On Oct. 21, Bitcoin got a strong victory from an European Union (EU) court ruling that termed the crypto-currency as money, and as such should not be taxed as either a commodity or collectible. This ruling, as opposed to how the U.S. courts have suggested Bitcoin is an investment rather than currency, opens the door for much greater use and acceptance in the Eurozone, and in commerce for countries mired in inflation and sovereign currency issues.
Bitcoin rose in value against most major currencies after the ruling, and has over time stabilized despite attacks from sovereign regulators who have tried to both negate and destroy the currency in the eyes of the public and in retail transactions.
Bitcoin got a boost at the European Union’s top court after judges said exchanging virtual currencies should be exempt from value-added tax in the same way as traditional cash.
In a ruling that puts Bitcoin on a more equal footing with mainstream money, the EU Court of Justice sided with Swede David Hedqvist who set up a service for the exchange of mainstream money for bitcoin and vice versa. VAT, a type of sales tax, shouldn’t be charged because the business involves “the exchange of different means of payment,” the judges said.
“It’s very good news,” said Simon Dixon, CEO of Bnktothefuture.com, a platform for investing in new, alternative financial products, including those based on Bitcoins. “If you were taxed on the exchange it would make it an inferior currency to other currencies, so the implications of it being treated as a currency are that it can free flow.” – Bloomberg
Bitcoin has followed the path of that old axiom from Mahatma Ghandi that goes, “First they ignore you, then they laugh at you, then they fight you, then you win.” And since its inception less than a decade ago, Bitcoin has not only won out over those who would discredit it, but now it is getting support from the very sovereign agencies who would suffer the most from it’s success.
Bitcoin is not the only alternative form of currency rising up out of the world’s rejection of fiat currencies, and its success is being seen and felt in other forms such as Bitgold and Karatbars. And as the world rushes headlong into its next monetary crisis that will assuredly see the end of purely fiat forms of money, the types of trade and commerce that emerge from this collapse will be in non-centralized financial systems, and in direct bi-lateral trade using any form of money people and retailers choose to conduct commerce in.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.