Stateless virtual money the tax system
CHAPTER 14
How to Tax Bitcoin?
Bitcoin, a decentralized cryptocurrency with no government or central bank, grabbed
the public attention as its value skyrocketed in 2013. Interestingly, the rise in the Bit-
tax practitioners and tax scholars is what the tax consequences of mining and trading in
digital currencies are.
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14.2 CHARACTERISTIC AND NATURE OF BITCOIN
In 2009, a person (or persons) operating under the pseudonym Satoshi Nakamoto created Bitcoin—a digital currency traded online via a peer-to-peer network, allowing its users to interact with one another anonymously and without a third-party intervention (Nakamoto, 2009). Nakamoto’s decentralized currency was a response to the financial crisis and governments’ reactions to it and to the role of banks and other payment inter-mediaries in mediating financial transactions. Bitcoin is not the first example of decen-tralized digital money but undoubtedly the most prominent so far.
