Bank of England bit coin

padington

antrobus wrote: »

And this digital pound is a replacement for cash. But over 96% of the money supply isn't cash. Thus it is of no real consequence.

So why are central banks, the stock exchanges and just about every big player in the world of finance all over the bit coin technology like a rash ?

System

padington wrote: »

So why are central banks, the stock exchanges and just about every big player in the world of finance all over the bit coin technology like a rash ?

Because cash is the last area of economic activity that they haven't yet managed to get their hands on. These people are interested in power and self-aggrandisement, so regardless of any relevance to the well-being of the wider economy, they want to stop it.

antrobus

Clifford_Pope wrote: »

Because cash is the last area of economic activity that they haven't yet managed to get their hands on. These people are interested in power and self-aggrandisement, so regardless of any relevance to the well-being of the wider economy, they want to stop it.

That's one way of putting it.:)

But essentially they, as in both governments and central banks want to be able to control it. If it ever amounts to anything.

http://www.theguardian.com/technology/2014/aug/06/george-osborne-britain-bitcoin-capital

Just imagine on how easy tax evasion would become if there was no third party record of financial transactions.:)

MJ12

When the article talks of cash and paper money, it is really referring to GBP in general. Otherwise it makes no sense talking about interest rate, positive or negative.

Central banks should not be interested in Bitcoin if they are in any way interested in keeping control of monetary policies. Cryptocurrencies are secured by distributed cryptography. It cannot be controlled by a centralised authority.

Fiat currencies are nothing more than IOUs. In contrast, cryptocurrencies are commodity money.

Switching to cryptocurrencies would be like reverting back to gold-backed currencies except that you can actually hold the key to your "gold". (It really is encrypted, only you can spend that money, if the government wants to cease it, they will have to get your key off you)

Stock exchanges and big players are into it because it is a ledger technology that can cryptographically prove what belongs to who without identifying the who. Everything will be transparent yet anonymous.

Big players are also into it because of the mathematics. If supply is fixed, the value is going to rocket BIG TIME if some how you can increase demand. There are not and will never be enough bitcoins to give a whole one to each person in Britain, let alone the world. If Bitcoin ever became even remotely relevant, most would have to settle with a fraction of a coin, and that amount might represent an average salary for example. A whole coin would be HUGE.

As people have pointed out, a whole bitcoin is currently traded at $230. A surprisingly high value given how few people use it.

Who knows, a bitcoin will either be worth nothing and fade into historical obscurity, or it will be absolutely huge.

padington

MJ12 wrote: »

When the article talks of cash and paper money, it is really referring to GBP in general. Otherwise it makes no sense talking about interest rate, positive or negative.

Central banks should not be interested in Bitcoin if they are in any way interested in keeping control of monetary policies. Cryptocurrencies are secured by distributed cryptography. It cannot be controlled by a centralised authority.

Fiat currencies are nothing more than IOUs. In contrast, cryptocurrencies are commodity money.

Switching to cryptocurrencies would be like reverting back to gold-backed currencies except that you can actually hold the key to your "gold". (It really is encrypted, only you can spend that money, if the government wants to cease it, they will have to get your key off you)

Stock exchanges and big players are into it because it is a ledger technology that can cryptographically prove what belongs to who without identifying the who. Everything will be transparent yet anonymous.

Big players are also into it because of the mathematics. If supply is fixed, the value is going to rocket BIG TIME if some how you can increase demand. There are not and will never be enough bitcoins to give a whole one to each person in Britain, let alone the world. If Bitcoin ever became even remotely relevant, most would have to settle with a fraction of a coin, and that amount might represent an average salary for example. A whole coin would be HUGE.

As people have pointed out, a whole bitcoin is currently traded at $230. A surprisingly high value given how few people use it.

Who knows, a bitcoin will either be worth nothing and fade into historical obscurity, or it will be absolutely huge.

I'm sure that's not true , from what I understand, the block chain can keep order to a system of purchases to ensure nothing is double sold whilst the central authority ( those that write the code ) can keep reins on what is on offer ( if that's how the code is written).

Literally anything is possible. Currently a whole operating system is being built on top of the block chain. Check out etherium.

https://www.ethereum.org

PS I'm not taking about Bit coin per se but the block chain code.

MJ12

padington wrote: »

I'm sure that's not true , from what I understand, the block chain can keep order to a system of purchases to ensure nothing is double sold whilst the central authority ( those that write the code ) can keep reins on what is on offer ( if that's how the code is written).

Literally anything is possible. Currently a whole operating system is being built on top of the block chain. Check out etherium.

The code is written by the devs. It contains a version of the policy. The code is then distributed and run by many other people on their computers, aka nodes. Anyone running a node can change the code and therefore the policy. The actual policy is the policy being run by nodes with more than 50% of the hashing power. So, say the dev wants to change the policy to increase the money supply, they change the code and publish it. People running the nodes might disagree with the change. If more than 50% disagrees, the new policy will not take effect. There will be a fork in the ledger for a while, but the policy with more than 50% of the hashing power will win out.

You could be right that most miners don't care, and most nodes would just take the new code and run it without checking the policy first. That would be sad because democracy requires voters to understand what they are voting for before making a vote.

I don't know much about Etherium, except that last time I checked the dev team was churning through lots of donated money. I remember there was a call to buy Ether with bitcoins when Etherium was started. It didn't sound right to me at the time. I might check on it again.

globalds

As a lot of this discussion sounds a bit vague and ethereal.

Can people include some examples of how the introduction of a bitcoin type currency would affect real world life.

Would I need a bank account ?

How would a mortgage work ?

If the B of E runs the crypto currency can they print as much as they wish ?

Could it be confiscated or a hair cut given ?

MJ12

globalds wrote: »

As a lot of this discussion sounds a bit vague and ethereal.

Can people include some examples of how the introduction of a bitcoin type currency would affect real world life.

Would I need a bank account ?

How would a mortgage work ?

If the B of E runs the crypto currency can they print as much as they wish ?

Could it be confiscated or a hair cut given ?

Ah. Well I can write a book about life with Bitcoin even with my limited scope! Bitcoin is not the only cryptocurrencies. New ones are constantly being thought out. I will guess the answers to your questions base on Bitcoin.

Would I need a bank account ?

No. You are your own bank. Although there will probably be services that offer to hold your money for you.

How would a mortgage work ?

It will not be based on an interest rate. Instead the Islamic Borrowing model could work. e.g. you pay back the original amount + a fixed fee.

If the B of E runs the crypto currency can they print as much as they wish ?

No. Money creation in Bitcoin is dictated by an algorithm the whole network runs. Even then the bitcoins created are given to any users in the network who process the transactions.
The money supply can be changed if some how more than 50% of the network are convinced to do it, but the extra money still goes to everyone processing the transactions, not BoE. There can be no centralised QE.


Could it be confiscated or a hair cut given ?
Not with Bitcoin. Only the person with the key can spend the bitcoins. No one can cease it from you unless they have your key.


The following picture is often used to illustrate how secure the encryption used in Bitcoin is:

Electrum

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.
l]

They can not do negative interest rates until they abolish cash, I mean who would not pull out all their cash if they had to pay to keep it in the system?

antrobus

MJ12 wrote: »

When the article talks of cash and paper money, it is really referring to GBP in general. Otherwise it makes no sense talking about interest rate, positive or negative. ...

No. The proposal specifcally relates to paper money.

"In one sense, there is nothing new about digital, state-issued money. Bank deposits at the central bank are precisely that" is what Haldane actually said

So over 96% of the money supply is already digital. The proposal is to make paper money digital so that you can "set an explicit exchange rate between paper currency and electronic (or bank) money. Having paper currency steadily depreciate relative to digital money effectively generates a negative interest rate on currency".

Central Banks can already impose negative interest rates on the 96%. Haldane is suggesting a method by which they can make it 100%.

Read the actual text of the speech
http://www.bankofengland.co.uk/publications/Pages/speeches/2015/840.aspx