Except those controlled by a company.
Just like 'cold hard cash' in your wallet, most of them are to be free of taxation.
Fiat money is used for debt settlement.
In a sense Cryptos {short for Crypto currencies} can also be used like digital representative commodity money or commodity backed money. Steem and Whaleshares family member Bitshares offers things like bitUSD and bitEURO for instance. They could be considered to be some form of digital representative commodity money. Where as things like bitGOLD and bitSILVER can be seen as a kind of digital commodity backed money. It is not a so called 'fiat' kind of money, because that is something a virtual entity known as 'the government' has claimed to be what is known as 'legal tender'. According to the rules made up by this virtual entity only 'its' fiat money is to be used legally to settle financial obligations. And it is 'debt' related. Where the virtual entity known as 'private banks' seem to have some kind of 'legal status' to counterfeit given to them by the so called 'law' of the virtual entity 'the government'. As the penetrate the public realm of fiat money with their virtual digital monopoly fake 'money. Which they create out off nothing against an interest bearing debt. Causing the rapid devaluation of fiat money and is the root cause of every economical crisis.
Are you still with me on this subject? Thank you for reading up to here, because I know that it can be quite confusing. Anyway, what could matter to you and me is that Cryptos are to be considered currencies, in many cases. Most of them are a digital kind of (commodity) money. And it can be used to settle a so called 'debt' or to solve a financial obligation. This could be a payment for the delivery of one or many goods, or for receiving any kind of service. Many Cryptos can be used for this as they can be used for storing value. Which then in turn will determine how many of any Crypto it will take to pay for some goods and or services with them. It is said that the Crypto market is highly volatile and using them carries a lot of risk. But the so called fiat money drops at least one tenth in its spending value within a time span of about thirty years. This is not caused by a so called 'invisible hand above the market' but due to the so called 'fractional reserve banking' system. (Banks creating fake money, flooding the market, causing devaluation.)
A young dynamic new kind of currency.
"Yeah, but Cryptos dropped too.", what!? Compared to 10 years ago when it all began with Bitcoin {BTC}!? There will be those that like to point out how Bitcoin dropped somewhere from close to 20'000 in United States of America Dollar fiat money to about close to 4'000. But what if that was manipulated? Some self acclaimed 'legal' system can make up trillions of its so called fiat money as it goes along. Imagine what can be done with that if over a time span of about 20 years more than 21 trillion can not be accounted for? But hey look over there! Extraterrestrial aliens are coming to earth! They are part of a secret space program, really it's huge. Sorry, what were stating about crypto currencies again? In the meantime the so called 'fiat money' of 'the banking monetary governance system' drops in spending value rapidly. While the many experience this in a month that lasts too long, and the fiat money they have seems to last for a shorter lifespan every year. Yet, on the other hand a small group seems to manage to get more. Almost if they know what is going on and how to secure their wealth for future use.
Bitcoin {BTC} and a lot of Cryptos that came after that do the opposite. It is very clear how much there ever will be of the real Bitcoin {BTC}. 21 million, all issued through the use of mathematics. Free of interest bearing debt, free of any kind fractional reservation. This could well mean that Bitcoin and a lot of other Cryptos will become worth more over time. For a huge part because fiat money drops in spending value faster and faster over time. That is why I think Cryptos could go towards at least 1 trillion market cap in the years ahead. Yet the self acclaimed 'ruling system' of the world might try to enforce regulation on something that actually is regulated by its own coding. And at that point there is already a difficulty in how to 'classify' Cryptos? As far as I see it most of them are a kind of digital money. Because it is possible to solve a financial obligation, or to settle a debt with it. Even if it is indirectly, but if all parties involved agree on a proposed settlement, than it is payed for and done with. In that way any financial issue is solvable. And all settlements can all be witnessed on a public ledger, known as 'the blockchain'. Without the use of any intermediate, thanks to complex mathematics.
But, but, how 'bout them assets?
Oh no, now I have to type about that business owned one? Well, it is the most obvious Crypto that is very likely to be classified as a so called 'asset'.
In financial accounting, an asset is any resource owned by the business. Anything tangible or intangible that can be owned or controlled to produce value and that is held by a company to produce positive economic value is an asset. {Quote from Wikipedia, source: https://en.wikipedia.org/wiki/Asset}
Yes, this is about Ripple, as that company is fully in control of XRP. It defines the value of its business, even though it is an intangible digital 'thing'. It does create value for the Ripple company. And it produces a positive economical value for them, being used, as the company claims, by private banks. The company itself still owns about 60 billion XRP in reserve. That means Ripple Incorporated controls XRP and decides how it is moving in and or out off the market. Therefore it is not a kind of digital (commodity) money, but a full asset. In a full monopoly controlled by Ripple Incorporated. And XRP is defined as 'The Digital Asset for Payments' on the Ripple website. {Source: https://ripple.com/xrp/} So it is an asset that is completely centrally controlled by one company.
There are some cases that will raise questions. And even some might argue that even Ripple its private company controlled XRP will have a limit set at 100 billion. Therefore speculators know up front that at one point there can be a 100 billion on the market, as there probably will be. It still makes XRP a digital asset though by definition. And holding those means having financial assets according to the virtual entity that is known as 'the law'. And thus it probably will be taxed accordingly by the means of the virtual entity known as 'the government'. Yet Cryptos like Bitcoin {BTC}, Litecoin {LTC}, Dogecoin {DOGE}, Vertcoin {VTC} and many other POW {Proof Of Work} types are basically a kind of digital (commodity) money. Just like Steem and Whaleshares, that are being created using the DPOS {Delegated Proof Of Stake} method. And there will be those who might argue that the 'staking' proces of creating new Tokens makes them an Asset. But it is no resource owned by a company. Even though a company could own a certain amount of these tokens, like it is the case with Steem. SteemIt incorporated does not own the resource, in this case the Steem Blockchain, like Ripple owns the XRP resource for instance.
Most Cryptos are Digital (commodity) Money
If there is a clear business ownership of a resource, whether it is something tangible or intangible, that is owned and or controlled by a company to produce value, held for creating a positive economic value, then the object is an asset. At least that is according to the virtual entities known as 'the government', 'the state' and its 'laws'. It does not mean I do subscribe to any of it. To me it is all one big farce that we are be programmed to belief. Yet it has the might of the sword to enforce 'its' will onto us. And I think it is good to know what we are dealing with. As this can work for our liberty to find loopholes in 'its' system of make-belief ruling. That is what is known by many as 'the alternative'. It is how things like Free and Open Source came into existence. Ideas and movements based on voluntarism and a peaceful evolution towards any kind of alternative are actually able to make a change for the good. Thanks to that the first Free and Open Source digital currency, Bitcoin {BTC}, could come into existence. It is money, free of debt and interest. And after that many followed.
Whenever something can be used to settle a financial obligation it is to be considered as a kind of money. That is a virtual entity of exchange. In the case of Cryptos it is digital, temporary patterns of electric currents. And when they are in a virtual wallet they are like the cold hard cash that many of us still use. Holding those Cryptos in such a virtual digital entity, known as a wallet, is basically tax free. It is only the moment that one settles a financial obligation with it that it can become an integrated part of a virtual entity 'ruled' (by its own claim) realm. In those kinds of situations it can become the subject to a proces that is known as 'taxation'. In many of those kinds of situations it is where a payment is settled for a good and or a service. These are known as Value Added Taxation {VAT}. The actual creation of new Cryptos, whether it being through a proces called minting or mining, is also to be considered free of this so called 'taxation', as demanded by a virtual entity known as 'the state', 'the government' or 'the law'.
For the many this could make using Cryptos as digital (commodity) money at one point become more interesting than the interest bearing debt kind of so called fiat money. But as long as the make-belief 'ruler' system enforces 'its' will by the might of the sword onto human kind 'it' will try to get full control over Cryptos. So far though it seems 'the worldwide banking monetary governance system' has have a hard time regulating the Cryptos realm. And it might finally settle for the idea that 'it' will still be able to tax Cryptos once they are being used as money, settling financial obligations. Where the added taxes will be at the side where the Cryptos move in and out off the fiat money realm. But it looks like that no matter what, Cryptos are here to stay and are to be used as digital (commodity) money in a so called 'legal' way.
This article is published at the Steem and Whaleshares blockchain.