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Central Banks Can't Ignore the Cryptocurrency Boom (bloomberg.com)
The boom in cryptocurrencies and their underlying technology is becoming too big for central banks, long the guardian of official money, to ignore. From a report: Until recently, officials at major central banks were happy to watch as pioneers in the field progressed by trial and error, safe in the knowledge that it was dwarfed by roughly $5 trillion circulating daily in conventional currency markets. But now as officials turn an eye toward the increasingly pervasive technology, the risk is that they're reacting too late to both the pitfalls and the opportunities presented by digital coinage. "Central banks cannot afford to treat cyber currencies as toys to play with in a sand box," said Andrew Sheng, chief adviser to the China Banking Regulatory Commission and Distinguished Fellow of the Asia Global Institute, University of Hong Kong. "It is time to realize that they are the real barbarians at the gate." Bitcoin -- the largest and best-known digital currency -- and its peers pose a threat to the established money system by effectively circumventing it. Money as we know it depends on the authority of the state for credibility, with central banks typically managing its price and/or quantity. Cryptocurrencies skirt all that and instead rely on their supposedly unhackable technology to guarantee value.
Making Slashdot great again. Trump 2020
Governments, on the other hand, are going to ruthlessly crack down on cryptocurrency. Smuggling is still smuggling.
At least in the U.S., if you have less than the insurance limit (I think it is about $200K) and the bank loses it, then you can get reimbursed. If you have less than whatever in internet coins and they get lost, you get squat. That's going to be a big hurdle, who guarantees those transactions? All it would take is one major exploit on a crypto-currency to tank it.
and they should.
Cryptocurrencies are currently the bubble du jour. As central banks have suppressed interest rates for so long, people are desperate for yield in anyway shape or form.
Cryptocurrencies are the easiest thing to game and blow up into a bubble. People are rushing in and flipping it to a greater fool the same way people were doing this with houses back in the mid 2000s.
Cryptocurrencies certainly have a lot of interesting uses, however their value is a direct threat to government control of currency. They're currently enjoying lax regulatory oversight which anyone with half a brain means that current valuations are bloated and in a perilous position if governments start deciding to heavily regulate it. I know, coindorks will come thrashing about saying "crypto will bypass this and become the next reserve currency!"
No, if governments make ease of conversion into fiat difficult in anyway or outright ban it that will directly impact the price of the coins in the longterm.
If you're using crypto presently, consider it purely a speculative play and continue to take profit along the way. If you've put your entire life savings into anything like this, you're an idiot and need to seriously reconsider your exposure to risk!
How many bitcoin are the three authors, 4 contributor, and the various people whom the article quotes holding? This thinly-veiled, self-promoting, product placement article doesn't begin to address the fact that cryptocurrencies, despite all of the hype, don't really circulate. They are little more than quasi-anonymous parking places for "wealth"; and as long as their legitimacy is tied to their convertibility back into an internationally recognized currency, they will never be more than that.
Cryptocurrencies skirt all that and instead rely on their supposedly unhackable technology to guarantee value.
Is it unhackable?
Or, rather, is it less hackable than the status quo?
And, is its value guaranteed? We at least have FDIC in the United States, but what happens to BitCoin if the system collapses?
It's been in a bubble since 2012 apparently. Still waiting for it to burst.
My apologies, hu-person. I did not mean to offend by assuming your gender.
https://99bitcoins.com/bitcoin...
Call me when I can walk down the street and buy a slice with it.
Obliteracy: Words with explosions
Didn't you just post a story about how no one actually buys anything with it?
So which is it? The Barbarian at the gate or a useless holding currency? Or some kind of intermediary that can coexist with the current banking system, which is needed to actually buy things.
Central Banks will do whatever it takes to keep people hooked into their system, so once they axe cash to huge uproar, it will be easy to control everyone at the touch of a button, something they cannot do as long as cash and the metaphorical cash under mattress survives.
The so called "bail in" that the ECB did to Cyprus circa 2013 was a test to see how easy it would be to raid people's bank / savings accounts once cash is axed, and if the bankers and governments could get away with it (they did).
Take Nobody's Word For It.
Whilst the headline of this article is certainly correct, it addresses only one small facet of a much larger problem with international finance. Public Ledger cryptosystems are far, far more than a form of digital cash. For example, one of the most lucrative forms of income for the big banks comes in the form of foreign currency exchanges, where it is customary to charge, for example, 2.75% "service charges" on transactions made in "non-local" currencies. Conversions from one currency to another always involve a "spread" - a difference between buying price and selling price - which is where the banks are creaming fat profits.
Cryptocurrencies introduce direct competition to this rip-off market. If it is cheaper for me to convert some of my local currency [Pounds Sterling] into Bitcoin and then, upon arrival in say the United States, covert that from Bitcoin into US Dollars - then if those conversions have significantly lower transaction fees than a conventional Bureau de Change type of deal, then they offer a fantastic and useful market-disrupting alternative.
An even more useful application of Bitcoin technology is the ledger itself. When transactions are conducted in a publicly-shared ledger, then it is possible for entities to exchange funding without actually needing a central bank at all. Most of the big banks are already looking at the "public ledger" aspect of the technology - not necessarily to start offering Bitcoin exchanges in high street branches, but to look to cut out central agencies like SWIFT and CLS and their kind.
Interestingly, the central clearing banks (Federal Reserve, Bank of England, ECB, etc) could themselves be replaced by a public ledger for much of the daily transaction volumes that privately held banks (your JPMorgans and Barclays of this world) actually need. So maybe the central banks are looking to regulate cryptocurrency and related technologies as part of a move in self-preservation?
THe purpose is by ultra conservatives and libertarians who want 0 intervention is to use something where the government or banks can't do anything to destroy value.
In their eyes if government didn't exist then inflation and crashes would NEVER EVER happen. So what can the central bank do? Either the libertarians and ultra conservatives will be right and it will never crash as that only happens due to the government interfering with the free market or it will go down and the investors with that philosophy will be laughed at with a told you so rebuke.
Since bitcoins are not considered money I can picture the FBI or an act of congress to ban or it put an end to the chain and kill it that way. This will cause people to get their muskets from their fireplaces 1776 style, but everyone else doesn't consider that theft as it is not real money.
http://saveie6.com/
Translation: "OMG, we can't screw over regular people anymore by manipulating the money supply or charging excessive fees for transactions."
Well, Mr. Sheng, perhaps you can't ignore cyber currencies, but cyber currencies can ignore you. That's kind of the point.
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Neckbeards and fedoras unite! Join in hands in your parent's basement!
The mods should stop allowing so much blatant advertising spam.
As for the article what does bitcoin have to offer that the modern financial sector doesn't already? Ridiculously high processing fees? Non-existant regulation exposing users to disastrous financial harm? Jargon filled press releases designed to distract from important issues? Fragmented user experience? Easy access to money laundering? A 'Just trust me!' attitude towards stability and continued access to your own money?
At best bitcoin is little more than a flash in the pan, at worst its a massive ponzi scheme. Sure the price is high in theory, but just try moving any substantial amounts to cash. Then imagine if lots of people tried at the same time. Heck, even buying a cup of coffee is a shit show. I think the banking profession is safe for another day.
I wager 200 quatloos on the newcomer.
There are some 900 cryptocurrencies at the moment, more variants than there are real currencies. I've been amazed the whole thing has maintained its hype so long. I expect a huge collapse before too long (not sure if its a year or ten however), as currently huge swaths of money are going into mining, but the amount of actual legal commerce enabled has been rounding error. At some point too many coin holders will ask the question: "Now what?"
Failing that I expect that when one too many criminal cases (especially money laundering and tax evasion) will get stymied by their involvement we will have major governments crack down and outlaw their anonymous sale and the whole mess will collapse. My conspiracy theory is that the NSA and its ilk have probably already cracked things well enough to track what is really going on, if not operating some of the exchanges themselves. Perhaps the whole thing has been turned into a giant honeypot already...
Re 51% attack - that's getting pretty close to impossible even for governments.
It wasn't a government, but Bitcoin has already had a single entity in a position to launch a 51% attack, fortunately they did not desire to "attack".
"The mining pool ghash.io briefly exceeding 50% of the bitcoin network's computing power in July 2014, leading the pool to voluntarily commit to reducing its share of the network. It said in a statement that it would not reach 40% of the total mining power in the future."
http://www.investopedia.com/te...
"Money as we know it depends on the authority of the state for credibility, with central banks typically managing its price and/or quantity. Cryptocurrencies skirt all that and instead rely on their supposedly unhackable technology to guarantee value."
Yeah, about that. Money used to be issued by private banks. Governments took took over this duty, not because they are any better at it, but because they wanted the power. There are still private currencies and complementary currencies, in countries that allow them, but they are likely only tolerated because their circulation is so small.
The internet initially allowed the completely free exchange of information, and some of us were naive enough to hope that it would reduce the power and dominance of nation states. Unfortunately, most people didn't care enough, and have let governments impose national-level regulations on this exchange of information: everything from the "Great Firewall of China" to Europe's "right to be forgotten". The potential of the internet has been hobbled.
Cryptocurrencies are likely next. Until now they have been nearly irrelevant. If the problems of transaction frequency can be solved, and they begin to be more widely accepted for payment, national governments will begin to take a dim view of currencies outside of their purview. Regulation will quickly follow. In most countries, the local tax authority has full access to your banking information - expect them to demand the ID of your cryptocurrency wallet, so that they can track your BitCoin transactions. Anonymous currencies like Monero may be prohibited outright (though enforcement will be difficult).
Goverments want power. Money is power, currency is money.
Enjoy life! This is not a dress rehearsal.
Since its value is heavily based on speculation, and is immune to ethical account management such as reversing mistakes and fraud, I look forward to the cryptocurrency crash of 2029. Luckily the big banks will have invested heavily in it by that time, resulting in a worldwide depression.
It's been in a bubble since 2012 apparently. Still waiting for it to burst.
Wrong, it crashed from $1,000 to $250 from 2013 to 2015.
The NSA designed the crypto algorithm at the heart of Bitcoin - SHA-2 - if it has a backdoor, then potentially the NSA can mine Bitcoin far more easily than the average Bitcoin miner. We already know the NSA backdoored previous encryption algorithms - it would be incredibly useful for them to have a backdoor in the worlds largest cryptocurrency as well - providing an excellent covert source of funding for them (probably among many other things). It would be deeply ironic if the cryptocurrency that many people laud for allowing an escape from the evils of fiat currency, ended up have a state-created backdoor at its very heart.
hurt and cognitive dissonant in the comments is real.
they're all scams, with the vast majority of 'currency' being "mined" by the russian and chinese governments. wouldn't surprise me if the "exchanges" were being manipulated by them as well.
https://freebitco.in/?r=708
banks have been trading cryptocurrency for years.
Witness BitZtream getting pwned!... twice.....three times!
"with central banks typically managing its price and/or quantity. Cryptocurrencies skirt all that"
Gold, silver, and gems skirt central banks more than any cryptocurrency will ever do. Can you walk into your local grocery store and pay in Bitcoin? No? Oh. But precious metals and gems always retain value and survive market fluctuations, including market crashes. That's why silver is one of the oldest currencies.
The only thing that will kill off a precious metal's value is if it becomes as common as paper. Paper currency is ideal when it is backed by things of physical value. It's an "old school" way of thinking but also a very correct one! Perhaps the only correct model.
You have not done all your $ thru bank cards and checking accounts. Actually, some of you that do not bend knee to Banks, have continued to use green $ for transactions, knowing the Banks get nothing from those transactions. Banks must get a part of every money exchange, they are self entitled to get part of every $ exchange. Crypto currencies deprive the Banks. Getting paid in crypto currencies will be the ultimate sin. Some of you will so sin, even revel in that sin.
Shame on you!
It's bitztream the autism-hating, custom EpiPen-hating, Musk-hating, Qualcomm-hating, Firefox tabs-hating Slashdot troll!
How's life in the hypocrite lane?
The liberty to choose money is the guarantee for a Free Society
"Money, even more so than democracy, embodies the essence of the social contract. Its legitimacy comes from its acceptance, freely chosen by all users.
The fundamental role of money in exchange explains its catalytic action in the seeding of the development of human societies, long before the emergence of democratic institutions. Finally, currency manipulation inevitably causes the decline of a society, as democratic as it may be."
https://fee.org/articles/money-is-the-real-social-contract