The recent decision by the state of Ohio to enable business pay taxes using cryptocurrencies have been criticized as nothing more than a gimmicky PR stunt as the skeptics believe that it is impractical and would not be sustainable for a long time.
Bitcoin price fluctuations make it impractical
The Detroit Free Press in their report stated that the skeptics of this latest development are of the view that bitcoin’s volatile price fluctuations and the lack of mass merchant adoption make it very hard and an unsuitable method to be used for tax payment.
Kevin Werbach, a professor at the Wharton School of the University of Pennsylvania stated that “The Ohio announcement is mainly a PR stunt. There is not a particular advantage in paying your taxes with bitcoin today. The state just wants to signal that it’s ‘cryptocurrency-friendly.’
Werbach has some experience in the sector after he taught a class last semester at Wharton called “Blockchain, Cryptocurrency, and Distributed Ledger Technology.” He is one of the business-school professors who are of the view that cryptocurrencies and blockchain courses should be introduced in top MBA programs across the country.
For most of the skeptics, the high volatility of Bitcoin makes it an unattractive option. Andrew Wu, an assistant professor at the University of Michigan’s Ross School of Business while commenting on this issue stated that the break-neck volatility of the world’s leading cryptocurrency has made it an unattractive means of tax payment. For this reason, he doesn’t believe that cryptocurrencies will be able to gain mainstream adoption, especially in areas such as payment for goods and services. Wu, however, noted that the technology behind them, blockchain is an amazing innovation that will play a role in improving numerous industries across the globe.
Crypto tax payment will gain traction
There are some people within the state who still believe that this is a good initiative by the government and will gain traction. Ohio car dealer Bernie Moreno paid his business taxes using bitcoin in November 2018 and believes it will only get better and become more popular. He stated that “Digital currency and blockchain are really the next-tech revolutions.”
He believes in cryptocurrencies as he recently sold three cars to entrepreneurs who paid for their purchases in bitcoin.
Ohio became the first state in the U.S to enable businesses to pay their taxes using cryptocurrencies. Ohio partnered with crypto payment processor BitPay a few weeks ago, with the company tasked with managing the payments made in Bitcoin and converting them to fiat currency. The state of Ohio making this move is due to the Republican state treasurer, Josh Mandel who strongly believes that Bitcoin is a legitimate form of currency.
Mandel is looking to attract blockchain start-ups with the acceptance of Bitcoin for tax payment. He stated that he believes Blockchain has the potential to revolutionize the financial services industry by making payments faster, more secure, and less expensive on a global scale.