Slashdot Mirror
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.
Forbes just published an article calling BTC the new gold standard.
Bitcoin is the New Gold
https://www.forbes.com/sites/p...
If you're scared of your govt then you need to further restrict its powers
Vote 3rd Party in 2016 and beyond
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?
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.
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...
2012:~$30 lol bubble
2013:~$1000 lol bubble
2017:~$4600 lol bubble
You left out:
2014: ~$450
2015: ~$230
THIS^^^
Inherently, there is no reason for bitcoin to be valuable. There is also no reason for gold certificates to be valuable. Bitcoin is valuable among other reasons because people literally use it as a gold standard to trade all other coins. Look at the bittrex exchange: every coin is traded against bitcoin (and ethereum). It is quite literally the digital gold backing all other coins.
Crypto is very volatile, but as the total crypto market cap increases, so will the bitcoin price. And I predict that over the long term, bitcoin is going to go up as long as people keep buying other coin. At least, until and as long as bitcoin remains the gold standard. 2018 could very well have 5 digit bitcoin prices.
The only reason that bitcoin crashed a couple years back is because Mt. Gox folded and many people lost all their coin and the trust in crypto.
Yes. In 2014. It's far more difficult today. Although a consortium of mining pools can reach 51% each pool is made up of thousands of individual miners.
There is little difference between 2014 and today, if anything its slightly worse today. We are even farther from the point where the masses could economically participate in mining; it is an even more specialized, an even more commercialized, effort that it once was. We are every bit as vulnerable to the good intentions of pool operators today as we were in 2014.