'I Don't Want Your Money': The Man Who Invented Bitcoin - The 5 Minute WrapUp by Equitymaster
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'I Don't Want Your Money': The Man Who Invented Bitcoin

May 11, 2016

In this issue:
» Rural income is hit badly
» Impact of the amended Mauritius tax treaty
» ...and more!
Radhika Pandit, Managing Editor of ValuePro
  • Today, we're sharing an interesting essay from Anisa Virji, our colleague and the Managing Editor over at Common Sense Living, who has some great lifestyle and wealth building ideas. Below, she shares her thoughts on Bitcoins and the man who invented it.

Happy reading!
Radhika Pandit


Anisa Virji 'I will never accept a cent from any of you for anything,' said Craig Wright, the Australian entrepreneur who just revealed himself as the inventor of Bitcoin.

'I don't want money. I don't want fame. I don't want adoration,' he went on to say. Bitcoin was created in 2009. It is the first example of what we now know as a crypto-currency - a form of digital currency that has no physical form. It is created and held electronically, and is not controlled by anyone.

(Note about bitcoins: A completely digital currency is a hard thing to understand, unless you are a hard-core techie. The only thing you need to know about Bitcoin is that, like money, it can be exchanged for goods and services. Unlike money, it is not physical. And most importantly, unlike money, all bitcoins are tracked on a public open-source system that any developer can access but no one can manipulate - making it completely secure. As I write this the value of 1 Bitcoin - Rs 30441.91)

Until earlier this month, the only thing we knew about Bitcoin's inventor was the pseudonym Satoshi Nakamoto. People have been dying to know who was responsible for the disruptive currency. Fans, financial analysts, and the authorities have been speculating and investigating and generally harassing in their efforts to find out.

But when Australian entrepreneur Craig Wright announced that it was he who invented the successful asset class, he wasn't doing it to gloat or profit. He wasn't doing it for fame, or fortune, or even recognition.

In fact, he wished he could remain anonymous. But he had to end the speculation. Apparently, the stories people were making up were 'making life difficult, not for me, but for my friends, my family, my staff... I don't want any of them to be impacted by this.'

In fact, he is so against going public that he categorically states, 'If anyone puts me up for awards or anything like that, I will never accept a cent... I will never accept a cent from any of you for anything.'

Now, I don't know about you, but I sometimes wish I could say to the world: I don't want a rupee from any of you.

I don't know why Craig Wright (allegedly) invented Bitcoin, but I can only imagine that he was so disillusioned with 'the system' - the world's financial and political structures - that he used his genius to free himself...and millions of others...from it.

Bitcoin is a completely transparent, open-source code that anyone in the world can access. Any developer can look at the code and verify how it works. No one controls Bitcoin, not even Craig Wright.

Here, according to bitcoin.org, are some reasons people trust this digital currency:

  • It doesn't depend on banks, borders, or bureaucracy. It can be sent anywhere in the world at any time.
  • The fees are completely transparent and in fact you can choose how large a fee you want to pay depending on the speed of confirmation you want.
  • There is absolute privacy - the transactions do not require your personal information. This offers strong protection against identity theft.
  • It's completely secure - even if some users are not trustworthy, the system protects both clients and merchants entirely from fraud.
  • Transparent and neutral - no one person or organisation can control the Bitcoin protocol because it is cryptographically secure.

No bureaucracy? Complete transparency? Absolute security? When was the last time you felt you had any of these at your local bank or any financial institution?

Do you see now why Craig Wright doesn't want anything to do with 'our money'? It's not nearly as good as his.

I wish we could all just wash our hands of the painful monetary systems we have to deal with and invent our own transparent, secure currency.

I wish no one had to worry about market crashes and identity theft...to be suspicious of 'terms and conditions'...to dread late payment charges and creeping interest rates...

But not everyone can invent their own currency.

So here's the next best thing...

Instead of rejecting the current financial system, I am doing everything I can to learn how to beat it. And in fact, some of what I've learned has helped me...

  • implement a three-legged safety stool to protect my whole portfolio from devastating losses in case of another 2008-style crash...
  • get rid of my so-called broker (who really was just breaking my bank)...
  • design a rock-solid retirement plan...
  • avoid the most ruinous wealth traps that suck in desperate investors everyday...
  • ensure no 'wealth stealer' is draining away my wealth when I'm not looking...
  • and so many more ways to beat 'the system', instead of being crushed under it.

And you can beat the system too. We will share these ideas with you in Creating Wealth.

The objective? Teach you everything you need to know about wealth so you can get to the point where you can say to the world, 'I don't want your money.'

Editor's Note: Right now you can get these ideas free for a thirty-day no-obligation trial period... Sign up, and get the financial independence you've always craved.

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2:38 Chart of the day

Two consecutive years of drought and no major hike in the Minimum Support Price of crops by the government are beginning to impact rural wages. After registering double digit growth since 2012, the average wage rate in rural India slipped to low single digits from November 2014 onwards. . This in turn has led to a severe slowdown in rural demand and impacted a host of industries such as consumer goods, two-wheelers and agri-inputs.

Amid a severe water shortage, the forecast of an above average monsoon in 2016 by the Indian Meteorological Department has come as a huge relief. This bodes well for the agrarian economy of rural India that is still largely dependent on rains for irrigation.

Even in the Union Budget 2016-17, the government has announced a number of measures to boost rural income. The government is aiming to double income of farmers by 2022. For this, the government has allocated Rs 55 billion to the crop insurance scheme and announced a long term irrigation fund with an initial corpus of Rs 200 billion. The government has also allocated Rs 359.8 billion for agriculture and farmer's welfare.

Apart from this, the government has made the highest ever allocation of funds of Rs 385 billion to the Mahatma Gandhi National Rural Employment Guarantee (MNREGA) scheme that provides an assured employment of 100 days to one member from every rural household. Hopefully these measures will help to arrest the shrinking wages in rural India.

Rural Income Hit Badly
Rural Income Hit Badly

* rural avg wage rate adjusted for inflation


The issue of black money and resolving it has been one of the priority topics on the government's agenda. One point of contention has been the status of Mauritius as a tax haven and the worry that India's tax treaty with the country is being misused to avoid paying tax on funds coming to India. After years of negotiations, India has now decided to amend its tax treaty with Mauritius. This means that capital gains will be taxed on investments channelled through Mauritius.

These new rules will apply from April 1, 2017. Thus, investments made by foreign investors before that date will not be taxed.

Not surprisingly, Indian indices reacted negatively to the news as concerns of capital outflows probably heightened. As reported in Livemint, more than two-thirds of investments through P-notes or offshore derivative instruments (ODIs) come via Mauritius and Singapore.

Despite the nervousness in the markets currently, we believe that in the longer term, this move makes sense as it will make the tax regime more transparent. More importantly, it will ensure that only genuine foreign investors invest in India. Thus, the motive to use Mauritius as a vehicle to avoid tax will be done away with.

Do you the amended tax treaty with Mauritius will have a significant impact on the Indian stockmarkets? Let us know your comments or share your views in the Equitymaster Club.


But is the government really doing enough to revive the agricultural growth in the country?

Looking at the huge sums of money that the government has been spending to keep a whopping seventy-seven public sector enterprises afloat, this does not seem to be the case. To be precise, the total loss of these companies far exceeds the agriculture budget of the country.

One such perpetual sinkhole is the state-run airline company Air India. Vivek Kaul, Editor of Vivek Kaul's Diary, in his latest article has pointed out that how the government has been squandering billions of taxpayers money to revive this white elephant.


Indian markets languished in the red today as the amendment of the tax treaty with Mauritius dampened sentiments. At the time of writing, BSE Sensex was trading lower by around 170 points. Selling was seen across the board with stocks from the auto, and IT sectors leading the losses. The BSE Midcap was trading marginally higher, while the BSE Smallcap was trading marginally lower.

4:55 Today's investment mantra

"It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent." - Charlie Munger

This edition of The 5 Minute WrapUp is authored by Radhika Pandit (Research Analyst) and Madhu Gupta (Research Analyst).

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