How to save 30% Crypto Tax? | And what is DAO?

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