Tax havens are renowned for allowing the rich and famous to shuffle their funds where governments can’t see or access them. Bitcoin, with its strong store of value, borderless nature, and unprecedented privacy, has the ability to obsolete tax havens.
Some investors, especially those in countries with high rates of taxation, seek to find ways of providing their savings with privacy and anonymity. This can be for various reasons, from tax avoidance, a fear of loss of funds or to a simple desire for privacy. Cash serves part of this purpose, but has some severe drawbacks.
We all use cash when we want more privacy, but cash is also “trash.” You can't save it as it devalues too much so you need to spend it all. You can't pay anyone online with it either.
Panama Papers revealed the extent of demand for tax havens
The Panama Papers scandal revealed a deep distrust in central banking, and has since led the US to crack down on so-called ‘dirty money’ More surprising though was the extent of the people involved in the scandal, from world leaders to sports stars to all manner of the rich and famous. This illustrates a clear demand for a shelter for investments.
Despite this demand, some limitations and complexities exist involved in setting up accounts in foreign tax havens. The smart and rich solve this by moving their residency or setting up companies in other countries with lower tax rates and more privacy but this requires lots of study, money and travelling.
Bitcoin has proved itself as a safe-haven asset
A recent invention and only a few years old, Bitcoin was previously seen as an experimental and highly volatile investment. However, the cryptocurrency has now earned its status as a safe-haven investment, a safe bet during times of economic turmoil, and considered more stable than the pound or euro.
Investing in cryptocurrency over offshore accounts provides several advantages, in terms of ease of use and privacy. You can convert your cash into Bitcoin, save them and see the value go up instead of down, while keeping your privacy, and you can pay online, also in privacy. However, this does require a lot of study to do well. There are other cryptos trying to solve this by making tracing transactions much harder like Monero, Dash and Zcash but they need wider adoption to truly become a better solution than Bitcoin. For now these are good speculations though.
Bitcoin is borderless
Finally, a distinct advantage of using Bitcoin as a secure and private store of value is in its borderless and easily accessible nature. Cash requires storage in a physical location, and investing in offshore accounts requires a lengthy process for setup. Bitcoin and other cryptos allow you to do this from home. It still requires study, but no money and no travelling.
If Bitcoin becomes more mainstream, the need for tax havens may be greatly diminished, or may even become obsolete.