This story about a rejected government offer was written by Tomas Forgac, friend of Bitcoin.com, early Bitcoin investor and entrepreneur, now focusing on Bitcoin Cash adoption and growth.
An unnamed pro-crypto government recently gave Bitcoin.com an unsolicited offer to finance the expansion of operations. While we are grateful for the trust given to us and the bitcoin cash community, we feel we must explain why we would never accept such offer. We also hope our decision inspires others in the ecosystem to reject government handouts.
Also read: US State Takes Action Against Crypto Operation Imitating a Bank
There is a moral and economic dimension of our decision. The majority of our colleagues, including our CEO, consider taxation aggressive redistribution of honestly earned income: a form of theft. It would thus be unacceptable for us to take taxpayer money through a process we recognize as unjust.
While most people have differing opinions on taxation, hardly anyone considers it appropriate for lower and middle-class folks to invest in a highly risky enterprise. Furthermore, why should the existing financial institutions be forced subsidize their potential competition via a corporate tax? They would never wittingly do such a thing; it would be suicidal. But this is the effect of taxation on the population and businesses.
The Broken Window Fallacy
Government officials have no skin in the game when making investment decisions. Unlike angel investors, it is not their money at stake, and unlike VCs who have to compete for the financing of their funds, governments don’t compete with anyone.
Governments expropriate wealth and redistribute it. Officials and bureaucrats have no incentive to make the right decision. It should suffice to compare the success of startup scene in countries with very little to no support (US, UK, Israel or Scandinavia) to those where a government is heavily involved and “supportive” (EU, Singapore).
Seen Versus Unseen
One of the most important concepts in economics was explained by Frédéric Bastiat in 1848 and popularized by Henry Hazlitt a century later. They expressed this idea as the “disconnect between what is seen and what is unseen.” Bastiat used this idea to dismantle the broken window fallacy: that when a child throws a stone in a merchant’s window, it helps the economy because the merchant needs to hire a window maker.
“This destruction,” says some pseudo-economists, “trickles down to the whole economy and provides jobs to the unemployed.” The fallacy attempts to convince people that wars spur economic activity; that for example, World War II ultimately saved the US from the Great Depression.
Destruction Cannot Lead to Prosperity
Anyone with common sense, however, intuitively knows there is something wrong with this line of reasoning. How can destruction lead to prosperity? It cannot.
Bastiat explained there is a difference between what is obvious and what is unseen. It is obvious the window was fixed and the window maker made money as a result. However, most people miss that the merchant made expenditures, which he would have originally reserved for other purposes.
Perhaps he wanted a new pair of pants made, but because of the incident, he had to forgo those. Therefore, the tailor loses money and society fails to accumulate greater wealth. In the case of the broken window, the economy merely replaced the window. In the latter, unseen case, the merchant would possess an intact window and new pair of pants. Overall, everyone would have been wealthier.
The same goes with the war economy. On paper, it grows rapidly because of government expenditure, but it doesn’t produce stuff people want. That makes the society poorer, not wealthier.
Broken Window Fallacy in the Startup World
This concept applies to governments making decisions on investments in startups as well. Even if some startups become successful and profitable, it is impossible to say which investments had to be forgone.
This is the natural result of money being stolen from people and businesses through the process of taxation. In reality, these folks would have made the decisions on where their money goes, not government agencies. Some of them might choose consumption, some might choose more profitable investments, and some might choose what they feel is a more socially conscious investment.
It should not be up to government to make judgement calls on investment decisions. This is an insane proposition, because government has no skin in the game. It is unlikely they would make a good decision. The incentives are not there, so businesses and investors would make better decisions on average.
Rejecting Government Handouts on Principle
The author of this article had a similar experience with his first startup attempt in Singapore. Because it was 3D-printing related, he received multiple unsolicited offers for state financing and turned them all down because of the aforementioned reasons.
With that said, we are not naive. We do not believe because we refused the money, it will be returned to the taxpayers or spent in a better way. No, we rejected it on principle. We turned it down because it is stolen money, and we want to educate the public about the unintended consequences of such programs.
Bastiat would be proud.
What do you think about rejecting government handouts on principle? Did the author and his company make the right decision?
Images courtesy of Shutterstock
OP-ed disclaimer: This is an Op-ed article. The opinions expressed in this article are the author’s own. Bitcoin.com does not endorse nor support views, opinions or conclusions drawn in this post. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the Op-ed article. Readers should do their own due diligence before taking any actions related to the content. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any information in this Op-ed article.
Three of South Korea’s largest cryptocurrency exchanges are expanding overseas. Upbit has launched a Singaporean crypto exchange with 156 coins and 221 trading pairs. Coinone has established a crypto exchange in Malta while Bithumb is planning to launch a security token platform in the U.S.
Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space
Bithumb to Launch US Security Token Platform
One of South Korea’s largest crypto exchanges by trading volume, Bithumb, announced its partnership with U.S. fintech company Seriesone on Oct. 31.
Under the agreement, “Bithumb is investing in a Seriesone entity in South Korea to scale technical development and marketing,” Seriesone detailed, elaborating:
Bithumb and Seriesone will form a joint venture intended to create a new exchange in the United States that will offer a compliant marketplace to trade security tokens, subject to receipt of SEC, FINRA and other applicable regulatory approvals.
Bithumb was recently acquired by Singapore-based Bk Global Consortium led by a plastic surgeon. The group inked a deal with BTC Korea Holdings, Bithumb’s largest shareholder at the time with 75.99 percent interest, to buy a controlling stake in the exchange.
Seriesone recently appointed Kaine Kim, former deputy director of South Korea’s Financial Services Commission, as managing director of its South Korean operation and head of Asian operations.
Upbit Singapore Now Live
Another major crypto exchange in South Korea, the Kakao-backed Upbit, announced the official launch of its Singaporean exchange on Oct. 30. The new exchange is headed by Alex Kim, who previously served as the head of Kakao Indonesia, according to the Investor publication.
Upbit, operated by Dunamu Inc., is a partner of U.S.-based exchange Bittrex. Dunamu CEO Lee Sir-goo said in September that Upbit will continue to strengthen its partnership with Bittrex as it makes a foray into global markets. Noting that Upbit Singapore will initially support only one fiat currency, the Singapore dollar (SGD), he described:
In the future, we would like to add other fiat currencies and expand in other Southeast Asian countries.
With 156 coins and 221 trading pairs listed currently, Upbit Singapore supports trading in the SGD, BTC, ETH, and USDT markets. “Any user who cleared identity verification” can use the exchange, Upbit Singapore clarified.
For the grand opening, all new users are offered zero-percent trading fees until Nov. 28 on the SGD market. Zero-percent trading fees are also offered until Dec. 28 on the same market to existing users who signed up and cleared real-name identity verification by Oct. 29.
Coinone Launches CGEX
Coinone officially launched its crypto-only exchange CGEX on Oct. 29. “CGEX is not a legal currency but a crypto-based (C2C, crypto-to-crypto) cryptocurrency exchange” with the same trading pairs as the Coinone BTC market, the exchange described. Deposits and withdrawals began on Oct. 29 while trading began on Oct. 30. The exchange is established in Malta and is offering zero-percent commission on makers in the first month of opening.
The new global crypto-crypto exchange will share its order book with Coinone’s new BTC market … CGEX provides stable liquidity to investors by integrating with Coinone Korea, Indonesia, and others under the Coinone brand.
What do you think of the three Korean exchanges launching operations overseas? Let us know in the comments section below.
Images courtesy of Shutterstock, Bithumb, Upbit, and Coinone.
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Monex Inc., the new owner of the cryptocurrency exchange Coincheck, has announced that Coincheck will expand into the US.
Monex acquired Coincheck back in April, not long after Coincheck experienced one of the largest crypto hacks of all time. Coincheck has been working to recover ever since but hasn’t fully succeeded yet. Now, in the hopes of helping the exchange to recover further, Monex plans to expand Coincheck into the US, reports Bloomberg.
Getting over the crypto hack isn’t the only reason Coincheck is expanding into the US, though. The CEO of Monex, Oki …
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