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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.
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.
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!
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?
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
Call me when I can walk down the street and buy a slice with it.
Obliteracy: Words with explosions
It wasn't "Forbes" -> http://i.imgur.com/fVkJLcX.png
"When life gives you lemons, don't make lemonade. Make life take the lemons back!" -- Cave Johnson
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?
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.
How long have you been saying that BTC value is a bubble?
"First they came for the slanderers and i said nothing."
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...
The Forbes we grew up with, the business magazine, isn't what's being talked about here. Forbes.com the internet site is just a blogging platform like Wordpress.com. Moreover they are highly aggressive with their adblocker-blocker and thus most people don't read anything on their site. Just because something appears there, doesn't mean Forbes endorses it. You can see from the URL it's just some guy's blog.
Shutting down free speech with violence isn't fighting fascism. It IS fascism!
"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.
It's a bunch of people who don't grasp anything about economics or complex monetary systems being completely-fascinated with the strange thing they just discovered in their pants.
It's a commodity. Go onto ETrade, short gold, and buy cotton with the proceeds. Congratulations: you just bought cotton with gold. You're expecting the relative value of cotton to increase over the relative value of gold. Welcome to arbitrage!
Here's the fun bit: if both go down, but cotton falls less proportionally than gold (e.g. 1% cotton drop, 1.5% gold drop), you can sell cotton and buy back your short, and now you have more gold than you started with--except you started with no gold, so you just bought back all the gold you borrowed and sold, and have money left over after surrendering the gold to its original owner.
You can also buy oil with frozen concentrated orange juice.
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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.
Anyone who knows their economic history even a little bit - and who isn't just a rabid gold-bug - knows that the gold standard was a complete disaster, totally unsuited to national economies... When people proclaim that something is 'the new gold standard', as if what they are praising is something laudable, they are nearly always unaware of the irony of their statement - which is pretty fitting, as for a long time entire nations (most of the world, even...) were unaware of just how damaging their glorified 'standard' was. Praising something as a 'new gold standard' might have a dictionary meaning of something being of a high standard - but the meaning in terms of economic history, as something being disastrously misplaced as a high standard - is a far more fitting meaning for the term.
Nothing has intrinsic value. Things are only valuable because we decide they are.
-- Give me ambiguity or give me something else!
Some things are abstract constructs in their entirety, and you cannot eat, drink, or wear them, or use them to hunt with, or even turn them into a ring. Such things with a physical manifestation do not tend to lose half their value in terms of their utility between starting lunch and ending it, as happened in the Weimar Republic with cash.
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.
Sure. Right. Things have been SOOOO much better since 1972! gold-backed dollars?? Bah! Unnecessary.
We're obviously much better off with a dollar based on its ability to buy oil. What could possibly go wrong??
"Somebody has to do something. It's just incredibly pathetic it has to be us."
--- Jerry Garcia
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.
Wow, edging towards $5k. Congrats to speculators in this; but I prefer to follow the Buffet method of not investing in things I don't understand, use, or enjoy. If BTC is like the gold standard, it could go a lot higher. OTOH, the BTC *economy* could have a depression. During the Great Depression, managers stimulated the economy by abandoning the gold standard. BTC can't do that. It's locked in to deflationary currency. We could see a paradoxical situation where the BTC value is off the chart, while at the same time nobody wants to spend it and create a useful transaction system. As long as the price goes up, the incentive is to hoard... until the price doesn't go up. I don't know when that stops. That's why I just sit here on the sidelines. It doesn't bother me if it goes to $100k even. Picasso paintings are worth even more because of the limited supply, and it has the same effect on me. I don't need a Picasso, or a Bitcoin. The Central banks and/or governments aren't likely to require me to change my currency into BTC or Picassos any time soon, so I'm not worried.
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
In the case of real money, what makes it valuable (and this has been true since the dawn of civilization) is governments demand its payment in taxes and adjudicate debts only on state currency.
Bitcoin is not money. It's more like baseball cards.
How's life in the hypocrite lane?
It is 'a' standard. Because gold can't be mined at high rates, same with Bitcoins. The difference is that Bitcoin mining is algorithmically upper bounded and it's increasingly harder to mine new Bitcoins. We know mathematically that you can't just suddenly dilute the value by creating double amount of Bitcoins. ;-) ) through offshore companies.
Compare this for example with currency like the USD. During the 2008 crisis the US just printed 200 billion $ (backed up by air... well, or the good faith in the US economy).
Art is also a very convenient way to launder money (but okay, so are Bitcoins
Nothing has intrinsic value. Things are only valuable because we decide they are.
Nope. That is just retarded in how stupid it is. Food has value because it can be eaten. Everything useful has value.
Modern money has value because it based by debt on thing that have use to you. For instance an average person owes more money on their house than they have in their pockets or bank accounts. All that money they have available is backed by their debt, and is leveraged by the threat of taking away thing that has intrinsic value.