Bank of England bit coin

padington

Clever idea, end cash, introduce a new crypto currency pound. This will then allow negative interest rates to be possible across the board. It will also mean a tax revolution no doubt too.

http://citywire.co.uk/money/uk-could-adopt-bitcoin-with-negative-interest-rates/a843076

Graham_Devon

The clever ideas avoid these types of scenarios where this sort of idea is seen as a good one in the first place.

antrobus

padington wrote: »

Clever idea, end cash, introduce a new crypto currency pound. This will then allow negative interest rates to be possible across the board. It will also mean a tax revolution no doubt too.

http://citywire.co.uk/money/uk-could-adopt-bitcoin-with-negative-interest-rates/a843076

One advantage of electronic money, he explained, was that it enabled central banks to impose negative interest rates which were impossible with paper money.



That's true. But then again, less than 4% of the money supply is paper money these days, so it hardly seems worth the effort. I suppose the BoE might be concerned that negative interest rates would lead people to hoard more paper money, but then it would also lead people to move their liquid assets into a different currency.

MJ12

Bitcoin and Central bank? :huh:

One of the main attractions of Bitcoin is that money creation is controlled by a decentralised algorithm and free from centralised manipulation.

Take that away, and whatever this crypto-pound is will be just another fiat currency. i.e. "government says so currency"

The supply of bitcoins is ultimately limited to 21million, it is however infinitely divisible (although currently 8 decimal places are implemented). This means that it is deflationary in nature.
As the supply of bitcoins become more scarce, prices will become smaller and smaller, but you will always have enough for the economy to function (because each unit of currency can always be sub-divided). This means that each unit of bitcoin has increased purchasing power, and that's the implicit negative interest rate in cryptocurrencies.

then it would also lead people to move their liquid assets into a different currency.

There's a law for this
https://en.wikipedia.org/wiki/Gresham's_law

It would happen if a different currency is allowed to be used along side Bitcoin or crypto-pound, or whatever commodity money we happen to adopt.

Generali

MJ12 wrote: »

Bitcoin and Central bank? :huh:

One of the main attractions of Bitcoin is that money creation is controlled by a decentralised algorithm and free from centralised manipulation.

Take that away, and whatever this crypto-pound is will be just another fiat currency. i.e. "government says so currency"

The supply of bitcoins is ultimately limited to 21million, it is however infinitely divisible (although currently 8 decimal places are implemented). This means that it is deflationary in nature.
As the supply of bitcoins become more scarce, prices will become smaller and smaller, but you will always have enough for the economy to function (because each unit of currency can always be sub-divided). This means that each unit of bitcoin has increased purchasing power, and that's the implicit negative interest rate in cryptocurrencies.

There's a law for this
https://en.wikipedia.org/wiki/Gresham's_law

It would happen if a different currency is allowed to be used along side Bitcoin or crypto-pound, or whatever commodity money we happen to adopt.

Bitcoin will revert to its underlying value of nil. It has no value to anyone except drug dealers and terrorists.

HAMISH_MCTAVISH

antrobus wrote: »

I suppose the BoE might be concerned that negative interest rates would lead people to hoard more paper money, but then it would also lead people to move their liquid assets into a different currency.

Money hoarding is probably more of an issue for the masses, who neither understand nor can appropriately manage FX risk and trading costs, capital flight is a concern for HNW individuals and corporates.

We've already seen the very wealthy and large financial institutions are prepared to accept zero or negative rates on a number of financial instruments globally provided in return they get to keep their money in a low risk environment.

If global circumstances ever warranted negative rates then it's likely all comparably low risk countries would adopt similar policies. So capital flight becomes less of an problem.

michaels

Generali wrote: »

Bitcoin will revert to its underlying value of nil. It has no value to anyone except drug dealers and terrorists.

Make sense, in one sentence you say the currency is of no value and is of use to probably 10 plus percent of the world economy, a larger share than gbp for example.

chucknorris

There used to be a nutter on here who went on and on about Bitcoin, you never hear anything now, so I'm guessing its value fell off a cliff?

mayonnaise

chucknorris wrote: »

There used to be a nutter on here who went on and on about Bitcoin, you never hear anything now, so I'm guessing its value fell off a cliff?

Pretty much.


But being the shrewd investor he was, I'm sure the naerlynew/dryhat conjoined twins got out at peak. They always do. :rotfl:

Outdated chart btw, bitcoin 'value' is around $240 currently... $240 above its intrinsic value of $0.

patman99

It also dosn't help that 2 brothers have accummulated 12 million BitCoins as they got in early and used their businesses PC's and servers to mine BC in the slack periods when the CPUs were not being fully utilised.

MJ12

patman99 wrote: »

It also dosn't help that 2 brothers have accummulated 12 million BitCoins as they got in early and used their businesses PC's and servers to mine BC in the slack periods when the CPUs were not being fully utilised.

Do you mean £12 millions worth of bitcoins?