As Bitcoin continues to grow in popularity, it’s no surprise that we are also hearing a number of governments around the world chime in on the matter. The latest country to speak out (negatively) on Bitcoin is Norway, Scandinavia’s richest nation.
Nans Christian Holte, Norway’s director general of taxation, said the currency doesn’t fall under the usual definition of money. Instead, government officials have deemed Bitcoin as an asset in which capital gains tax can be charged and that profits from Bitcoin will classify under the wealth tax. We are told that losses can be deducted, however, so it’s not all bad.
The decision will likely have an impact on Kristoffer Koch, the Norwegian man we profiled back in October. Four years ago, Koch was working on a thesis paper about encryption and decided to buy 5,000 Bitcoins for (now) bargain price of $27. That stash is now worth more than $3.6 million at today’s (rather low in recent days) exchange value of $734.
The future of virtual currencies in general is unknown but there’s huge potential if things go right. As BI Norwegian Business School professor of financial economics Paul Ehling told Bloomberg, if people start to trust Bitcoin and use it for large purchases, it could easily rival existing currencies. Problems could arise, however, in times of crisis or during a power outage where having cold hard cash in your wallet would be the best course of action.
Need a quick lesson on the history of Bitcoin? This handy infograph from Visual Capitalist should do the trick.