Bitcoin Valley in Rovereto: what can it teach us?
Bitcoin Valley in Rovereto: what can it teach us?
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Bitcoin Valley in Rovereto: what can it teach us?

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Many people know that there is a small enclave in Rovereto, in the heart of Trentino-Alto Adige, Italy, where cryptocurrencies are commonly used to purchase everyday goods and services. This is not news of today: Rovereto’s Bitcoin Valley has existed for years, and a few years in the world of cryptocurrencies can be geological eras. But why are we talking about it again today? What is the news?

The case of Rovereto

What is topical is the fact that what has been happening in Rovereto for years and is still happening today, with no specific repercussions or traumas: you enter a bar and pay for your coffee in Satoshi, the fraction of Bitcoin. Or you get your house renovated and pay in Bitcoin.

All this, in spite of the proverbial, terrifying, volatility of cryptocurrencies, the lack of clear tax rules, the question of capital gains (will they be taxable or not?), the RW form, and so on.

A regular receipt or invoice is issued, tax returns are filed and life goes on. Rovereto is not a free zone. VAT, other taxes and, in general, all tax obligations work exactly as they do in the rest of Italy. The same applies to the application of privacy or anti-money laundering rules.

There must be a reason if all this continues to work well. There must be tried and tested mechanisms, suitable for small entrepreneurs, artisans, and retailers, who have been relying on it for years without any problems, without necessarily having to be start-up computer experts.

How Rovereto’s Bitcoin Valley was born

In fact, this was made possible also thanks to the work of the company Inbitcoin, founded by Marco Amadori, which over time has worked hard not only to prepare a series of technical solutions, but also to spread the crypto-culture and to overcome mistrust, cultural barriers, and allow many businesses to make the leap that now allows them to circulate wealth through cryptocurrencies.

A fundamental step that, de facto, has made possible the consolidation of a community that uses cryptocurrencies extensively, has been the use of the Lightning Network, i.e., the famous “second layer solution” that overlaps the Bitcoin network.

This technology actually makes the use of Bitcoin (or rather, fractions of Bitcoin) to make micropayments practically feasible, making them quick and inexpensive, with the application of almost imperceptible commissions.

And so the expression “paying for a coffee in Bitcoin” ceases to be hyperbole and becomes a description of a concrete, everyday action.

The tax aspect

But this technology, as Marco Amadori explains, could also provide a significant incentive for the growth of circular economies. 

Through the use of Lightning, it is technically possible to set in motion articulated split payment mechanisms which, if desired, can allow the direct remuneration of all suppliers in a supply chain.

For example, when I pay for my pizza in Bitcoin, part of the price I pay can be diverted at the same time to pay the supplier of the flour or tomato sauce, etc.

And that’s not all: in the abstract, if only the Italian tax system were slightly less complex than blockchain technology and allowed to establish with some clarity the weight of taxes on the purchase price of a pizza, it would be possible to direct the share in an automated way into the coffers of the Treasury.

Bitcoin Valley Rovereto
In Rovereto it is possible to pay a coffee with Bitcoin

Forget the electronic invoice.

Now, to be realistic, it is unlikely that, even assuming that the Italian tax authorities are able to grasp the opportunity, it will be possible to prepare a regulatory and technical system that will intercept the tax component of every transaction that transits on the blockchain.

But let’s not put the brakes on providence.

Returning to how this ecosystem has grown and thrived, certainly the use of the Lightning Network has played a crucial role and significantly aided its consolidation. However, it is obvious that this is not the only ingredient.

With the support of appropriate professionalism, operators interested in growing this ecosystem have, over the years, experimented with systems and applications that make it easy in everyday practice: we are talking about payment gateways and POS (Points Of Sale) that allow for the easy completion of the cryptocurrency payment transaction.

At the same time, however, we are also talking about applications and systems that make it just as easy to issue compulsory tax documents such as a receipt, tax receipt or invoice.

One of the biggest cultural and emotional barriers for many businesses is the fear of not knowing how to navigate tax obligations when it comes to issuing tax documents and recording and accounting for income received in cryptocurrencies.

In reality, however, there are now many platforms and applications available on the web that make it easy to manage not only the cryptocurrency payment phase, but also the simultaneous conversion of the amounts received into euros, and thus the issuing of tax documents for the corresponding value.

Issuing a receipt or invoice following a Bitcoin payment is in fact an elementary operation, as it is no different from issuing a similar tax document following a fiat currency payment.

The only crucial point is the correctness of the conversion of the amounts from cryptocurrency to fiat currency (in this case, euro), since it is on what the tax law defines as “normal” value that the conversion value of cryptocurrencies received in payment for goods or services should be aligned for tax purposes.

This problem is pragmatically solved in Rovereto’s Bitcoin Valley with an application developed by Inbitcoin itself. It’s bitcoinPOS, a service that, besides acting as a POS and payment gateway both in Bitcoin and Euro, instantly performs the conversions needed to issue tax documents and organizes data so that they can be easily shared with your accountant.

Bitcoin is not just speculation

The Rovereto case has anticipated and tested, over a significantly extended period of time, what is happening in El Salvador on a much larger scale and, probably, in other Latin American countries as well: namely that the use of cryptocurrencies to purchase goods or services of common use, and not only for speculative trading, is not only possible on paper, but is actually happening, without trauma or anarchic revolutions.

It is not by chance that insiders claim that the El Salvador case is about to be a test case for technologies operating on the second layer of the Bitcoin blockchain, i.e. those technologies that, through sidechains, aim to make transactions more sustainable and immediate than those of the underlying blockchain.

In the medium to long term, this could mean that with the possible multiplication of communities such as these, cryptocurrencies would move back to the origins outlined in Satoshi Nakamoto’s paper: they would increasingly function as a means of payment; with the consolidation of a certain purchasing power, they would increasingly take on the character of a store of value and their volatility could be mitigated. Ultimately, perhaps they would be used less and less as an opportunity for speculation.

This may not please everyone, but cryptocurrencies are a world that has accustomed us to the most unexpected surprises.

 

Luciano Quarta - The Crypto Lawyer

Luciano Quarta, tax lawyer in Milan, managing partner and founder of the tax law firm QRM&P, has published extensively on the legal and tax aspects of legal tech, artificial intelligence and cryptocurrencies. A speaker at numerous conferences on the subject, he writes the column "Tax & the city" for the daily newspaper "La Verità" and regularly writes for the Economy and Taxes section of "Panorama". He is a member of the Tax Justice Commission of the Milan Bar Association and is the contact person of the Milan office of the interdisciplinary association for the study and application of artificial intelligence GP4AI (Global Professionals for Artificial Intelligence).

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