Murphatollah, sigh

He doubles down on a misundertanding:

I raised some concerns about banks creating their own digital currencies backed by blockchain technology earlier today.

Let me raise another concern now. Who taxes these trades? Where? And in what currency?

You can be sure three things will be argued. The first is that the currencies are created and managed in tax havens so no tax is due on that process.

Second, it will be argued that if they are anywhere these trades are in tax havens, where file servers will, no doubt be located (although this gives rise to interesting questions because blockchain is energy hungry).

Third, it will be suggested that no tax is due as a result.

I almost suspect that the argument will be that these trades are so virtual that they are not anywhere.

In that case it’s time for tax authorities to react, now.

I explain the whole thing elsewhere and with reference to Murph:

We even have a useful test of this in the person of Richard Murphy, the Father of Corbynomics. Just as every compass has a butt end then it’s extremely useful to have someone out there consistently wrong on matters economic and banking. Mr. Murphy fulfils this position admirably:

If banks are planning new currencies regulators need to act to curtail the risks

The FT is reporting this morning that four banks are teaming up to create a new form of digital currency based on blockchain technology: a rival to Bitcoin in other words.

If he says it’s a new currency, a rival to Bitcoin, then clearly and obviously it isn’t. There, our contention is proven. As is actually explained to him:

No, it really isn’t a new currency. It’s purely for faster and more secure settlement of existing currencies.

He refuses to believe this so further proof of our contention that it is about settlement and not about currencies.

While we could indeed say that there’s a new currency here it’s a known to be artificial one, one that won’t escape into the wild and is as much currency as any other internal settlement method and only as much. The point is to use the blockchain to allow immediate settlement no more.

More Murphy:

Let me raise another concern now. Who taxes these trades? Where? And in what currency?

Trades aren’t taxed. Profits from trades are taxed. Given that these settlement “currencies” will be 1:1, by definition, with extant currencies there is no confusion about profits nor how and where they will be taxed. Especially since the idea is that they clear through central banks….

19 thoughts on “Murphatollah, sigh”

  1. Whoever BC on TRUK is deserves a medal. I rarely go there to read anything, but the discussion in his original thread clinches it: Ritchie is nuts

  2. I don’t normally go in for Murphy-bashing, partly because my ignorance is such that I recognise others are far better-placed to do it, partly because, however much he may deserve it, there is a whiff of the school yard about said bashing.

    But today, I change my tune because I’ve just realised: he’s just about as ignorant as I am.

    Nevertheless, one should pay tribute to his ability to create the brand that he has. I could not have done that.

  3. Second, it will be argued that if they are anywhere these trades are in tax havens, where file servers will, no doubt be located (although this gives rise to interesting questions because blockchain is energy hungry).

    Blockchain / servers?


  4. “(although this gives rise to interesting questions because blockchain is energy hungry).”

    Blockchain is not energy hungry. Mining bitcoin, litecoin etc is.

    Two different things.

    Murphy is an Imbecile

  5. “although this gives rise to interesting questions because blockchain is energy hungry”

    How about Green QE to build windmills to “power blockchain”?

  6. Bloke in Costa Rica

    “Blockchain is not energy hungry. Mining bitcoin, litecoin etc is.”

    This is, of course, the entire fucking point. Verification is easy, so it can be done at low cost in whatever unit you want (time, hardware, energy etc.). Has Murphy ever been presented with a stick, the wrong end of which he did not immediately seize?

  7. Once the bitcoin has been mined, the blockchain is created. It is about as difficult as sending an email. Updating the blockchain is like replying to an email. The stupidity hurts my brain.

  8. He has discussed this with experts.

    At City University? Fuckwit doesn’t begin to describe this bipedal gerbil

  9. How does this really differ from a big interbank netting-off process? As Tim rightly says, it’s already possible, if cumbersome, to do same-day settlement. The problem with this – as with any other process – will be the quality of data input and control. Standing data – counterparty names, settlement details, etc – will need to be tightened-up if they’re to achieve the efficiency they’re aiming for, but standing data’s one of the most boring jobs in investment banking and attracts appropriate people; it’s all very well saying blockchain tech can work wonders, but it’s not much good if different trading desks are booking trades to three different accounts for the same XYZ Cpty or should’ve booked it to XYZ Cpty (Europe).

    Improved trade confirmation processes will help, but there are plenty of trades that fail because that T+3 isn’t long enough to get it booked properly.

    As to the WGCE, I’m puzzled that the most obvious objection seems to have eluded him: what’s the point of a trade that doesn’t convert to a real currency? What does the bank pay its traders: Here’s your bonus for this year, and don’t go spend it all ever?

  10. I certainly never paid any tax anywhere when I walked into my bank in Hong Kong, converted money in my bank account into a bank draft, posted it to my bank in the UK where they converted it into money in my UK bank account. The blockchain proposal is absolutely no different to using a bank draft to transfer money between accounts, or using a cheque or a bank giro, or an electronic funds transfer. Presumably Murphy wants to steal money from me whenever I transfer money from my account into Scottish Electric’s account, or into Virgin Media’s account, or into Yorkshire Water’s account, or into the the council tax account, or – god help up – into the HMRC income tax receiving account.

  11. Bloke in Costa Rica

    jgh, that sounds about right. Murphy finds it mortally offensive that two people might engage in trade and he not be able to wet his beak. His cupidity is exceeded only by his stupidity (see what I did there?)

  12. It really seems to offend him that transactions are not taxed.

    I bet he’d be livid if he sent his kid some birthday money via a bank transfer and it was taxed though…

    But, given that these two things are visible through different holes in his stump, the connection between them must… erm… stump him.

    Thanks, I’ll get my coat….

  13. Bloke in North Dorset


    I don’t think that would worry him half as much as his grants being taxed as they went through the bank.

  14. Perhaps his grants should be taxed as a transfer and his grants then taxed as personal income before being taxed as his company income?
    That would please him.

  15. “Who taxes these trades?”

    Always the obsession with taking a cut of what you haven’t earned yourself.

    Fuck off. Just fuck off. Get a proper fucking job to keep you occupied and pay your own way in the world. And stop obsessing about what other people are doing or having.

    I know lefties are likely mentally ill, but sometimes you just run out of patience with their pathetic, jealous, greedy whining.

  16. what Edward Lud says.

    But I’m begining to like RM – in the same way I like David Lammy. He makes me feel clever.

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