Cryptocurrency Predictions: The Future of Taxation and Government Intervention

The Crystal Ball of Cryptocurrency: A Trip Back in Time

Way back in 1997, a pair of authors dropped some wisdom that, back then, might’ve sounded like sci-fi. James Dale Davidson and William Rees-Mogg, in their book The Sovereign Individual, almost foresaw the rise of cryptocurrency. They basically said that in the future, government wouldn’t have jurisdiction over cyberspace, like trying to place a speed limit on the wild west.

The Great Migration to Cyberspace

In their predictions, these guys were not just shooting in the dark. They claimed that as governments printed more money (which feels eerily familiar), there would be a mass migration to cyberspace to escape predatory taxes. Who could blame us? We’d all like to dodge the grim reaper of taxation, right?

Shedding fiat currency like a snake sheds its skin.
Chasing off-shore opportunities like a seagull on a french fry.

If they were right, which they usually are, why don’t we run from our wallets to the blockchain?

Tales of Totalitarianism

However, they took a turn into some pretty dark territory. They painted a picture of governments turning nasty, wielding totalitarian tactics to crush this new cybereconomy. For those of us nervously watching IRS audit horror stories on our phones, this sounds familiar. But let’s be real—has anyone successfully outlawed Bitcoin? Is it more of a bureaucratic face-off than a dystopian nightmare?

“When the state finds itself unable to meet its committed expenditure, it will resort to desperate measures…”

The Great Underestimation

Davidson and Rees-Mogg argued that transaction tracking would become extinct, but they clearly didn’t recognize the powers that be. Fast forward to today, and the IRS is pinning down offshore accounts without needing a ski mask. They’ve cracked down on banks and exchanges in a way these authors never dreamt of!

How Did They Miss the Memo?

The IRS didn’t need to bust down doors lightly—thanks to FATCA, they waltzed right in and said, “You’ll share those records, right?” The authors completely underestimated how governments would evolve to fight tax evasion. But are we all just sitting ducks, waiting for the crypto-kraken to drag us back to the depths of taxation?

The IRS Showdown with the Crypto World

If we look at the IRS’s past performances, particularly with offshore accounts, we may glean some insights. Here’s the progression:

First, they sent a slew of subpoenas to foreign banks for client rosters.
Next, they turned up the heat on Swiss banks with criminal prosecutions.
Finally, they rolled out disclosure programs for those who wanted to play nice. Surprise! IRS became the school principal, making sure everyone filed their taxes.

Conclusion: Taxes Are Inevitable

So, are we headed for a totalitarian tomorrow or a more structured confrontation? The second option seems more likely, albeit still dramatic. Planning for taxes is just as necessary as holding on to your Bitcoin investment. Like our mothers always said, “Nothing is certain but death and taxes”—even in the world of cryptocurrency!