Writer Ploiny contributed this article. Want to join our research team? Email email@example.com.
President Donald Trump has in his hands a tool no other President has ever had to advance the goals of conservatives and libertarians in this country: Blockchain technology.
Blockchain could render both the IRS and the Federal Reserve superfluous.
Blockchain is a decentralized digital system for doing just about anything. Its chief virtue is that all transactions can be accounted for through a cross referencing technology that does not rely on any individual, trusted party. All transactions are accounted for by all “miners” on the system, who get paid for making sure that all the miners have all the information on any transaction. If a transaction occurs between party A and party B, all the information on that transaction will be on the data of all miners working on the particular network. If party B wants to see what happened with his interactions with A, he can pull the information from one of hundreds of miners, and the information each miner has will be identical.
But blockchain is most noted for its ability to create and manage a digital currency like Bitcoin.
Bitcoin satisfies the most fundamental properties necessary in a medium of exchange. It is homogenous and divisible, like gold. And since it lives on hundreds of computers at the same time, it is better than portable. Proof of ownership is ubiquitous without having to transport it. Just get access to your account and it is there.
But the really novel thing about Bitcoin is that it is relatively scarce. The only way to make more of it is to mine the data or perform some other service within the blockchain, and as the mining process itself becomes more and more complex and the algorithms restrict supply, it requires more effort to create. Again, like gold, all Bitcoin that have ever existed will continue to exist and additional Bitcoin become increasingly difficult to obtain.
Scarcity as an attribute solves one of the key problems for the naïve who first investigate taxation. “Why doesn’t the government just print itself money and not tax people?” asks the newbie. The answer is that it always leads to the government devaluing its currency because governments inherently can’t control their spending, thus making the value of the money printed decline. But Bitcoin’s algorithm prevents this. Thus, if the U.S. government got behind a distributed blockchain system, it could be sure that scarcity was enforced.
So here is a proposal for the President. Adopt blockchain currency and have any miner who sets up shop send to the government account 20 percent of the mined coin. Congress can fight over the percentage at each session. Manumit the citizens and the businesses from filing or paying any tax at all. Have the algorithm account for various macroeconomic interruptions just as Milton Friedman suggested and have the algorithm be publicly available. Then follow Professor Friedman’s advice and end the Federal Reserve. By ending the IRS and ending the Fed, you will become the most conservative President in history no matter what else you do.
Stay tuned for more.
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