Overstock CEO: Modern Financial System is a Ponzi Scheme, Collapse Will Bring Global Crypto Adoption

Patrick Byrne, the CEO of Overstock, stated in a recent interview that the entire modern financial system is a “big Keynesian magic money tree ponzi scheme”.

The statements were made during an interview with crypto YouTuber Naomi Brockwell on Monday, October 7.

The CEO of the tech-driven online retailer, which was one of the first major retailers to accept bitcoin, also believes that the modern financial system will eventually collapse, ushering in the global adoption of cryptocurrencies:

“People turn to it where they collapse, like Venezuela or Cyprus or Syria, something like that. When people start getting into it is when their own financial systems collapse.”

When asked about the role of governments in regulating cryptocurrencies, Patrick admitted being a national security libertarian. He believes that know-your-customer (KYC) and anti-money laundering (AML) requirements are important tools to keep criminal activity from thriving on the crypto sphere:

“I guess I must confess, as revolutionary as I am – I’m what you could call a national security libertarian. So I worry about threats to our country. And that means that KYC and AML are not just things to be scoffed at.“

Patrick believes that it is possible to take blockchain to the point where it becomes completely anonymous. On the one hand he loves the idea of becoming truly free and anonymous, but on the other he acknowledges that there will be some bad actors that will take advantage of the situation to hurt others.

Patrick is of the opinion that there is a right balance between freedom and security but “the more the world gets digitized, the more there will be government surveillance.” He trusts that distributed ledger technology can remake society and hopes that authoritarian states are unable to exert control and own the technology. Specifically referring to China, he also expressed his concerns on the country’s plans to rank all its citizens based on a "social score" by 2020.

Patrick thinks that social barriers and stigma and the idea that Bitcoin is mainly used for illegal drug trades and money laundering, are what’s holding back crypto adoption. When asked if Bitcoin will become a worldwide currency or if it will always have specific use cases he replied:

“Now, whether Bitcoin is the one, whether Bitcoin has solved its speed problems or it’s another cryptocurrency, only time will tell.”

Israeli Courts: Bitcoin Is a Taxable Financial Asset, Not a Currency

A central district court in Israel has reportedly ruled in favor of the nation’s tax collection department, which has categorized bitcoin (BTC) as a financial asset - but not a medium of exchange (MoE).

According to the court’s ruling, the Israeli tax department may impose and collect taxes on transactions involving bitcoin, the world’s most dominant cryptocurrency. The court’s decision on the matter was announced on Monday (May 20, 2019).

Bitcoin Is a Taxable Financial Asset

As confirmed by Israel’s central district court, bitcoin-related transactions are subject to a capital gains tax as the pseudonymous cryptocurrency is considered a financial asset by the country’s central bank.

Notably, the matter was brought before court Judge Shmuel Bornstein by the founder of a crypto startup that argued bitcoin should be treated as a currency, or medium of exchange. The entrepreneur said that transactions involving the cryptocurrency should not be taxed because it’s a currency, not a financial asset.

Bitcoin's Status Hasn't Yet Been Established

As noted by local news outlet Globes: 

The Central District Court in Lod accepted the tax authority’s interpretation, and held that bitcoin is an asset and not a currency, and that the transaction in question is therefore taxable.

Going on to mention that Israeli financial regulators have not yet established a comprehensive regulatory framework for cryptoassets, Judge Bornstein said that it was “hard to envisage a result whereby Bitcoin would be considered a currency for tax purposes in particular.”

According to Globes, the case involving bitcoin-related transactions could reach Israel’s Supreme Court.

Commenting on the status of Bitcoin, Itay Bracha, Managing Partner at Israel-based law firm Bracha & Co., remarked:

The ruling is a signal to all those who have yet to report cryptocurrency-related [capital gains] or based their actions on differing legal advice.

Building Decentralized Infrastructure for the Transportation Sector

Per the legal specialist, the recent ruling is “unequivocal” and that it is only a “judicial interpretation”, not a “new legalization.” Therefore, the current ruling on the status of bitcoin would only “apply retroactively.”

As noted by local sources, the latest BTC-related case involves Noam Copel, the founder of blockchain startup DAV. As stated on the crypto firm’s official website:

We’re building a decentralized infrastructure to revolutionize the transportation industry on the blockchain.

In 2011, Copel reportedly purchased BTC and sold it in 2013 for a profit of around $2.3 million. Arguing that his profits, or capital gains, were not taxable, the crypto entrepreneur stated (in court):

Bitcoin should be classified as a foreign currency, and that his profits should be seen as exchange rate differences received by an individual not in the course of a business, and therefore should not be taxed.

As explained, the Israeli courts ruled in favor of the nation’s central financial institution by categorizing Bitcoin as a financial asset - which is subject to taxes.