Bank of England Looks Into 'Centralized' Bitcoin Alternative, RSCoin (thestack.com)

An anonymous reader writes: The Bank of England is working with researchers at University College London to design a Bitcoin clone of its own that can be centrally controlled. It was recently found that the UK's central bank had reached out to university researchers to help it create a cryptographically secure digital currency. The resulting system has now been revealed, and is named RSCoin. The system employs cryptography to obviate counterfeiting and tampering. Unlike other mechanisms, the digital ledger used by the new cryptocurrency is handled exclusively by a central body and will only be made accessible to users in possession of a specific encryption key. Its developers explained that an RSCoin ledger could be published publicly by a central bank, and added that the system's design would also allow a central bank to make transactions entirely, or partially, anonymous.

Comments

Woosh!

[Anonymous Coward]

Is the sound that plays perpetually there.

Re: Woosh!

[Moblaster]

RSCoin = RothSchild Coin. No thanks.

This is the beginning of a real digital currency.

[r2rknot]

Once a state backs up a currency with this 'full faith and credit' then it has value. That is something bitcoin lacks.

I can compare this to a number of things...

[Anonymous Coward]

Letsee, I can compare a centralized, locked down currency to a number of things.

DIVX (no, not the codec) to DVD.
ATRAC3 to MP3.
SDMI-compliant MP3 players to the iPod.
CPRM to regular HDDs.

Having one central party, who is free to do what they want with a currency is just asking for trouble.

Re:I can compare this to a number of things...

[squiggleslash]

Having one central party, who is free to do what they want with a currency is just asking for trouble.

Probably, but I'd trust the Federal Reserve or Bank of England over a crude algorithm with no ability to react to changing events any day of the week.

Re:I can compare this to a number of things...

[r2rknot]

A vast difference exists between the reasons those things have a central authority and the reasons a currency would have one. They are not equitable.

Re:I can compare this to a number of things...

[GLMDesigns]

Crude algorithm? Really.

No ability to react to changing events? Does the piece of paper in your pocket react to daily events. No? Then it's worthless right?

Centralized currency? Don't we already have that?

[BoberFett]

I'll take Missing The Point for 800 Alex!

And the question is "This digital currency is centrally controlled and allows the authorities to monitor every purchase you make."

'What is centralized bitcoin?

You are correct.

Who's going to use it?

[vadim_t]

The main reason to even bother with bitcoin is the attraction to its lack of central control and regulation. The other, closely related one, is that it works anywhere and for any purpose.

There's really no other reason to use it than the above. It has technical and practical limitations that normal electronic transfers don't have. Mistakes are forever, scams are rampant, technical understanding of what you're doing is vital if you like keeping your money.

There's no reason to bother with it over something like paypal or bank transfers if you're not into it for the lack of control or philosophical reasons, and a system controlled by a bank would do away with that.

Re:Who's going to use it?

[Anonymous Coward]

There's no reason to bother with it over something like paypal or bank transfers if you're not into it for the lack of control or philosophical reasons

Bullshit.

I'm interested in cryptocurrency (I don't care if it's bitcoin or something else) because it has the potential to serve the same function online that cash does offline: I give you some money and you give me a widget, with no need for me to tell anyone my name and address and credit card number. I don't care whether it's centralized or not; cash is centralized and that doesn't bother me at all. I do insist that it be properly anonymous before I'm going to bother with it (which is why I don't use bitcoin), but that's orthogonal to centralization.

Re:Who's going to use it?

[Anonymous Coward]

I imagine that it would be fantastic for bank-to-bank transactions.

Re:Who's going to use it?

[Anonymous Coward]

If we have a cryptocurrency that is controlled by one entity, this has been done before in an extremely secure manner, back in 1993-1994. David Chaum made eCash/DigiCash which was decently secure... secure enough to have a few banks actually start using it without any reports of security issues.

As a side bonus, due to blinding factors, the currency is anonymous, but a double-spender would immediately be found out, destroying the anonymity they had. Timothy C. May also had a currency similar, but his was more of a "first to the locker", where the first person spending it had access to the contents of a container of currency, the second and subsequent party just found nothing, just like if two people had the same key to a locker in a train station... first to empty the contents gets everything.

Problem is that all the old Cypherpunks stuff is forgotten... and in the 1990s, people wrote code, rather than whined about the problem on their favorite social network on a device tracking their every move and spoken word.

Re:Who's going to use it?

[Ralph Wiggam]

The other, closely related one, is that it works anywhere and for any purpose.

Ehhh...not really.

http://www.pastemagazine.com/articles/2016/03/bitcoins-latest-hurdle-is-another-sign-of-its-demi.html

>Users have been reporting that their transaction times have been slowing down, in some cases from 10 minutes to more than 40 minutes.

No retail merchant is going to accept a payment option that takes 40 minutes to process.

Re:Who's going to use it?

[vadim_t]

It's already gone down back to normal:

https://blockchain.info/charts...

There are enough people interested in things working that when something does break, the dust eventually settles. Now this isn't ideal, but that's what you have to deal with in exchange of decentralization: when some problem is found you have to convince other people to adopt your fix.

Re:Who's going to use it?

[GLMDesigns]

Bitcoin is one part of an ecosystem. It need not fill every niche. There are other coins out there beside bitcoin - and there are solutions to the transaction time.

But you do realize, don't you, that this "problem" is a function of bitcoin's success. There is SO much use that not all transactions can be fulfilled quickly enough. I don't see this as a bad problem. A bad problem is lack of use. Too much use can be adapted for.

Re:Who's going to use it?

[Khyber]

You fucking spaz, it specifically says at the top of your chart "WITH FEE ONLY"

It has NOT gone down for those not paying fees.

Re:Who's going to use it?

[Ralph Wiggam]

I have no idea why you think that's comparable.

Re:Who's going to use it?

[xvan]

There are people interested in keeping the transactions speed slow, to create the bitcoin version of the CC tax. Only a serious threat to fork will solve this.

Re:Who's going to use it?

[vadim_t]

Fees are going to be required universally anyway, and current clients already suggest that you pay a fee by default.

There is a limit to the amount of bitcoin that can be made ever, and the reward for block mining is halved every 4 years. This means that transaction fees are needed to motivate people to keep on mining and the network operating.

And I think you misunderstand me -- I'm not some crazy bitcoin evangelist. My point is simply that bitcoin is unlikely to die to such temporary hiccups, because there are quite a lot of people interested in keeping things working. It might cause tension and problems once in a while, but there is plenty motivation for people to find some sort of solution, eventually.

Will it be pleasant to use, though?

[Anonymous Coward]

The biggest problem with Bitcoin is that it's fucking awful to actually use it. If you want to run it on your own computer, you need to download a fucking massive amount of historic blockchain data. We're talking GB and GB of data, nearly all of which is absolutely useless for nearly all users. Yeah, you can use some other third party service, but that totally defeats the decentralization of Bitcoin. The reference client is quite shit. Even the network is shitty, since it takes so fucking long to process a transaction, making it unsuitable for most business uses. Then you have its development team which is fighting and bickering all of the time, even now as transactions get slower and slower. Then there are the occasional developer fuckups where the chain ends up at risk of forking and all hell breaks loose. All in all, it's an absolutely awful experience for most users.

It's a lot like desktop Linux or Rust. They sound all sweet and awesome, then you try them and find out that they aren't so useful after all. That's why they see almost no adoption. A small number of loud geeks get all hot and bothered by them, but regular developers and users try them and are very unimpressed. They end up being worse than whatever established alternative is already being used.

Re:Will it be pleasant to use, though?

[Anonymous Coward]

Your lack of blind ideology is disturbing. Bitcoin is one of the most popular atheistic religions for nerds and you will be down-modded for your rational, pragmatic heresy.

tl;dr LA LA LA I'M NOT LISTENING

Re:Will it be pleasant to use, though?

[Anonymous Coward]

"since it takes so fucking long to process a transaction for free"

There you go, I fixed it for you.

Bitcoin transactions are quite fast if you offer a transaction fee. There is then incentive for someone to process your transaction. Why would I bother processing your free transaction when I have millions of others offering me 0.00000001BTC to process theirs?

Re:Will it be pleasant to use, though?

[GLMDesigns]

You don't need to download the full blockchain to buy and spend bitcoin.

If you want to mine bitcoin you do. If you want to have a wallet which references the entire blockchain you do. But there are plenty of light wallets out there which do not download the entire blockchain.

If that was so people couldn't have 60+GB blockchains on theri 16GB phones now could they? And yet there are plenty of mobile wallets out there.

And no using a light-wallet does not defeat the decentralization of bitcoin. You can have both. AND not everyone needs to have both for the blockchain to have value as a distributed resource.

Re forking. Forks happen every day and yet ... bitcoin is still around. Now hard forks are not something that should happen often - but they will.

Re lack of adoption. Umm. I guess you've been missing the news about how many major firms have been putting serious funds into developing blockchain technology.

Re difficulty of use. Yup. You have something there. Until it's as easy to use as a debit card it's too complicated. But it will get simpler in time or will never get mass appeal.

Re:Will it be pleasant to use, though?

[Anonymous Coward]

Using a light wallet or a mobile wallet does defeat the decentralization of Bitcoin. If you don't have the full history, then you aren't a full participant. If you aren't a full participant, then you're dependent on some locally centralized entity to provide you with the information you don't have, but would have if you were a full, proper participant.

This is the same for all those projects that use a service like GitHub. True decentralization is difficult and often very inefficient. So they centralize on a service like GitHub, but then tell themselves that they're still decentralized, even when they aren't. Then the service they're using goes down for a few hours, their workflow is totally disrupted, and they bitch and moan.

There is no middle ground in this case. Decentralization is an all or nothing situation. The moment you move even slightly away from being decentralized, then you've introduced a center of some sort. There can be different degrees of centralization. But that isn't the case for decentralization. Either the system is decentralized, or it's not.

Re:Will it be pleasant to use, though?

[apoc.famine]

Sure, using the raw blockchain is somewhat difficult. But have you seen http://www.changetip.com? You deposit bitcoins which they then credit to your virtual account and store offline in a cold wallet. From there you can transfer money to people via social media including tweets, on reddit, through facebook, etc. They link their social media account to changetip, and then can (of course for a small fee) withdraw the funds or transfer them to someone else.

At periodic intervals they bring the cold wallet online and process your transfers before pulling it off once again.

This avoids the hassle of actually dealing with bitcoin by paying a third party to handle that crap. The end result is super easy to use. On reddit, post "/u/changetip $1" to a post or comment and if they are linked to changetip with that account, it instantly shows up in their wallet there. If they aren't linked to changetip, they get a message with instructions for how to claim the money.

I look at this like I look at credit cards. Paying someone on the other side of the country $1000 in cash is not easy to do. Even a check would take some time. But if they take credit cards, that processing % is essentially paying someone else to do the work to make that transaction nearly instant and hassle-free. I think that the blockchain will end up working more like changetip makes it work. "The Dollar" is still behind credit card purchases. It's just far faster and easier to swipe and pin/sign than it is to count cash in many situations. We pay a % for that efficiency.

Re:Will it be pleasant to use, though?

[St.Creed]

Paying someone on the other side of the country $1000 in cash is not easy to do.

Why, Backward Cousin, do and come visit us in Europe sometimes! It takes about 3 seconds to transfer cash to anyone I know straight into their account, and takes at most a day to show up on their account if they have some weird small bank that only processes transactions once a day. Once PTSD2 goes live in the EU, it will all be realtime across the entire EU.

Now, in countries that are a bit backward, like those colonies you live in, I understand that bitcoins are preferable to the alternative. But come on, it's 2016... surely your banks can come up with something better? :P :)

Re:Will it be pleasant to use, though?

[Jane Q. Public]

Using a light wallet or a mobile wallet does defeat the decentralization of Bitcoin. If you aren't a full participant, then you're dependent on some locally centralized entity to provide you with the information you don't have, but would have if you were a full, proper participant. ... There is no middle ground in this case.

No, Bitcoin was designed that way, on purpose. Mining wasn't supposed to be "free" if you have the hardware. The majority of the computing cost of verifying the blockchain was supposed to be on the miners with the hefty hardware, with remote nodes being a lot more "lightweight".

The whole system and process have been corrupted now by centralized exchanges, which is a corruption of the way Bitcoin was supposed to work.

You can call that a "flaw" in Bitcoin, if you want, since there was no in-built way to prevent that kind of usurpation of intended roles. Nevertheless, it was intended to be used the way GP described: with most end-users having only a "thin client" as it were, and the miners carrying the heavy load.

Re:Will it be pleasant to use, though?

[Orgasmatron]

With online banking, anyone with a scanner and photoshop can pull money from any account into theirs, and it takes about 3 seconds to process, and the money usually "shows up on their account" immediately.

You do know that Europe and North America use different fraud liability and transaction reversion models, right? And that those legal differences are the root cause of all of the procedural and technical differences between the systems?

North America is on the pull model, there is very close to zero liability for fraud on the innocent party, and transfers can routinely be reversed up to 6 months later. Many years later under unusual situations. Because reverses are so easy to do, there is no incentive to verify things in advance. Under this model, security is a joke, because there isn't actually anything that needs to be protected.

Remember the stories about chip and pin getting hacked a while back? The European banks knew, but they had convinced the governments to place all of the liability burden on the customers, so what did they care? They just sat back shouting "Unsinkable!" as their customers lost everything.

Er, might have been "Unhackable!", now that I think about it.

At any rate, bank transfers are about as far away from cash as you can possibly get. You might have missed that tiny detail in your haste to proclaim your imagined superiority.

Re:Will it be pleasant to use, though?

[St.Creed]

Even acknowledging (some of) your points, the fact remains that the whole bank transfer system in the USA is extremely fragmented, and quite outdated in several areas. With or without a pull system, you should still be able to transfer money pretty fast nowadays. The fact noone is investing in it, means you're going to be looking at substantial banking costs for a long period. This is a private tax on enterprise that most companies can do without, and is lethal to high-volume, micro-transactional types of services.

Moving to faster and cheaper transaction processing will open up a whole host of opportunities for smaller micro-services. Bitcoins could have filled that gap, had it taken off. But the problems with bitcoin seem to be increasing instead of decreasing, so I fear the worst there.

Re:Will it be pleasant to use, though?

[St.Creed]

I was wondering at the end if I wasn't overdoing it, so I decided to add hints. Sorry!

Partial truth

[s.petry]

States could easily back the Bitcoin digital currency without creating their own. That a central bank wants to re-invent the wheel is more a testament to how much money there is to be made by a central bank controlling currency. That a State plays along and goes with the central bank's version is a testament to the control Bankers have over Governments.

Nothing new here really.

Re:Partial truth

[DriveDog]

What's new is that this should be an eye-openerâ"if KAOS doesn't create and gain reasonably wide acceptance for a fully anonymous cryptocurrency soon enough, then CONTROL will get theirs widely accepted and a competing currency will not gain wide acceptance among merchants. And we'll be stuck with something a lot easier to track than paper.

Re:Partial truth

[delt0r]

Thing about bitcoin is that its shit. It is shit as a currency since far too many speculate with it (it is basically a low volume high risk stock with zero equity behind it). It is shit for transactions because it is sooo slow and getting slower! It is shit because not many people use it. It is shit because even the people in charge of the specification are not in charge and cant sort out their shit. It is shit because it can't handle much volume at all.

Re:Partial truth

[St.Creed]

Bitcoin has way too many issues to be acceptable. Apart from that, a central bank already *has* a currency, no need for another one.

No, the issue that causes central banks to research these things is the interesting blockchain technology. Almost every CB has a coin just to play with the blockchain. For instance, the Dutch Central Bank has "dogecoins". The purpose isn't to create new coins, however. The purpose is to examine ways to make transaction processing cheaper, more reliable and more distributed. And blockchain technology can help with this.

Re:Partial truth

[michelcolman]

The reason why it's getting slower is because more people are using it. So "getting slower" and "not many people use it" are kind of contradictory.

Because of the constant bickering between the developers, the protocol cannot keep up with the system's growth. Bitcoin was designed to be adaptable, all it takes is a change in the specs (easy) and general agreement among a majority of miners (which is apparently a lot harder). Once they finally agree on which path to take, the system can speed up again in a matter of a few days. Volume can go way up and transaction times can go way down, the current slowness is not due to any inherent flaw in the system but, like you say indeed, because the people in charge are not in charge and can't sort out their shit.

entirely, or partially, anonymous

[fustakrakich]

Oh, right! That's going to happen! Please, HSBC is just looking for another way to launder money

Being the Bank of England...

[Harold Halloway]

..every SHA-256 hash will have to be calculated by rows of clerks armed with abacuses and quill pens.

Centrally controlled

[Dunbal]

So I'm sorry Mr. Smith, but according to the regulation in Chapter 48, paragraph 179 subsection j of volume 12 of last years' "Combined Banking and Virtual Currency Regulations", 3rd revision, we've been forced to suspend your account. No there's no appeal, this is not a judicial process. After all, it's only a virtual currency. Well then I suggest you read up on the regulations next time...

Re:Centrally controlled

[delt0r]

That is why you want these things run by official regulated banks. Because without that you have no leg to stand on.

Re:Centrally controlled

[Dunbal]

I was joking about "virtual" currency. But if you want real world examples banks get "nationalized" all the time, even in "free" countries. You could look at what happened recently in Cyprus, for example, where due to government mismanagement everyone with a bank account in that country was given a "haircut". This idea of stealing people's money was so appealing that even Stephen Harper was considering doing it in Canada:

The Government proposes to implement a bail-in regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants. "

Taken from the 2013 Economic Action Plan, pp 144-5

I think Canada is arguably a "free country" still. And let's not forget all the times a bank is allowed to "freeze" your account, indefinitely, on judicial orders that can be as vague as "you're from a country our government is currently miffed at, fuck you". Virtual currency controlled by a central authority would be even easier to grab, since technically even if you don't have it stored "in the bank" they can just flag it as invalid and boom, your own electronic wallet is suddenly useless.

See the thing you have to remember about Robin Hood economics is that you can't steal from poor people because they don't have anything worth stealing. It makes for GREAT politics, because there are lots of poor people, they all have a vote, and they love it when the rich get fucked. But it makes for SHITTY economics because you're punishing the people who are cautious enough to manage their money wisely to reward the foolish who were reckless enough to squander their wealth.

Re:Centrally controlled

[KGIII]

I've read a variety of articles and seen a number of documentaries where the IRS has, in the US, frozen assets - all of them. That is not quite the same but there is no appeal and no real due process. Eventually, in the cases that I've read/heard about, they get access to their assets again but that process not only takes years but also incurs no penalties for the IRS. One particularly egregious case was a matter of a guy who owned a couple of restaurants on the East Coast. They pretty much ruined him and there's no recourse for him. If I recall correctly, he got access to his accounts at some point but, by then, it was all owed to other people, he was long since bankrupt, and his restaurants had been closed.

They seize and freeze accounts fairly often and for a variety of reasons. I'm sure some of them are justified and I'm sure that sometimes they are in error. But, it happens. We can argue that the US isn't a "free" country and I'd be inclined to disagree. I guess the point is that it happens, unfortunately.

Re:Centrally controlled

[Dunbal]

Yes it's a fine line between catching bad guys who need to be caught, and being a tyrant. The line is fine because after all, we are ALL guilty of something. As Cardinal Richelieu said: "If you give me six lines written by the hand of the most honest of men, I will find something in them which will hang him.". That was in a time when laws were much fewer and much simpler. I'm guessing we're probably down to one liners by now.

While paper currency has the usual problems, namely the guy with the plates for the printing press can print more, this is not just a problem with paper currency. Even if a bitcoin-like virtual currency were issued that mathematically could never exceed a certain quantity, government has the power to one day turn around and say "oh today this currency is invalid. We're using the new currency from now on and the exchange rate is 100 old to 1 new...". It's not paper per se that's to blame and people forget this. Government can always make a new law to fuck you over, and they have people with guns to enforce it.

But digital currency under the eyes of government - that's dangerous as hell. At least paper currency can be stashed somewhere. It can be placed overseas. It can be held by relatives. It can be put in a safety deposit box in your dog's name. But digital currency will let anyone with access at the government see exactly what you have, where you have it, and ostensibly hit the "nuke" button and have worldwide, immediate effects. Not to mention that there is always abuse. There's the jealous husband doing something to the guy that looked funny at his wife. There's the pervert looking up the assets of his favorite movie star. Etc. People get caught doing this regularly in the health profession and in the police with just health/criminal record information. Imagine if you had someone's world-wide assets, how they got it and how they spend it - at your fingertips. Did you know that so and so spends $500 a WEEK on doggie biscuits! The scandal!

And then of course there's the obvious argument - who is to say that this government owned closed source virtual currency can't be constantly and easily debauched. It is, after all, the game rulers have been playing since currency has existed.

Re:Centrally controlled

[KGIII]

Hmm... It's tempting... I've an affinity for writing long responses. I don't think I will but you have been duly warned. Let me see...

No, I think it can be short. Your post makes me think of this which is both directly related and tangentially related, all at the same time!

There is, I should think, a finite number of laws that need making. Yet, the job of legislatures is to craft and vote on new legislation. It's tempting to wax philosophically about where that line is best drawn but I think most rational people can conclude that there's a finite number of laws that should be needed in a free society. We could argue that we need more, we could argue that we need fewer, or we can wonder - what the hell are they supposed to do with themselves after they've run out of laws to write?

I'd like to think that the laws, perhaps not specific individual regulations concerning finer details like particular OSHA standards, could fit in a five subject, college-ruled, notebook. I mean, really... How many damned laws do we need?

But, rather than debate where that line should be - it's fairly self-evident that there's a line - somewhere... There's gotta be, I don't care how much of an authoritarian one is (that is *NOT* an accusation directed towards you or anyone else), eventually you've progressed or regressed enough to where you don't need any more regulations.

I don't think we're set up for that. Which gets to your point - which is a valid point, I think.

On any given day, the government (even in the US) could probably decide to adjust the value of the currency without much trouble at all. I'm not even sure if there's much that we can do about it until another election cycle has hit. The elected officials would have to work together. They might not be able to say that the current currency is no longer valid and give an exchange (like Germany after WWII when they moved to the Deutschmark [?]) but I don't think there are any Constitutional protections that stop them from just saying, "To hell with it. We're printing 10 trillion dollars."

Now, the idea is absurd - but is there anything *legal* preventing them from doing so?

As an aside: I know i don't know everything so I consulted, lots and lots of consulting, a financial advisor and investment manager when I sold my business. One of the things discussed and acted on was diversification of assets (as well as tax avoidance - which is not evasion and is legal) and it's actually rather important to protect your assets against stuff like that. At first, it can actually cost money but putting some in varied accounts in different banks is important. Then, you don't put all of it to work for you, you invest in hard assets or even leave currency in safe deposit boxes. You toss some into markets that are slow and stable but not in the US (or your home country). I did not realize it was that complicated and that important. One of the reasons is to ensure that you're protecting "wealth" instead of protecting "currency."

Alright, so it's kind of a novella. 'Snot too long.

Re:Centrally controlled

[Dunbal]

Alright, so it's kind of a novella. 'Snot too long.

The TL;DR LEL millenial crowd can go fuck themselves. They're too busy playing with their phones anyway. Poor them, one day they'll finally look up and the world will have been sold from right under their feet. But I digress...

what the hell are they supposed to do with themselves after they've run out of laws to write?

I think society implodes or explodes under repression long before that point is reached. Then someone shoots all the politicians and burns all the books. Then someone shoots that guy (you should always fear the counter-revolution not the revolution itself). Then after a period of anarchy it all starts again. Nothing lasts forever, even though it may seem like forever at the time. Certainly it was forever for the people who died under the oppression.

Now, the idea is absurd - but is there anything *legal* preventing them from doing so?

Not really a valid objection because if you have the power to delete, modify, or create law, then it's just a matter of convincing your fellow lawmakers that this is a good idea. Corruption, greed, or just plain murder can help. Laws can always be changed - are always changed. They are never a stumbling block for the determined statesman. It's harder to do in a "democracy" because of the number of people involved, but it can be done. Look at the power the EU has granted itself, for example. Or the rise in authoritarianism overall in previously "free" countries around the world.

Nixon was forced to resign because evidence incriminating him and/or his staff might - MIGHT - have been caught on tape. Now a woman is running for President who has allegedly committed at least one crime by violating state secrets, and no one seems to bat an eyelid. I didn't mean to get political (I'm not American anyway so I don't vote there) but I'm trying to demonstrate how slippery the slope is. Soon we will have people openly confessing crimes running for office, no one will be able to say anything, and the government will not prosecute one of its elite "families". Legality is never an obstacle for getting power for very long.

And breaking someone financially is the ultimate power - possibly even worse than putting a bullet in his head. Because then you destroy him and all his dependents, but he's alive to perceive it. Better still, you could even have the power to deny him a chance to regain anything. Sorry - you've been excluded from the currency system...

One of the things discussed and acted on was diversification of assets (as well as tax avoidance - which is not evasion and is legal) and it's actually rather important to protect your assets against stuff like that.

You don't have to sell that to me. There's a reason I live in Panama, previously lived in Costa Rica, and in the Bahamas before that... :)

Re:Centrally controlled

[KGIII]

> The TL;DR LEL millenial crowd can go fuck themselves.

Good.

As an aside: I'd have grown up to be a complete and total idiot (more so than I did) if I'd had those sorts of things as a kid. I'd have been nose to the phone, playing games, and generally inattentive and not bothering to learn anything because the information is already there - why learn how when I can just get the answer? I do wonder if there's going to be a long-term effect on society and if there might even be some physiological changes to the species because of this. I'm not much of a doom and gloom type of person and life always finds a way so I'm hoping that it is for the best.

> I think society implodes or explodes under repression long before that point is reached.

I'm very inclined to agree. I don't think we've achieved stability yet, I don't know if we ever will. I think we've got cycles and pendulum swings until humans exist no more. Not that long ago, I noticed you posting more frequently. I don't know if I noticed or if you started posting more frequently. So, take that for what you will. I'm one of those people that actually pays a bit of attention to who said what and sometimes names keep popping up. More on that in a minute, maybe...

> Not really a valid objection because if you have the power to delete, modify, or create law, then it's just a matter of convincing your fellow lawmakers that this is a good idea.

No, not so much meant as an objection, at least not by me. I'm thinking you mean not an objection that they can't overcome? If so, I quite agree. It's more a method of how open, rapid, and aggressive the changes might be. The fewer obstacles, the easier it will be. Much like the more we citizens are either content or fighting amongst ourselves, the easier it can be. There's really not a whole lot stopping people with enough power or wealth from doing anything they damned well please - assuming they're willing to really work at it.

Oddly, I don't believe criminal acts directly disqualify someone from being president of the United States. I know of no law that actually prevents that. We've been an oligarchy for a long time, the same can be said for the entire planet. I got lucky in life and sold my business for a rather healthy sum - as in, I retired at about the age of 50. I'm quite comfortable and grateful for it. However, not even I have enough money to buy a law or get away with murder - if caught. I might be able to scrounge up some assets that enable me to hide it better but I'd still end up in prison and be convicted, surely.

> You don't have to sell that to me. There's a reason I live in Panama, previously lived in Costa Rica, and in the Bahamas before that... :)

Ah, Panama. It's beautiful in parts. Since retiring, I've done a bunch of traveling. I'd already spent a bunch of time in Central/South America but I've spent more time since retiring. I'll actually be driving (probably) through your area in a month or so. I'll be going to Peru to give my son a hand. He's to borrow some money from me (I'd give it but then he's not earned it and I will not have inept children if I can help it) and he's to close on a small bar and hotel.

He's been living there for about a year now. I'd brought him down to Peru with me before and he got the chance to skip a semester and go there and collect plants for genome sequencing. He met a lovely native and he's not returned to school. I can't say that I blame him. Both she and he were up for the holidays - in fact, I had a few /.ers over to the house here for New Years Eve and we set off a bunch of fireworks and had a good celebration. It was kind of fun. It's not often that I get both him and my daughter at the same time as they're adults now and they've got things to do that are important to them.

I guess, I could just let 'em not work and support them but then what'd I be leaving behind? They both have small trusts so they won't starve. The kid's smart. In the US, he'd be doing "oka

Re:Centrally controlled

[Dunbal]

Oh I go through phases of posting, depending on my mood, on the news, on how busy I am with other stuff, etc. I have a similar amount of posts on this site as you, for better or for worse.

The signal to noise ratio on the internet in general is awful. I think this is the longest most intelligent exchange I've had certainly in years. The last time I think was when I met my second wife, and well, I ended up marrying her. Sorry I'm still married though - you'll just have to wait lol.

Yeah Panama seems ok. There is an undercurrent here because this place has grown far too quickly for its own good - skyscrapers amid the ghettos kind of thing. But all the nice apartments in luxury buildings are owned by foreigners. The native Panamanian (although his lot has improved marginally due to all the construction jobs and all the other service businesses that sprang up to support the foreigners) still lives modestly where he lived before. So now they're looking at all the buildings and the Luis Vuitton stores and other places where they can't afford to live, shop or eat, and wondering what's so special about foreigners that they "deserve" to go there... but I don't see any pitchforks just yet. And most of the animosity seems directed at the very large Venezuelan population who are all here fleeing Chavez/Maduro economics. Venezuelans are awesome but they are also latin and competitive and don't mind rubbing fellow latinos' faces in it when they succeed - and it's really not hard to beat the average Panamanian. Don't get me wrong I've known some very successful and smart Panamanians but overall - eugh. It's as if Panama is a place where ambition goes to die.

But yeah, my wife was asked by a cop to pay a 20 dollar bribe when she was caught making an illegal turn, and that's about it - we had no problem getting our permanent resident cards quickly and legally without bribes, for example. Panama is not so bad - apart from the traffic. And one hell of a lot warmer than San Jose, Costa Rica :)

Oh kids. I could talk for hours about my kids, their virtues and their failings. In the end you have to let them live their own lives and try not to ruin it for them either. I think you're doing the right thing. There's something to be said about merit. Best thing my parents ever did for me was force me to get a job at 15. I've been supporting myself most of my life, even though I've never really had to. I did the same for my kids - you want anything you need to get a job and do something with your life - ANYTHING. My youngest is jogging in place - she has other issues, but my eldest wow, her career has reached escape velocity. She's a professional at a Fortune 500 while studying for a second degree, she has plans to move to Europe after to get a Master's from a prestigious university and she'll get it too I have no doubt. She earns a very, very decent salary for 24. But the most impressive thing is she did it all herself, by herself. All I did was tell her to get a job, and support her when she needed a little help. I'm proud of her. And I love her sister to pieces but she has no ambition. She prefers to party, play with her phone, and cover her body in tattoos. Well it's her life and I don't judge her for it. But when she complains that her sister has so much more money than her I just have to say "well...."

Anyway feel free to drop me a line anytime it's been nice chatting. I'm on hotmail with this nick. Have been for years :)

Re:Your Rothschild Masters :)

[Dunbal]

That's ok the wheel turns. And it keeps turning. The tighter the grip the closer the time comes. Orwell's vision of a boot stomping on a human face forever was flawed. We take turns, see.

Re:Centralized currency? Don't we already have tha

[ClickOnThis]

I'll take Missing The Point for 800 Alex!

800 bitcoin?

[*ducks*]

Re:This is the beginning of a real digital currenc

[ClickOnThis]

Once a state backs up a currency with this 'full faith and credit' then it has value. That is something bitcoin lacks.

The value of a currency is determined by what you can buy with it. You can buy stuff with bitcoin. Therefore, it has value. It doesn't need a nation-state to bestow a fiat value on it.

Wow!

[Jawnn]

Who saw this coming?
/sarcasm

We already have digital currency like this.

[mwvdlee]

We already have digital currency like this.
It's called "credit card".
And is also known by many, many other names, like "paypal" or "wallet" or any of a huge number of country-specific names.

Re:We already have digital currency like this.

[ClickOnThis]

No, a credit card may facilitate transactions in various currencies, but it is not itself a currency.

When you buy something using a credit card, you get a bill at the end of the month. Which you must pay ... using currency.

Re:We already have digital currency like this.

[Darron_Wyke]

Not quite. Those are digital /payment methods/. Not currencies. They are still backed up by actual fiat money.

Re: We already have digital currency like this.

[Type44Q]

I don't suppose you're aware of the fact that you're not very bright..

Re:We already have digital currency like this.

[ClickOnThis]

The correct digital currency would be a prepaid debit card.

FTFY. Unless the card is prepaid, it's still not a currency. It's just like a credit card, except you pay the bill immediately from your bank account instead of at the end of the month.

Re:We already have digital currency like this.

[Khyber]

Uhh, there's a difference between credit and debit. Credit means you don't have the money. Debit means you DO.
Thus, Debit is a digital currency.

Re:We already have digital currency like this.

[ClickOnThis]

No. Debit means you pay immediately. Credit means you pay later. Either way, you still have to pay. And neither is a currency. They're a pass-through to your own currency resources.

Re:We already have digital currency like this.

[dbIII]

You are confusing the method with the madness :)
Bitcoin-like management of and existing currency is a concept which is why analogies of debit cards etc are being rolled out.

Re:We already have digital currency like this.

[Khyber]

"Credit and Debit are the results of _using_ currency."

The card is *TIED* to *MY* currency (much like fucking software dependencies.)

Thus, my debit card, being the direct link to MY currency, is currency. If it were not currency, NO FUCKING STORE WOULD ACCEPT IT.

I own and run businesses. I understand this stuff far better than you do.

Re:Your Rothschild Masters :)

[Ralph Wiggam]

They saw the free market currency bitcoin and felt it threatened their precious dollar

That explains why the dollar has plummeted in value over the past two years and BTC has skyrocketed.

Wait....that hasn't happened at all.

Sounds like a winner to me

[davidwr]

It's NOT a replacement for a decentralized "people's currency" which the pre-cartel BitCoin was* and which most other cybercurrencies are.

But it IS a convenient, possibly-stable** form of money which has clear advantages over paper money or traditional electronic transactions in some applications.

Again, if you want the anonymity and confidentiality that a suitcase full of 50-Euro notes gives you, this isn't for you.

* with rumors of a cartel in place, one should assume that the current BitCoin ecosystem is "controlled" by a "single entity" and treat it as such.

** backing by an existing currency or precious metal guarantees stability with what backs it, but even without that, if it's backed by a nation or a nation's official bank, that will create some stability all by itself.

Centrally controlled != Tracked

[xtal]

Cash is both centrally controlled and protected and very anonymous.

A digital currency - please look up what currency means, if you're pedantic - would be a boon if backed by a proper nation state.

You are fined one credit for a violation...

[PrimeWaveZ]

https://www.youtube.com/watch?...

Seriously?

[Anonymous Coward]

They're going to do this and NOT call it BritCoin? or the BritBit?

Re:Seriously?

[Harold Halloway]

It's the Bank of ENGLAND, not Britain.

BRITcoin surely

[McWeenie]

I'm a long time lurker but had to sign up to point out the Royal Bank has missed the very obvious name: BRITcoin

Re:BRITcoin surely

[bugs2squash]

I think they are online Rupees. Clearly the Bank of England has outsourced their tech workforce.

Re:Centralized currency? Don't we already have tha

[mjwx]

I'll take Missing The Point for 800 Alex!

And the question is "This digital currency is centrally controlled and allows the authorities to monitor every purchase you make."

'What is a credit card?

You are correct.

There, fixed that for you.

We've had easily traceable purchases for some time now, in fact many of you are so enamoured with it you'll actually defend the way credit cards rip you off (Read: merchant service fees).

Re:This is the beginning of a real digital currenc

[vvaduva]

You are not very smart, are you. lol

Stupid stupid bankers

[vvaduva]

The whole point of Bitcoin and one of the key innovations behind it is that it is NOT centrally controlled or manipulated by a nation state. Bitcoin started as an experiment in decentralized, crypto-currencies that offer some level of protection against inflation, government tracking and control. A government creating an alt currency that is trackable, monitored and controlled by a central authority is the antithesis of the philosophy behind crypto currencies.

Whatever moron came up with this idea should be given a raise...because that's what governments do.

Re:This is the beginning of a real digital currenc

[RyuuzakiTetsuya]

The value of bitcoin has value because private entities with fiat currency is backing it.

Strictly speaking, every currency is a fiat currency because we decide what it's worth based on how we feel about either it, or what's backing it. Whether it's gold or the combined goods and services the economy it supports.

There's no explicit gold to bread conversion.

OT: Negative interest rates may be tolerable

[davidwr]

For people who typically deposit large sums of money in bank accounts (as opposed to investing in money markets, bonds, or stocks), even a very small "negative interest rate" is less costly than having the money in suitcases, in a private vault, or in a bank's safe-deposit box.

Keeping and using large amounts of paper currency has costs:

You have to pay storage costs, which can range from zero (in your wallet or mattress, or in a safe you already own) to a modest one-time cost (a fireproof safe in your house) to a recurring expense (renting a bank safe-deposit box).

You have to insure it against theft and destruction (or accept the risk of not insuring it, which may be fine if it's in a safe-deposit box or the maximum loss is small).

You have to accept the risk of it suddenly becoming temporarily inaccessible (if it's in a safe in your house and you are at work, and there's an emergency in your neighborhood and they aren't letting anyone in including residents, then it's "temporarily inaccessible").

For large transactions, you have to accept the inconvenience of filling out extra paperwork that your nation-state may require.

If you possess or carry large amounts, you also run the risk of government harassment and even seizure under the pretense that you "must be up to no good, any reason you give to the contrary is just a cover."

Re:OT: Negative interest rates may be tolerable

[davidwr]

Some of your points are well-taken, but I think you are mistaken in a few cases.

* Safe deposit box scales by size. A box that is twice as big can store twice as many pieces of currency.

* the reasons large cash transactions are under scrutiny is that *typically* money-launderers and drug dealers prefer them. Why do they prefer them? Because if they used banks or some other form of easy-to-trace means of conducting business, the odds of them getting caught would go way up. If I buy something as expensive as a brand new mid-priced car with a check or domestic bank wire, there's no extra paperwork. If I buy it with cash, I'll have to fill out a bunch of paperwork explaining why I got the cash, and if the person I'm buying from has any real suspicion that I'm lying, he risks jail time if he doesn't report me. Even if his suspicions are unfounded, odds are that the police will hold the cash until they decide there isn't enough evidence of a crime to get a conviction, and that's assuming the police are honest (if they are corrupt, well, as you said, corrupt cops can get you even with electronic money). With a bank transfer, there's no special reporting requirement (on the other hand, if I made cash deposits to the bank, either as one large deposit or as a series of not-quite-big-enough-to-report deposits, the bank would be required to have me fill out paperwork and, if they thought I was lying, call the police).

Bottom line:

Whether a particular user or a particular transaction is best served by using cash, traceable electronic money, hard(er)-to-trace electronic money (money orders or Western Union), hard-to-trace/decentrailized public-ledger systems like BitCoin is supposed to be, or a centrally-controlled, presumably-easy-to-trace electronic-ledger system like the one proposed, is going to vary from person to person and transaction to transaction.

For the sake of simplicity I'm leaving out systems like direct barter or systems where a physical good, such as gold, an unopened pack of cigarettes (WWII), diamonds, or even a person's unwritten promise of future payment ("my word is my bond") is used as a medium of exchange. For some people and for some transactions, these and a myriad of other options may be the best option.

Step 1 anonynous transactions, Step 2 paper please

[JcMorin]

I can predit that years in advance. They will allow anonymous transaction. Then they will required paper to withdraw money. They can change the rule since they are the central authority. They can also emit as many as they want! They could probably have build that using mysql and simple public API in json!

Re:This is the beginning of a real digital currenc

[Marginal Coward]

I've also heard a more practical explanation: once a state accepts taxes in a currency, it has value.

Do they know what they're doing?

[KramberryKoncerto]

Bitcoin without the decentralization mechanism is just a very clumsy database of transactions. You may as well just make something from a MySQL database and the development costs would be cheaper.

Re:Do they know what they're doing?

[Virtucon]

yes they do. it's all about control and has nothing to do with digital currency.

Re:Acronym

[Khyber]

"making it more difficult for a central authority to interfere with your financial affairs"

Yep, to the point that with a reversible transaction capability, you can fuck people over and pretty much get away with it. Pay, get your stuff, reverse the transaction, keep your money. Gov't can't help the one getting scammed!

Re:This is the beginning of a real digital currenc

[ClickOnThis]

The value of bitcoin has value because private entities with fiat currency is backing it.

No, I say again: bitcoin has value because you can buy stuff with it, and its value is measured in terms of what you can buy (including other currencies.)

Support from any entities (public or private) does not create that value -- it merely helps to stabilize it.

There's more about why bitcoin has value in the bitcoin FAQ.

Strictly speaking, every currency is a fiat currency because we decide what it's worth based on how we feel about either it, or what's backing it.

On this, we agree. But note the "or" in your sentence.

I once heard someone describe bitcoin as a "collective hallucination" that assigns a value to an abstract concept. But in the next sentence, the same person said that all currencies are the same kind of collective hallucination.

Re:This is the beginning of a real digital currenc

[ClickOnThis]

I found the reference. It was Jonathan Zittrain from Harvard University:

Bitcoin is itself a collective hallucination -- as it turns out, most currencies are -- in which, there is agreement that the units of currency will have some form of value.

Re:This is the beginning of a real digital currenc

[currently_awake]

I see no difference between this and a debit card system. It's a Government issued and maintained currency, complete with police and government spying.

A centralized blockchain... why?

[Baron_Yam]

How long will it take for the IT folk to explain to their bosses why it would be better just to use a regular old database and some PKI?

Blockchains are a massive waste of time and effort, but I guess some techies get to make money while the non-techies figure that out.

Re:Centralized currency? Don't we already have tha

[sociocapitalist]

I'll take Missing The Point for 800 Alex!

And the question is "This digital currency is centrally controlled and allows the authorities to monitor every purchase you make."

'What is centralized bitcoin?

You are correct.

Bonus question: These transactions will be "entirely, or partially, anonymous"...

Answer: What are political contributions and government spending?

Anonymous for who?

[Coisiche]

...system's design would also allow a central bank to make transactions entirely, or partially, anonymous.

The bank is under the control of the Chancellor of the Exchequer, who will be a Conservative Party MP, for probably more than the next decade after the planned gerrymandering during this spell in government, and they will get to choose what's anonymous and what is not. This does not bode well.

Re:This is the beginning of a real digital currenc

[RyuuzakiTetsuya]

The reason why you can buy things with bitcoin is that you can use any number of services and cash out those bitcoins to fiat currency. If there wasn't this escape hatch, bitcoin wouldn't be seeing the traction it does.

Do you think a guy who's selling drugs on a darknet some where gives a shit that you think you're sticking it to some central banker?

Do you think that anyone who's involved with combining bitcoin with fiat currency transactions like BrainTree care about the ideology at all?

The ideology of bitcoin isn't what's driving bitcoin's value in the market right now.

Re:This is the beginning of a real digital currenc

[david_thornley]

It used to be that gold and silver would be useful, despite not being backed by a state. (Early coinage was about having easily verifiable standard weights of precious metals available, not a state-backed currency.) Currency is valuable if enough people think it is valuable.