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.

Comments

Re:FDIC

[GLMDesigns]

If the blockchain is "hacked" or there is a successful 51% Attack then yes BTC and other crypto are in big trouble.

However the blockchain was not hacked at $1,000,000.00 dollars, and it wasn't hacked when it was 1000 times that amount (1 billion) and it's still not hacked now. So far so good.

Re 51% attack - that's getting pretty close to impossible even for governments.

Can government stop crypto? Of course. Make it illegal and shoot people who have (or are suspected to have BTC). That ought to work.

You talk about one major exploit - true. But, of course, if people could counterfeit US dollars that would also tank the dollar. Right?

Re:FDIC

[djsmiley]

You missed the fact that the brokers have been hacked, time and time again, but then again banks seem to like leaving our details out anyway, so they are hardly who I'd turn to for trust worthy storage either ;)