Digital+currencies

= = Digital currency is a currency which the unit of account it employs has no physical counterpart with legal tender status. With the development and discovery of internet humanity stepped into a new era, at least regarding information flow. From an economical point of view it has led to faster, cheaper and much more efficient trade and transactions. This new type of commerce has brought a few challenges to deal with. In a world where everything moves and changes within a few seconds, society still needs to create an solutions both socially, economically and all this should be regulated by proper laws, which hardly can cope up with the time, changes and development of the digital world.

Regulating Digital Currencies
The international monetary fund (IMF) is the international institution, which is supposed to coordinate and control the currency market. All countries in the world, except North Korea, are a member of IMF, therefore they are than obliged to stick to the rules and regulations. Today there are several different digital currencies in the market, still developing but yet creating curiosity. A great advantage for the digital currencies is the avaiablitiy to increase the transaction costs. There are a few different types of digital currencies in the market such as Lightcoin, Peercoin and perhaps the most know, Bitcoin. A global economic system is developing and with this new type of money a few challenges are appearing. Except from the fact that a digital currency could destroy another weak national currency there are several other issues to deal with. From a tax perspective it will, indeed, become a great challenge. Digital money works are similar cash and the transactions are almost unable to track, digital currencies are threatening to increase tax avoidance.

Digital currencies and tax avoidance
The technical solution of digital money allows that payments to move straight into the receiving digital cash account, without going via a bank. This could lead to that a lot of different payments will be done in cash, untraceable, they can easily be transferred to tax havens and used for tax compliance. Another problem, when transactions get invisible, is where to tax. If money “disappears” into the digital wallets the tax will automatically rise for the visible money. Governments are facing a new digital era taking place and to have a responsible tax planning, the taxation point could be moving from the earned money to the money you spent.When it comes to legislation of digital currencies, there is a major issue with the fact that the money is untraceable. How we are supposed to regulate the electronic money is developing, electronic money institutes, are as proposed as an instrument controlling the digital money. Today it is not obvious what impact the requirements from legislators will have on institutions handling digital currencies and regulations regarding trancsparency and traceability.

Different digital currencies

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