I just read an opinion piece titled "Say Goodbye to Banking as We Know It" by Andy Mukherjee.

In the opening paragraph, it stated a claim which I've seen a few times, and which I think is worth examining, and Twitter seems not well suited to that sort of thought.

The crypto yuan, which may be on offer as soon as 2020, will be fully backed by the central bank of the world’s second-largest economy, drawing its value from the Chinese state’s ability to impose taxes in perpetuity .

I've underlined the part above I want to discuss: This alleged ability to "draw value from the state's ability to impose taxes in perpetuity".

Imposing a tax does give the imposer an ability to draw on value produced by the subjects of that tax.

However, it is not the act of imposing that produces the value, and at the very least when someone (or a state) claims to have an ability to draw in perpetuity on some value it does not produce itself, some questions ought to arise.

Taxes do not solely increase economic welfare.

Some say that in most cases, they reduce economic welfare. Wikipidia lists a few negative impacts such as added costs of compliance, deadweight costs and perverse incentives brought about by taxes. I'd argue there are far more, including costs of sustained (and perhaps growing) big government, since taxes are often used to prop up political supporters, either directly in government or in industries which support the governing party line. Then there is the issue of "defense" spending which often translates into aggression on weaker geopolitical players - some might cynically call it "force projection", in many cases it can be viewed as weapons testing on those who are ill equipped to retaliate. Proxy wars in recent times, in the Middle East, Africa and Ukraine, are numerous and serve as examples of taxpayer monies being spent to destroy economies.

Let that round number sink in.

Any statesman or -woman claiming an ability on behalf of a state to extract taxes forever needs to be directed to a history textbook.

"Nothing is certain but death and taxes", they say.

Wanting to fight (or cheat) both death and taxes is not a new human pursuit, but I find it fascinating that during my lifetime, people have started to make some remarkable additional progress on tackling aging via scientific means.

Of course aging and death is not defeated yet, but the inevitability is now being seriously questioned. Which brings us to taxes...

Enter Satoshi with his/her/their Bitcoin invention in 2008.

No wonder Bitcoin has been fought with various means by many governments, who see it as a "security" threat. Of course. If your political or job security lies in forcing taxpayers to cough up money on an annual basis, Bitcoin and its crypto relatives are a tough pill to swallow.

Taxes suddenly look at bit more uncertain, not just in terms of collection, but their ethical basis itself is coming under the spotlight as the general population begins to examine and question the previously unquestionable - the foundations of the monetary system under which we've lived for centuries.

Taxes. What may have originated in ancient history through a voluntary effort to collect and store food stuffs - notably grains - for the wider community to tide over periods of drought and famine, has mostly mutated into something quite different in character.

Coerced collection of ever-increasing levels of tax funds, enforced by gunmen in service of the state, and in this electronic age, often deducted directly out of virtual paychecks without any means for the taxpayer to object or intercede, who are then forced to watch as a lot of the fruits of their labor are squandered by a corrupt and/or incompetent political class - foxes guarding the hen-houses.

No wonder Bitcoin (and cryptocurrency) is so appealing as a means of freeing oneself from what has turned into barely mistakable coercion. People do not want to be working only for the results of their labor to be invested into systems that control and oppress them on an ever grander scale, eroding the hard-won freedoms built up over past decades if not centuries.

Now some taxes, in some places, are certainly employed do some good. But how does it measure up to the loss of liberties done though? I guess that's a question that we each need to answer for ourselves.

I'm here to tell you that the states' ability to enforce collection of taxes stops at cryptocurrency's door. States, being mostly unimaginative about how a future of humanity built upon voluntary exchanges could even begin to look like, will by and large ramp up their efforts to criminalize and deter the use of cryptocurrency wherever possible. Under the banner of "national security".

There will be more talk of "terrorists, pedophiles, drug dealers, and money launderers". And requests for you to "think about the children".

But they cannot kill an idea, much less one whose time has come. And I dare say, that cryptocurrency will have the advantage in this millenium. Our existing system has proven its weaknesses, over and over again. It is time for cryptocurrency - and cryptography generally - to show its strengths in the protection of ALL OUR liberties.

It will fall to a few enlightened nations, states or private cities to embrace the ability of their citizens to transact freely, without coercion, and allow them to build the prosperous societies of the future.

Photo by Elcobbola (public domain) [1]

Not like the brazen giant of Greek fame,

With conquering limbs astride from land to land;

Here at our sea-washed, sunset gates shall stand

A mighty woman with a torch, whose flame

Is the imprisoned lightning, and her name

Mother of Exiles. From her beacon-hand

Glows world-wide welcome; her mild eyes command

The air-bridged harbor that twin cities frame.



"Keep, ancient lands, your storied pomp!" cries she

With silent lips. "Give me your tired, your poor,

Your huddled masses yearning to breathe free,

The wretched refuse of your teeming shore.

Send these, the homeless, tempest-tost to me,

I lift my lamp beside the golden door!"



- Emma Lazarus, "The New Colossus", 1883

Image source:

[1] https://commons.wikimedia.org/wiki/File:Statue_of_Liberty_7.jpg