How the Wealthy Legally Defer Taxes Using Debt
— and How We’re Reclaiming That Power Through Ancestral Protocols on Blockchain
Happy tax day to my US friends!
My intuition always said: if two people exchange words, promises, or even gift cards — these commitments — that should not be taxed. These are agreements between people, not commodities. No one should stand in the way of that. No one should be able to demand a fee, insert a middleman, or impose extraction on mutual trust.
This belief is what led us to build SwapPool Contracts, which implement the Commitment Pooling Protocol on EVM blockchains like Celo. Our goal? To create free and open access to the most ancient and natural forms of exchange — systems of shared obligation, multilateral reciprocity, and trust without centralized control.
But let’s rewind. Because this idea — that people can exchange commitments instead of cash — isn’t just an idealistic dream. It’s the exact loophole that the wealthy and powerful have been using for decades to legally avoid/defer taxes and consolidate control.
How Debt Becomes a Tool for Tax-Efficient Exchange
In traditional finance, there's a core principle: debt is not income — and thus, it's typically not taxable.
This isn’t a loophole in the shady sense — it’s a legal structure that acknowledges a basic truth: when someone borrows against an asset, they haven’t sold it. They’re just unlocking temporary access to value.
Here’s how this plays out in corporate finance:
A company needs funds for operations or expansion.
Instead of selling assets or declaring taxable income, they borrow against their holdings.
This borrowed capital is not taxed, because it's a loan — not a gain.
When the loan is repaid, often using revenue or even new debt, the original asset remains intact, and interest may even be deducted.
This approach allows corporations and high-net-worth individuals to:
Maintain their long-term asset positions,
Access liquidity without triggering capital gains taxes,
And structure their exchanges to be tax-efficient and strategically regenerative.
This isn’t inherently extractive — the issue is that access to these tools has been restricted to the few, while everyday people are locked into rigid systems of sell-to-survive economics.
But Here’s the Catch: Access Is Controlled
The real kicker? Not everyone can play this game.
Want to borrow against your assets or future worth? You’ll need a platform that accepts your collateral.
Want to access low-interest loans against your labor, land, home, or business? Good luck without pristine credit and regulatory permission.
Want to defer taxes by repaying obligations with future value? Most people aren’t even allowed to try.
Access to these debt-based tax strategies has been heavily regulated and selectively offered. In many cases, only accredited investors, large institutions, or those with specific licensing can legally use them.
In other words:
The loophole isn’t just debt — it’s who gets to use it.
Regulation doesn’t eliminate exploitation — it just encloses the workaround, keeping everyday people in systems of extraction, while letting the elite operate in tax-free shadows.
Enter Blockchain: Reclaiming Access to Exchange
Blockchain changes everything — because it doesn’t ask permission.
Take the example of a platform like Nexo:
You use your Nexo card to buy something in USD.
Behind the scenes, you're borrowing against your Bitcoin (BTC) as collateral.
Later, you repay that loan with BTC — but since you never “sold” it in a traditional sense, there’s no taxable capital gain triggered.
You just used debt — tax-free — to live your life, while keeping your assets intact.
Now imagine this open to everyone — no single token/money like BitCoin required, no gatekeepers, no permission, no middlemen.
Commitment Pooling: A Return to the Oldest Economic System
That’s what Commitment Pooling is really about.
It’s not just a prototype blockchain app called Sarafu.Network. It’s a protocol of trust, embedded in the fabric of ecosystems and ancestral societies long before the first coin was ever minted.
Commitment Pooling lets people:
Exchange promises, not just products.
Clear mutual obligations in cycles, not get stuck in bilateral debt.
Build value together, based on shared commitments, not centralized accounting.
Our SwapPool Contracts are a modern digital expression of that — enabling multilateral credit clearing, reciprocal obligation, and voluntary resource coordination across a network. Just like fungal networks beneath a forest. Just like rotating labor associations across indigenous cultures. Just like our grandparents.
The real loophole isn’t legal — it’s relational.
The ancestors knew this. Blockchain just reminds us.
In Closing
We built these tools at Grassroots Economics (a small non profit foundation) not just because they’re efficient — but because they’re right for life. Because every human being deserves the ability to exchange, coordinate, and thrive without needing to go through someone else's toll booth.
This isn't about dodging taxes — it’s about dismantling the systems that extract from our trust.
It’s about remembering that debt among friends is a promise, not a punishment.
And it’s about ensuring that everyone, not just the wealthy, has access to the deepest economic wisdom humanity has ever known:
“We take care of each other.”
This blog does not constitute legal or financial advice. It offers reflections on economic systems, access to tools, and the ethics of coordination.
Note: I believe deeply in contributing to quality, community-centered public services — education, healthcare, security, infrastructure — and honoring the role of collective investment in society.
Contribution doesn’t have to mean forced extraction. The longer it does - the longer we remain in a colonial world.
There are many ways to support shared wellbeing that don’t require artificial scarcity or gatekeeping — especially when mutual trust and commitment serve as the foundation for coordination.
Alternative models worth deeper consideration:
Community-issued service credits
Networks of Local commitment pools
Time-banking and skill exchanges
Transparent contribution circles
Ecosystem-based stewardship bonds
Vouchers for State Services
Voluntary tithing to public goods
Blockchain-based social dividends
Participatory budgeting via pooled commitments
Multilateral clearing of care and labor obligations