Taxes on The Blockchain: Litecoin and Bitcoin Cash
Crypto Taxes

Taxes on The Blockchain: Litecoin and Bitcoin Cash

By M87 | Blockchain_Space | 26 Jan 2020

As development continues for blockchain projects, it can get costly to bring new features and many are looking for more ways to fund their development.

Normally there would be independent corporate donors/investors but that is looking to change in the crypto economy. Miners are being the target of paying a percentage of block rewards to raise the development funds. Could this be the start of a form of taxes on the blockchain?

Litecoin Proposal?


Source: Pixabay


Litecoin launched a development fund last month in December of 2019 and are collecting donations for the fund. Their goal is $72,000.

  • The community had donated roughly 208 LTC and 0.14 BTC.
  • Charlie Lee matched community donation with 208 LTC and 0.14 BTC.

Their current total:

  • 502 LTC and ‭0.04582746‬ BTC = ‭$27,351.37‬ (at the time of writing)

With a goal of $72,000, they are almost halfway there with roughly 40% of the funds collected. Charlie Lee proposed a possible way to get the rest of the funds and funding for future developments were mining pools "voluntarily" donate a portion of the block reward. His proposal is not that bad of an idea as the donation would only be 1% (0.125LTC) going to the Litecoin Foundation or a Litecoin development organization of their choice. 

However, many don't like the idea of this as some mention why Charlie Lee doesn't donate the funds himself from the money he made from supposedly selling all of his Litecoin near the all-time high.

Bitcoin Cash Infrastructure Funding Plan




Litecoin's proposal comes just after Bitcoin Cash is dealing with their development fund being proposed on January 22, 2020, and instead of being voluntary as Charlie Lee proposed, Bitcoin Cash mining pools will be redirecting 12.5% of mining block rewards to be sent to a Hong Kong company that will use those funds for Bitcoin Cash development.

To provide this funding, we intend to direct 12.5% of BCH coinbase rewards to a fund that will support Bitcoin Cash infrastructure.This funding will last for 6 months, and it will provide significant and much needed support to the Bitcoin Cash ecosystem.


A Hong Kong corporation has been set up to legally accept and disperse funds.The funds would be used to pay for development contributions to full node implementations as well as other critical infrastructure.


-Jiang Zhuoer (BTC.TOP) on Medium

The proposal is supported by Bitmain CEO Jihan Wu, ViaBTC CEO Haipo Yang, and CEO and Bitcoin Cash advocate Roger Ver. The development fund will begin in May 2020 and run for 6 months.

The way this funding is being implemented is a bit controversial as miners that are participating in mining pools are required to participate as those that aren't following the plan, blocks will be orphaned.

This is sparking a lot of criticism of centralization and taxes.

Which is Better?

Should minders voluntarily donate to raise development funds? Should miners have to go along with what the top mining pools want? Should there be any percentage of block rewards being allocated at all? Naturally, most have a problem with going with the top mining pools wants as the centralized nature makes it a bit contradictory for crypto trying to be a decentralized network.

There's no arguing that there needs to be continued development on blockchain networks to add needed features and rather than relying on corporate funding, getting funds from the community helps keeps the decentralized nature of crypto intact. 


Perhaps Charlie Lee's proposal might be the best route of the community voluntarily donate but if that's not enough to raise funds needed, then this could be the start of having taxes on the blockchain.

Taxes in society serves its purpose to help with the necessities in our everyday lives and progress our economy. The crypto economy may be no different and development for building a larger, better blockchain ecosystem has its costs as new features are needed for users to do more on a blockchain network. 


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