If there’s one thing that the leak of The Paradise Papers proves, it’s that the rich don’t like mere mortals poking around their financial affairs. The maze of shell corporations, tax havens, and secret accounts in the Caymans or the Channel Islands are there for one reason, and one reason only: to further enrich the rich.
These mostly legal, if remarkably arcane, financial devices and tricks illustrate the simple fact that the rich fear the rest of us. Without their hyper-expensive offshore law firms and shady banks, their wealth – and the lengths they will go to in order to shield it – become public knowledge. And there are few things the public hates more than a company with $252 billion stashed in a tax haven paying an effective tax rate of 0.005%, while the government rakes in 25% of their hard-earned income as a teacher or a family doctor.
Concealing wealth is, of course, a by-product of some cryptocurrency offerings, such as Monero. Untraceable (to date) the coin has, as might be expected, become a refuge for many who don’t want the means of their income – or the amount of it – to be public information.
None other than our favorite law-abiding banker, Jamie Dimon of JPMorgan Chase, is on record as claiming that Bitcoin is only useful for drug dealers, murderers, and North Korea. (Clearly he isn’t aware that the IRS can track Bitcoin transactions – a bit of a downer for your average cocaine baron.)
But Dimon’s argument rings hollow in light of the Paradise Papers – which make it transparently-clear that financiers, celebrities, political patrons, corporations, and even the Queen of Great Britain are sheltering their own assets behind impenetrable firewalls of legal mumbo-jumbo, which have come tumbling down only as the result of a massive leak.
What exactly, is the difference between concealing wealth in cryptocurrency, and concealing it in an invisible offshore tax haven?
Simple – average people have access to cryptocurrency. The knowledge to create the tangled webs that shroud the hundreds of billions of dollars that Apple has moved around to avoid taxes? Not available to average people.
In other words, cryptocurrency is leveling the playing field. The rich fear you, the owner of a little Bitcoin or Monero, because their chief weapon in the defense of their wealth has become cheapened, mass-produced, and marketed to any Joe Schmoe with a computer and an online wallet.
I said “Fear the rich…” because the most dangerous animal, is a cornered animal. The rich are feeling the pressure – from leaks, sure, but outrage passes. The democratization of secrecy, on the other hand, is a far more threatening long-term problem for those who would avoid the outstretched hands of the taxman. Blockchain technology could narrow the global income gap – if used for the good of the many. The chill of cryptocurrency must surely be coursing through the veins of the blue bloods – and who’s to say how they will react?
Perhaps by artificially boosting the price of Bitcoin until it crashes spectacularly, taking the promise of cryptocurrency with it?