Author Topic: Welcome to the 'Bitcoin killer'  (Read 3255 times)

SharperDingaan

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Welcome to the 'Bitcoin killer'
« on: December 02, 2017, 04:11:37 PM »
Research courtesy of the Bank of Canada. ‘Central Bank Digital Currency: Motivations and Implications’, Engert and Fung, 2017. https://www.bankofcanada.ca/2017/11/staff-discussion-paper-2017-16/

The Benchmark Central Bank Digital Currency (CBDC), Section 3.1, p 8-11 is a Bitcoin killer. It is legal tender backed by a central bank, there is no transaction charge to use it, and no charge for storing cash (security, insurance, etc.). Allow the central bank to track the owners or parties involved in CBDC transactions, and your ‘cash' can even pay you interest – as per the I-CBDC, Section 5.1, p 21-24.

Negative interest rates are no longer practical - as all an owner need do is hold CBDC, and rely on the security of the Central Bank server to prevent theft. No more paying the bank for security to hold 'your money'.

The logical next step is a World Bank issuing a global CBDC that all citizens of the world can use to transact with each other.
Hello inclusiveness, and bye-bye PayPal, ApplePay, GooglePay, etc. 

Taken together, this goes a very long way to wiping out the business case for private crypto-currency. No Bitcoin, no Ether, no ICO. Worse still is that the only people who would use Bitcoin, are those who cannot stand the scrutiny of a central bank – the drug dealers, arms merchants, money launderers, dirty money, etc. And that money cannot get out of crypto – unless you or I buy crypto …. and pay in fiat.

Clearly a very, very elegant solution – akin to ‘Raid’ for cryptocurrency.
And pretty hard to see how the crypto bubble remains inflated – when this becomes the very real alternative.

What are your thoughts?

SD



doughishere

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Re: Welcome to the 'Bitcoin killer'
« Reply #1 on: December 02, 2017, 04:17:20 PM »
Research courtesy of the Bank of Canada. ‘Central Bank Digital Currency: Motivations and Implications’, Engert and Fung, 2017. https://www.bankofcanada.ca/2017/11/staff-discussion-paper-2017-16/

The Benchmark Central Bank Digital Currency (CBDC), Section 3.1, p 8-11 is a Bitcoin killer. It is legal tender backed by a central bank, there is no transaction charge to use it, and no charge for storing cash (security, insurance, etc.). Allow the central bank to track the owners or parties involved in CBDC transactions, and your ‘cash' can even pay you interest – as per the I-CBDC, Section 5.1, p 21-24.

Negative interest rates are no longer practical - as all an owner need do is hold CBDC, and rely on the security of the Central Bank server to prevent theft. No more paying the bank for security to hold 'your money'.

The logical next step is a World Bank issuing a global CBDC that all citizens of the world can use to transact with each other.
Hello inclusiveness, and bye-bye PayPal, ApplePay, GooglePay, etc. 

Taken together, this goes a very long way to wiping out the business case for private crypto-currency. No Bitcoin, no Ether, no ICO. Worse still is that the only people who would use Bitcoin, are those who cannot stand the scrutiny of a central bank – the drug dealers, arms merchants, money launderers, dirty money, etc. And that money cannot get out of crypto – unless you or I buy crypto …. and pay in fiat.

Clearly a very, very elegant solution – akin to ‘Raid’ for cryptocurrency.
And pretty hard to see how the crypto bubble remains inflated – when this becomes the very real alternative.

What are your thoughts?

SD



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Fat Pitch

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Re: Welcome to the 'Bitcoin killer'
« Reply #2 on: December 02, 2017, 05:01:32 PM »
So the central bank will never ever increase the supply? No more bail outs during recessions? Bunch of crap, there's nothing they can do to stop this tide of private sound money.

Research courtesy of the Bank of Canada. ‘Central Bank Digital Currency: Motivations and Implications’, Engert and Fung, 2017. https://www.bankofcanada.ca/2017/11/staff-discussion-paper-2017-16/

The Benchmark Central Bank Digital Currency (CBDC), Section 3.1, p 8-11 is a Bitcoin killer. It is legal tender backed by a central bank, there is no transaction charge to use it, and no charge for storing cash (security, insurance, etc.). Allow the central bank to track the owners or parties involved in CBDC transactions, and your ‘cash' can even pay you interest – as per the I-CBDC, Section 5.1, p 21-24.

Negative interest rates are no longer practical - as all an owner need do is hold CBDC, and rely on the security of the Central Bank server to prevent theft. No more paying the bank for security to hold 'your money'.

The logical next step is a World Bank issuing a global CBDC that all citizens of the world can use to transact with each other.
Hello inclusiveness, and bye-bye PayPal, ApplePay, GooglePay, etc. 

Taken together, this goes a very long way to wiping out the business case for private crypto-currency. No Bitcoin, no Ether, no ICO. Worse still is that the only people who would use Bitcoin, are those who cannot stand the scrutiny of a central bank – the drug dealers, arms merchants, money launderers, dirty money, etc. And that money cannot get out of crypto – unless you or I buy crypto …. and pay in fiat.

Clearly a very, very elegant solution – akin to ‘Raid’ for cryptocurrency.
And pretty hard to see how the crypto bubble remains inflated – when this becomes the very real alternative.

What are your thoughts?

SD
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scorpioncapital

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Re: Welcome to the 'Bitcoin killer'
« Reply #3 on: December 03, 2017, 12:13:46 AM »
"the scrutiny of a central bank – the drug dealers, arms merchants, money launderers, dirty money, etc. And that money cannot get out of crypto – unless you or I buy crypto …. and pay in fiat."

In other words the same politicians and the rich - have you seen Panama Papers and Paradise Papers? Even fiat has not stopped anyone. I don't blame them incidentally. Our social systems are so screwy I see more and more chipping away at trust in the system. Bitcoin has a large natural reason for being. I'd like to know if governments can shut it down. Probably there will be some tax haven nations that will benefit by allowing it for their currency or in case Western countries  ban it for legal tender like paying salaries and expenses.


SharperDingaan

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Re: Welcome to the 'Bitcoin killer'
« Reply #4 on: December 03, 2017, 05:58:22 AM »
The reality is that there is a very large market that Bitcoin serves extremely well, it isn't going away.
However, the presence of the CBDC will severely limit the long term demand for Bitcoin.

While it is highly likely that Bitcoin will be used to develop the options/futures/loan markets for crypto-currency, it is also highly likely that it will not be able to hold its market share against competing CBDC counterparts. Given the choice; aren't you far more likely to prefer transacting with a fully convertible coin backed by a central bank, versus taking your chances on a coin exchange to buy a Bitcoin backed by squat? Welcome to the market.

Do we really still think that we're going to see Bitcoin at USD 50,000, when these things are present?

SD   

clutch

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Re: Welcome to the 'Bitcoin killer'
« Reply #5 on: December 03, 2017, 06:18:42 AM »
Given the choice; aren't you far more likely to prefer transacting with a fully convertible coin backed by a central bank, versus taking your chances on a coin exchange to buy a Bitcoin backed by squat? Welcome to the market.

I'm sure people preferred exchanging sacs of grain instead of money at some point in time...

no_free_lunch

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Re: Welcome to the 'Bitcoin killer'
« Reply #6 on: December 03, 2017, 07:23:09 AM »
SD,

Is this even a blockchain or just digital currency?

I don't see this killing blockchain without it being a public ledger.  One of the advantages of bitcoin is that you can take large chunks of information, form a token and store the hash of the token on the chain.   You then have high probability that that hash really was created when you said it was.  I think this is how t0 is planning to integrate their data into blockchain for instance.  It all works together along with money transfer/payments/etc to add value to bitcoin.  I think the central bank might be missing this but could be mistaken.

I think what will kill bitcoin if anything is the forking.  It's power is being this solid reliable source but when people get greedy and start looking at forking as some weird type of dividend you lose the uniqueness of the chain.  This forces the miners to pick chains and as the miner pool on a single chain get to be smaller and smaller, it increases the risk of a bad actor compromising the chain.  It also makes it difficult for these ancillary apps (t0) as they have to guess which chain is the main chain to store their information.  You don't want to be keeping everything on a chain and then have it fade away.
« Last Edit: December 03, 2017, 07:25:33 AM by no_free_lunch »

wachtwoord

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Re: Welcome to the 'Bitcoin killer'
« Reply #7 on: December 03, 2017, 07:34:20 AM »
Lol! The whole value proposition of Bitcoin is decentralization and absense of the need to trust. Canadians crack me up (but Russia and Equador are doing the same stupid thing).

The Canadians have even tried something similar before with Mintchip (https://www.coindesk.com/canadian-government-end-mintchip-digital-currency-program/ ).

Dead on arrival.
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wachtwoord

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Re: Welcome to the 'Bitcoin killer'
« Reply #8 on: December 03, 2017, 07:37:04 AM »

Given the choice; aren't you far more likely to prefer transacting with a fully convertible coin backed by a central bank, versus taking your chances on a coin exchange to buy a Bitcoin backed by squat? Welcome to the market.

You'd be better of buying something (as a store of value) that doesn't require backing cause it's the actual thing such as gold or Bitcoin rather than something non-existing, even if backed by a real thing (which this is not as fiat currency is NOT backed by gold these days).
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SharperDingaan

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Re: Welcome to the 'Bitcoin killer'
« Reply #9 on: December 03, 2017, 08:46:13 AM »
SD,

Is this even a blockchain or just digital currency?

I don't see this killing blockchain without it being a public ledger.  One of the advantages of bitcoin is that you can take large chunks of information, form a token and store the hash of the token on the chain.   You then have high probability that that hash really was created when you said it was.  I think this is how t0 is planning to integrate their data into blockchain for instance.  It all works together along with money transfer/payments/etc to add value to bitcoin.  I think the central bank might be missing this but could be mistaken.

I think what will kill bitcoin if anything is the forking.  It's power is being this solid reliable source but when people get greedy and start looking at forking as some weird type of dividend you lose the uniqueness of the chain.  This forces the miners to pick chains and as the miner pool on a single chain get to be smaller and smaller, it increases the risk of a bad actor compromising the chain.  It also makes it difficult for these ancillary apps (t0) as they have to guess which chain is the main chain to store their information.  You don't want to be keeping everything on a chain and then have it fade away.

CBDC is just another digital currency, performing the same functions as Bitcoin. Better, faster, and more securely.
Agreed that Bitcoin is simply an Oracle running block chain on a distributed ledger. With CBDC, the CB is simply a similar Oracle running block chain on a data base. The data base permits scaling, faster processing, and comes with the network advantage of every citizen in the nation also having a digital wallet at the CB. Bitcoin just isn't competitive.

Bitcoin is also an inflation machine. As the only way a miner gets paid is in new bitcoin - steadily increasing the supply of Bitcoin at a declining rate up to the design limit of 21M coin. Thereafter we are simply to BELIEVE that the 21M design limit will never be raised; the same way we are simply to BELIEVE that the central bank will never increase money supply. Same belief, but who do you trust more?

SD