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How to save 30% Crypto Tax? | And what is DAO? - YouTube
Channel: unknown
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hi everyone welcome to today's video so
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on today's video i will speak about how
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you can pay zero percent tax on
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cryptocurrencies in india there is a lot
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of hava lot of halal that you know what
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government has shot like 30 crypto
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taxation people have gone bankrupt
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akshay has gone crazy because he keeps
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on talking about cryptocurrencies no i
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have not gone crazy i will tell you on
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this video how you can pay zero percent
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taxes and how akshat is planning to pay
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zero percent taxes on cryptocurrencies
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in india i will speak about a little bit
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of theory also so that it helps you
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understand that why governments can't
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systematically charge very high taxation
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on cryptos so little bit of theory there
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and then i will give you an example and
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prove it to you that you don't need to
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pay any taxes on cryptos so let us get
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the discussion started and first and
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foremost there are three critical
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concepts that you need to know about the
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cryptocurrency space so the three
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critical concepts that you need to know
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is the difference between
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decentralization and centralization what
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is decentralized autonomous organization
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and how the identity process in web 3.0
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works
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these are all highly technical
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complicated concepts but i will try to
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explain it to you in very easy to
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understand and practical language so
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please hit the like button if you like
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these explanations so first and foremost
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let us quickly understand the difference
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between decentralization and
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centralization so centralization simply
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means the aggregation of power and
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aggregation of control and processes for
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example think about it this way that you
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might have an account at hdfc bank or
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sbi or icici bank who controls that bank
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account truly speaking you would say
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that hey the bank account is in my name
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i control everything the answer is no
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you don't necessarily technically own
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100 of that account because if tomorrow
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the bank decides to freeze your account
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you can't do anything with it similarly
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the government can come out with a
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mandate and say that you know what ban
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person x bank account then again the
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bank account will get frozen so
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theoretically yes you are owning your
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bank account under your name it's linked
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to your fan card card all that stuff but
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there are central organizations that are
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controlling that bank account the
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central organizations being the hdfc
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bank sbi bank the government all these
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agencies control your bank account in
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true sense so you would say
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you know how does that impact me it
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impacts you a lot so let me give you a
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couple of examples one is a classic case
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of lebanon's economy back in 2019 this
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was even before the covet period so in
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lebanon what happened was that the
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entire economy was going through a
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massive crisis and government came out
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with a mandate and called it capital
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control so people who had money in their
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bank account they could only withdraw a
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certain fraction of that money every
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single day as per the capital control
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rules and every single day they used to
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see their currency depreciate so for
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example if you had let's say an
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equivalent of one lakh rupees sitting in
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your bank account in lebanon government
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would not allow you to withdraw more
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than three four thousand every single
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day every single day the currency was
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getting depreciated and as a result
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people saw their 1 lakh rupee in real
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terms becoming like 20 000 rupees so
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these are some of the crazy problems
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that you have when the world is
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centralized on the opposite side of the
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spectrum we have something called as
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decentralization so let me pick an
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example from the crypto domain to
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illustrate this point so i'm taking you
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to a protocol called as uni swap right
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and you can go on this particular
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website uni swap dot or slash faq and
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here is what they say what uni swap
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exactly is so uniso consider it to be a
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decentralized app important word here is
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decentralized so how does unisof define
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itself so uni swap is an open source
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protocol for providing liquidity and
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trading of erc20 dopant ethereum this is
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technical stuff you don't need to
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understand it this part is very very
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important so let me highlight some of
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the keywords from this paragraph so
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number one it eliminates the form of
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rent extraction the protocol is
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non-upgradable designed to be censorship
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resistance this word censorship
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resistance is extremely extremely
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important this is the prime reason why
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in the last five years cryptocurrencies
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have gained so much prominence is every
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cryptocurrency every protocol completely
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decentralized the answer is no but
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compared to traditional banks
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traditional systems that exist many good
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cryptocurrencies and crypto projects are
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decentralized that's the key aspect that
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you need to understand and the most
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important word here is the censorship
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resistant part and the non-upgradable
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part so basically what happens in this
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decentralization game is that protocols
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like uni swap are smart contracts so
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what are smart contracts smart contracts
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are pieces of code that are running on
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distributed ledgers like ethereum and
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bitcoin so essentially what happens is
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that these distributed ledger because of
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the distributed ledger technology so to
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say these nodes are distributed right
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think about it this way that if this is
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india i'm not drawing a map of india
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because i'm a horrible drawer so imagine
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this to be india and if amazon has
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certain fulfillment centers within india
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then indian government can come and tell
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amazon that you know what shut down your
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operation we don't like you so they can
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institute censorship technically
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speaking but indian government or
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portuguese government or uk government
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can't do anything with distributed
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ledgers why because these nodes are
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distributed all across the globe and no
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one controls these nodes so to say
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if i get into the explanation of
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distributed ledger it becomes
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complicated but i hope you get the
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picture that these nodes are not sitting
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in india indian government does not have
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any control over these nodes and
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therefore they can't censor them so this
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is the first key point second key point
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is that majority of these decentralized
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protocols are non-upgradable what does
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that mean it means that once this smart
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contract has been returned you can't do
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anything with it the rules have been set
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just because the indian government wants
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to impose like 30 taxation on anything
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that is happening on uni swap indian
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government can't come and say that you
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know what uni swap give us your trade
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book and do kyc for indian customers and
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give us all data you can't do anything
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there is no agency here it's a smart
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piece of code that is running on
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distributed ledgers so indian government
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can't dictate anything to decentralize
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protocols like yuri swap or metamask so
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an extended concept comes into play
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which is called as decentralized
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autonomous organizations now what is a
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dow dao is basically a collection of
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smart contracts that you have
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a series of smart contracts that are
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running into the picture and these smart
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contracts join together and they create
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an organization called as doubt so uni
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swap is essentially a dow right so
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that's an example of a doubt now you
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will say okay sounds very fancy what
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exactly is dao and how is it different
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from current set of businesses so in the
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current world we have a lot of
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centralized organizations so imagine
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yourself using facebook and if for some
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reason facebook does not like your
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profile or if your profile is offensive
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then facebook can ban you so who is
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controlling that organization mark
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zuckerberg is controlling even if you go
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and own meta or facebook stocks then
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also facebook can ban you right and even
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as a shareholder you will have very
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limited say or literally no say in terms
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of day-to-day running of the firm this
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is true for tcs this is true for infosys
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this is true for amazon microsoft etc
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etc so here i hope you get the picture
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that who the rule makers are the rule
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makers are people sitting in the top
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management even if you own one percent
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of tcs which is a big significant
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holding you can't dictate the ceo to
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make certain changes so centralized
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organizations again can institute a
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series of censorship the rules can be
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changed at the will of these rule makers
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but that is not the case when it comes
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to decentralized organization or douse
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now what is a dow precisely so dao is a
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protocol like uni swap and it works on a
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series of smart contracts now again the
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explanation will become really elaborate
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i don't want to wait there but here is
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the interesting bit about dows if any
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rules within this dao or this smart
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contract that is running on the
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distributed ledgers has to be changed it
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has to go through a voting process now
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let me show you how the voting process
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works so you can scan through it again
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you can go on uni swap and read about it
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so beginner's guide to voting so what do
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you need in order to participate in the
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voting process so you need to buy some
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shares of this company which is called
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as uni tokens you need some ethereum for
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transaction and a meta mask installed
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metamask again is a web 3.0 wallet it is
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decentralized in its nature so if you go
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if you take a look at some of the
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features that are being debated whether
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they should be added to yuri swap or not
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add uni support send wb tc collateral
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factor etc etc so all these proposals
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are there and if 51
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of people holding uni tokens vote yes
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then that protocol gets executed so
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similarly if the government is proposing
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that hey charge 30 tax on people
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interacting via uni swap that proposal
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will be added here and 51 voting needs
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to happen on that protocol as yes for
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that to go through will that happen i
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will talk about it subsequently on the
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video but i hope that in decentralized
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autonomous organization you can't
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include censorship just because
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government wants it does not mean that
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it will happen they will have to get in
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the line like everyone else also and
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follow the rules that the computer is
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telling them that's the genius part of
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douse now comes the third and final
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concept that i want to talk about that
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will help you understand this taxation
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game at a fundamental level which is
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that how web 3.0 identity is revealed
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now what is exactly web 3.0 it is the
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crypto world so to say which is where
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the newer version of the internet is
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getting created i have made a separate
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video on web 3.0 so you can go and check
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it out but in short we currently are in
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web 2.0 where centralized organizations
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exist and now we are moving towards a
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web 3.0 space where decentralized
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organizations are getting created now on
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web 3.0 what happens is that if you go
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on bitcoin here what you will see is
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that if you go on this holders tab you
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will get all the data the total number
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of nodes that have bitcoin these are the
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total number of nodes that control
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bitcoins right now active addresses are
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these many now what you will see is that
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you will see these addresses so for
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example this particular address called
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as 34 xp for vro something something has
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total 1.2 supply of bitcoin so these are
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web 3.0 wallet addresses here you can't
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ascertain whether this is satoshi's
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address whether this is akshat's address
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but you know for sure that this address
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on the blockchain network holds 1.2
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percent of bitcoin supply so the point
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that i want to outline is that in web
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3.0 if i'm buying cryptocurrencies then
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you can't figure out my identity unless
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i reveal it myself for example if i go
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on twitter and say that hey this is my
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address i will show you by transferring
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on thursday at 1.23
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0.0075 bitcoin or to this particular
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address right then it becomes clear so
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this wallet is associated with akshay
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but do i need to do it the answer is no
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so web 3.0 gives you that anonymity as
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well you have control over your identity
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are there good parts to it definitely
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are there bad parts to it yes which
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requires more debate and there are
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systems and processes around it again
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not getting into the security part of it
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because the video gets extremely
[636]
complicated but i hope that you
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understand three critical concepts that
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in the crypto world a lot of protocols
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are decentralized there are dows
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decentralized autonomous organization
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and your identity can be masked now with
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that viewpoint let us run through a
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simple exercise where we try to debate
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if a government any government not
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necessarily indian government can it
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control a doubt decentralized autonomous
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organization so number one can the
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indian government ban something like uni
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swap which is a decentralized autonomous
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organization the answer is no why
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because the nodes of uni swap are not
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sitting in india what can you do about
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it these are decentralized distributed
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ledgers indian government can't do
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anything with it that's point one now
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second point that you might say is that
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akshat you talked about the fact that if
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someone controls fifty one percent of a
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dao's network for example unisop then
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they can control the network and change
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the voting process and all of other
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things okay so first and foremost it
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requires massive amount of capital to do
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that uni swap at one point in time was
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valued at 22 billion dollars so
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controlling 51 percent of the voting
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rights is really really difficult and if
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the indian government buys even one
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single uni-swap token then guess what a
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lot of people will call out the
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government that you yourself are buying
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cryptocurrencies then how can you not be
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in support of it so there will be a lot
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of allah created so government can't
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even do that and control the network so
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it becomes a problem for them you will
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say that okay then the government will
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create its own network or a parallel
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system which will compete with something
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like unisop and will beat unison okay so
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this is like this argument that hey
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there are a lot of taxis in india which
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are government run and they used to be
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right you can go around and check it if
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you are living in cities like kolkata or
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mumbai they have a big taxi association
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then why was it that companies like uber
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and ola came in became billion dollar
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companies and took away market share
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from these government agencies the
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answer lies that the private
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organizations are smoother they are
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creating better systems they are
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creating and adding more value yes we
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can talk about the surge pricing in ola
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uber etc etc but generally speaking they
[754]
have improved the cab healing
[755]
infrastructure in a country like india
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and across the world and this is a trend
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that you will see in literally
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everything that private companies are
[762]
better in marketing they are better in
[763]
creating developer ecosystem they have a
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lot of leverage for example a company
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like uber burned one billion dollars in
[771]
order to make two billion dollars now
[773]
can the indian government do that the
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answer is no they can't do that right
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the moment they won one billion dollar a
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lot of tax payers will start creating
[780]
around it that hey why are you burning
[781]
so much money with no guarantees of
[783]
return so government cannot get into
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these type of businesses and make them
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stand out and make them compete with
[789]
protocols like unison so this brings us
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to the final flow of the story that if
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daos exist in the crypto space and
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government can't control these dows or
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do anything about it they will continue
[799]
to exist then how can you save taxes so
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let us pick an example and run through
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it that will make things more clearer so
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for example let's say that that i have
[808]
thousand rupees lying in my hdfc bank
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account so i pick that thousand rupees
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then i buy some bitcoin then you will
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say that okay government will stop you
[815]
from buying bitcoin itself right
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government will come and put some taxes
[819]
here so you will have to pay taxes on
[821]
bitcoin no because there is something
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called as binance right and if i go on
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binance i can do something called as
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peer to peer now peer to peer trading
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means that for example if you want to
[832]
sell me your bitcoin i will do a upi
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transaction into your account you will
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pay me bitcoin in my decentralized
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wallet done you can't do anything with
[841]
that and government would not even know
[843]
why this transaction is happening in the
[845]
first place so because of these
[847]
peer-to-peer transaction mechanism
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government cannot do anything in terms
[850]
of stopping you from purchasing
[852]
something like bitcoin let's move on to
[854]
the next part of the story so now let's
[856]
say that this bitcoin that you had
[857]
purchased it goes up in value it becomes
[860]
1200 rupees now you are sitting on a
[862]
profit of 20 percent now if you are in a
[864]
dow decentralized autonomous
[866]
organization for example uni swap or
[869]
metamask then the government can't ask
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unisop or metamask to do kyc of me right
[875]
they will not ask unisop or metamask to
[877]
share their trade books with the
[879]
government and they would know that your
[881]
bitcoin has gone up in value and pay
[883]
taxes to us no you can't do it why
[885]
because this dao as i showed you has to
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go through a voting process it can't go
[889]
through it unless you are controlling
[890]
the network so you are sitting on a
[892]
profit of 20 here now you will say
[894]
akshat you know what i need this money
[896]
at some stage right because i can't live
[898]
in the crypto world forever if i made 20
[901]
profit i want to withdraw it back but if
[903]
i withdraw it to my hdfc bank account
[906]
government will know that hey i have
[907]
come out of the crypto world into this
[909]
hdfc world and they will charge me taxes
[912]
and i agree what you should do here is
[914]
slightly convoluted but you have a range
[916]
of options number one you can convert
[918]
this money into usdt i have made a
[921]
separate video on usdt you can watch it
[923]
here bought usdts and usdt is pegged to
[926]
usd so if you're converting this 1200
[928]
rupees into usdt then you can do a fixed
[932]
deposit on it and let it grow and you
[934]
can do that on something like world
[935]
which is very easy to execute and make
[937]
12.68
[939]
fd returns but you will still say that
[941]
i'm still in the crypto world i still
[942]
can't use this money per se because in
[944]
india majority of the organizations are
[947]
not accepting usd and i agree which
[949]
brings us to option number two what you
[951]
can do is that you can go open your
[953]
binance account in something like
[954]
portugal now i am not necessarily
[956]
talking from a retail investor point of
[958]
view this is a step that you might not
[960]
be able to execute right away but i am
[962]
talking about a loophole in this entire
[964]
process that you can go open a binance
[966]
account in portugal or have your friend
[968]
open a binance account in portugal in
[970]
portugal as per this article the crypto
[972]
taxation is 0
[974]
now you can send this 1200 rupee worth
[976]
of btc to your binance portugal account
[979]
or to your friend in portugal and they
[981]
can in cash it for you in their banks in
[984]
portugal and then via remittance you can
[986]
bring that money back to india are you
[988]
paying some commissions in terms of
[990]
transferring money from portugal to
[991]
india the answer is probably yes you
[993]
would have to pay maybe five percent
[994]
commissions as per the current rate but
[996]
you are definitely not paying that 30
[998]
tax in this entire game
[1000]
now two three very very quick questions
[1002]
because i'll get a host of comments here
[1004]
so first and foremost why are people not
[1006]
exploring this path as of now right now
[1008]
the problem is that there is a lot of
[1010]
friction in the crypto world especially
[1012]
around erc 20 token chain what it simply
[1014]
means is if you are using the ethereum
[1016]
blockchain to do all these transfers
[1018]
then you have to pay a lot of gas fees
[1020]
why because the networks right now are
[1022]
getting built this is a new system this
[1024]
is a new process like anything there
[1026]
will be friction when the stock market
[1028]
started this zero brokerage did not used
[1030]
to be there this zero brokerage has come
[1032]
up in the last one one and a half
[1034]
decades only but the stock markets in
[1036]
india existed for a very long time there
[1038]
was a lot of friction when the stock
[1039]
market got built similarly there is a
[1041]
lot of friction when the crypto market
[1043]
is getting built it does not mean that
[1045]
these commissions will forever stay high
[1046]
these commissions will come down and
[1048]
this entire chain that i explained to
[1050]
you will work out very easily the second
[1052]
key point that i will get here is that
[1054]
okay this looks like a very complicated
[1056]
process it requires a lot of technical
[1057]
understanding yes you require to study
[1060]
this space if you are taking positions
[1061]
in the crypto space you need to
[1063]
understand all the technical aspects
[1064]
around it as well how to do these
[1066]
transfers how to transfer these money
[1067]
outside india at a low cost you need to
[1069]
learn about all these aspects if you're
[1071]
not learning it becomes like a problem
[1073]
right because in decentralized
[1075]
autonomous organization space you are
[1077]
responsible for doing things on your own
[1079]
the bank is not going to spoon feed you
[1081]
so please learn how to read instructions
[1083]
how to understand these technical
[1084]
aspects third you would say that okay i
[1087]
don't have a friend in portugal i don't
[1088]
have like any relative outside india all
[1091]
that stuff so portugal is just an
[1092]
example it could be any other country
[1094]
the point of explaining this entire
[1096]
spectrum is that right now the systems
[1098]
are broken there is clear arbitrage
[1100]
opportunity here therefore a system of
[1102]
taxation cannot be built out that's the
[1104]
larger point that i want to make this
[1106]
entire 30 taxation 50 taxation is a
[1109]
scare tactic it either shows that the
[1111]
government does not understand the
[1112]
technology or they are just doing it in
[1115]
a bad spirit just to shoot people away
[1117]
for a little while but as the system
[1119]
processes gets built as i release more
[1121]
and more tutorial more and more people
[1123]
will become aware of it and will start
[1125]
taking stronger strands this was a
[1127]
slightly technical video but i hope you
[1128]
enjoyed our discussion please press the
[1130]
like button and i will see you tomorrow
[1138]
you
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