The Russian authorities, and in particular, the State Duma , consider the regulation of cryptocurrencies only from the side of introducing prohibitions and restrictions. If we talk about the Central Bank of the Russian Federation, as the main monetary regulator, then they intend to completely prohibit free finance.
Thus, Russian citizens have not so many options as to legally, and most importantly, reliably and safely, acquire and sell digital assets. To understand this, let’s consider the current situation and plunge a little into the history of the attitude of the authorities to the finances of their citizens in Russia at different times.
Bitcoin for Cash vs Monetary Reforms
Due to the peculiarities of the existing monetary system, Central Banks or their analogues print any amount of money uncontrollably, most often in agreement with the current authorities. This leads to unlimited emission and depreciation of the national currency. Despite this, bitcoin has a limited supply and a deflationary circulation model, and if you consider that part of the funds is constantly lost, although now not as often as at the dawn of the cryptocurrency industry, then the value of digital assets will constantly grow as long as there are people who are ready to use them. buy. And if we take into account the ever-increasing demand, then we can talk about simply huge growth potential.
To combat unlimited emission and an overabundance of money in the economy, the authorities often resort to monetary reforms. Thus, the money supply is reduced, but it only happens at the expense of ordinary citizens. Considering the last century, we can talk about five monetary reforms, first in the USSR, and then in the Russian Federation. If in the latter case the reforms were not so much of an economic nature, designed to reduce the money supply, but still more related to political events, then the Soviet period will be the most indicative.
What does buying bitcoin for cash give?
Before looking at the three monetary reforms of the Soviet Union, and the implications for the general population, let’s take a look at the benefits of buying bitcoin with cash.
Although from the “high stands” in Russia they are broadcasting to the population (however, the same thing is happening in China) that cryptocurrencies are needed only for speculation, which is unsuccessful for the common population, and for illegal activities, international studies show the opposite. The share of transfers related to criminal activity does not exceed a few percent of the total turnover. Therefore, to say that those who want to buy bitcoins for cash want to evade taxes or conduct an illegal transaction, to put it mildly, is not entirely true. The main advantage of buying cryptocurrency for “paper” money is the inability to link the actual address of the wallet and the buyer. This means that even when carrying out any activities related to the withdrawal or restriction of bitcoins, only their real owner will be able to access the coins.
This may come in handy in the face of a looming crisis that will surpass the Great Depression in effect. At that time, the authorities of the United States, although at the same time the government of the Soviet Union did almost the same thing, but for slightly different reasons, forced the purchase of physical gold from the population at a fixed, greatly underestimated rate. In the USSR, gold was simply “seized”, often this was done by force, accompanied by major repressions.
The second reason is to avoid double taxation and paperwork. Without a doubt, living in a state, it is necessary to comply with the laws. However, in the field of cryptocurrencies, they are actually absent, and it is hardly worth expecting complete clarity in the future, in 2022. Some experts say that the adoption of amendments to the tax code could lead to a situation of double taxation of bitcoins held in investors’ private addresses. For the sale, you will need to transfer the cryptocurrency to the address of the exchange, which the tax authorities may consider as receiving coins from another person, the opposite will have to be proven separately. And about the old and mined bitcoins, the conversation will be separate, in general, a “dark forest” is expected there.
The circulation of cryptocurrency with cash will help to avoid such situations. This is how you can secure your savings, because no one, even the seller, will know the actual buyer. If we talk about taxes, then there is no need to pay fees in excess of the necessary, calculated on the actual profit.
Also, do not forget about the possibility of transferring value between individual citizens. Reduced commissions and the absence of restrictions allow bitcoin to become a convenient tool when you need to send money over long distances, especially when it comes to fairly large amounts. Although in some cases it is possible to use a number of payment systems, but for their use it is necessary to go through the identification procedure, the mechanism of which is rather humiliating, and the commissions make the transfer of large amounts unprofitable.
The depreciation of money by the state
There were several monetary reforms in the Soviet Union, the early period of the formation of the state is not so interesting, but the post-war period, which was essentially quite stable, brought many surprises to people.
In 1947, the authorities decided to reduce the money supply, which had grown greatly during the Great Patriotic War. In the period of the latter, people truly worked heroically a lot, for which they received considerable funds, and soldiers could also be rewarded with a significant amount of money for their exploits. All this led to an increase in the money supply, which had to be fought. Also, as some researchers say, the German authorities during the hostilities flooded the USSR with “fake” banknotes, indistinguishable in quality from real ones. However, at that time there was such a period that the world was recovering after the World War, and people were ready to endure hardships.
But in 1961 and 1991, the authorities simply trampled on all the finances of citizens. In the first case, this happened due to a sharp jump in actual prices, which, although they decreased in absolute terms, however, not as much as the official currency, that is, 10 times. A simple example, a box of matches before the reform cost eight kopecks, and after that it began to cost one. However, bringing to a common denominator of post-reform values, the cost of matches is expressed as follows. Until 1961, 0.008 rubles, after, 0.01. That is, the actual, one-time inflation amounted to 20%. For other goods, the rise in price could be even greater.
But the Pavlovian reform of 1991 treated people simply inhumanly. In fact, the population was placed in conditions where all their labor savings turned into nothing. The most enterprising somehow managed to keep part of their savings, but the deposits, which for some reached the size of several annual salaries, “burned out”.
Thus, no matter what the authorities and “classical” economists tell us, no means of physical accumulation can ensure the reliability of savings. Even the United States, a stronghold of democracy, has not always dealt honestly with its people. Of course, there remains the option of buying gold bars and “burying them in the forest”, but this is also not the most reliable way. And here cryptocurrencies allow to solve most of the problems.