Bitcoin as Legal Tender

Economy
1

Policy Proposal: Legalizing Bitcoin as Legal Tender

Introduction

Bitcoin is a decentralized, digital currency with a fixed supply of 21 million coins, designed to resist inflation. Unlike fiat currencies, it cannot be manipulated through excessive printing, making it a stable store of value. As an asset, not a security, Bitcoin serves as a medium of exchange without incurring inflationary risks.

Bitcoin can coexist as legal tender alongside traditional fiat currency through a few key mechanisms:

  1. Parallel Payment Options: Businesses can be required to accept both Bitcoin and the national currency. Consumers and businesses would have the choice to use either, allowing the market to naturally determine which method works best for different transactions. This ensures flexibility in the economy without disrupting the use of fiat.

  2. Seamless Conversion: Payment platforms and financial institutions can offer instant conversion services between Bitcoin and the national currency, making it easy for users to pay in one currency and for businesses to receive payment in another if they prefer. This removes friction and ensures interoperability between the two systems.

  3. Specific Use Cases: Bitcoin could be promoted for certain types of transactions where it excels, such as international remittances, online purchases, or large-value transfers, while fiat remains dominant in day-to-day, smaller transactions. This division of roles allows Bitcoin to complement, rather than replace, the traditional currency.

  4. Public Sector Integration: The government could accept Bitcoin for tax payments, fees, and fines, promoting its use in certain sectors while leaving individuals free to choose either currency for other transactions.

  5. Stable Value Store: As Bitcoin has a fixed supply, it can act as a long-term store of value, while fiat currency serves as the more liquid medium for everyday transactions. This dual function lets Bitcoin act as a deflationary hedge, while fiat remains the primary tool for daily commerce.

By allowing both to coexist, the policy supports innovation while maintaining stability and choice for users.

Policy Overview

Adopt Bitcoin as Legal Tender

Businesses will be incentivized but required to accept Bitcoin for goods and services. It will coexist with the national currency, providing flexibility for both businesses and consumers. It will take away credit card fees for transactions.

Inflation Resistance

Bitcoin’s fixed supply shields the economy from inflation, which is often caused by overprinting fiat money. This stability offers long-term protection of value and reduces reliance on central bank policies.

Government Transactions

Government entities will accept Bitcoin for taxes, fees, and fines. This simplifies public sector payments and reduces intermediaries in financial transactions, fostering transparency and efficiency.

Boost Financial Inclusion

Bitcoin’s global accessibility allows unbanked and underbanked populations to participate in digital finance, reducing dependency on traditional banking infrastructure and enabling broader economic participation.

No Taxation on Bitcoin

Bitcoin will not be subject to capital gains tax when used as legal tender. Its status as an asset, not a security, exempts it from securities regulations and taxation normally applied to financial investments. This encourages its widespread use without the tax burden associated with other assets.

Conclusion

Legalizing Bitcoin as tender, without taxing it or treating it as a security, promotes economic stability, financial inclusion, and long-term growth while fostering innovation in digital finance.

10 Likes
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Yes, so needed! Opens up the bitcoin economy and makes saving great again. Fits closely with abolish the federal reserve bills!

1 Like
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Very supportive of this initiative! Two things:

  1. I don’t want to require businesses to accept bitcoin. Businesses should be able to decide what they want to be paid in; however, historically the status of something as “legal tender” required banks to accept the item as payment in satisfaction of a debt. This I support!
  2. No income taxes on mining bitcoin! This standard is unfair and subjects miners to double taxation (once when they acquire the bitcoin and again when they sell it for a gain). Gold miners are not subject to this tax treatment, why should bitcoin miners?
4

Bitcoin is a surveillance coin and should die. How does it help me to publicly disclose my account balances and all of my transactions? Instead we need to allow privacy coins like Dero, Pirate Chain and Monero.

While adoption of surveillance coins should be discouraged, if people want to have them I think they certainly should be able to do so without any threats of theft by anyone - including taxation. I think what everyone really wants though, however aware of it, is actually the establishment of silver/privacy coin exchanges so that can we can effectively conduct fair commerce both on and offline, using either silver or Dero (for example) as both lawful and legal tender as we see fit.