He is inciting people to move criminal proceeds using Bitcoin. In a way, it is a good thing. Because once such criminal proceeds are in Bitcoin, they can be frozen.”
In Saylor’s interview, he makes it seem as if your BTC can never be taken from you; however, there have been several instances that prove this is not true. If any digital currency holdings are illegally obtained, or used for illicit activities, law enforcement officials can confiscate or freeze your funds once they learn which wallet addresses are under your control. For instance, when law enforcement officials were investigating the individual that went on to use verified Twitter accounts to scam people out of their BTC (in a previous case), they were able to confiscate 400 BTC from him.
“Bitcoin is a completely transparent system. Bitcoin is the simplest system ever invented to enforce court orders upon. Bitcoin is the simplest and most open system to allow criminal proceeds to be seized.”
If law enforcement officials can identify a wallet address that they know and can prove an individual is associated with, they can step in and confiscate or freeze those funds. Even though Bitcoin comes with a degree of pseudo-anonymity, in nearly all of the instances where a person converts their digital currency into fiat currency, they will need to go through a service provider and give them their personal identification information for KYC and AML purposes. That being said, Saylor’s comments about moving Bitcoin from bank to bank, and never having to give it to anybody if the digital currency owner does not want to, are just not true.
“Bitcoin is a system that does not even need tracing rules,” says Dr. Wright. “The ledger is so complete that the rules of following apply. But, it needs to be noted that if assets were transferred into a foreign bank, the rules of tracing would apply. You see, tracing presents a change of the asset class. Under tracing law, the asset that has moved can be traced to the point of another asset. Such an asset may be seized. The law of following means that the original asset, including the fully traceable bitcoin tokens, can be seized. If you are told that it cannot happen, you are being lied to.”
The bottom line is, you can’t commit crimes with digital currency and get away with it. Many people seem to think that digital currencies are a tool you can use to evade taxes as well as hide and launder money, but that is not how digital currencies work. As soon as you introduce your digital currency into the legacy banking system, or convert it into fiat currency, you have created a taxable event and have executed an action that is overseen by a government agency.
“The blockchain is not friendly to crime, and within the year, the government will start learning that it is not,” says Dr. Wright. “And so, any criminal found using Bitcoin will just have their assets taken.”
To find out why blockchain technology cannot be used to successfully facilitate crime, why Bitcoin is not encrypted, and why Michael Saylor has an inaccurate idea of what Bitcoin can actually be used for, you are going to want to read Dr. Craig S. Wright’s latest blog post, “NanoStrategy.”
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.