Interesting bit of info on bitcoins by Prof Lawrence White:
On July 25, Miami-Dade Florida circuit judge Teresa Pooler dismissed money-laundering charges against Michell Espinoza, a local bitcoin seller. The decision is a welcome pause on the road to financial serfdom. It is a small setback for authorities who want to fight crime (victimless or otherwise) by criminalizing and tracking the “laundering” of the proceeds, and who unreasonably want to do the tracking by eliminating citizens’ financial privacy, that is, by unrestricted tracking of their subjects’ financial accounts and activities. The US Treasury’s Financial Crimes Enforcement Network (FinCEN) is today the headquarters of such efforts.
He goes on to show how banking functions in US requiring one to submit all kinds of information to the state. Bitcoins helps escape all this:
When most of these rules were enacted, before 2009, there were basically only three convenient (non-barter) conduits for making a large-value payment. If Smith wanted to transfer $10,000 to Jones, he could do so in person using cash, which would typically involve a large withdrawal followed by a large deposit, triggering CTRs. He could make the transfer remotely using deposit transfer through the banking system, triggering CTRs or SARs if suspicious. Or he could use a service like Western Union or Moneygram, again potentially triggering SARs. For the time being, the authorities had the field pretty well covered.
Now come Bitcoin and other cryptocurrencies. Cash is of course still a face-to-face option. But today if Smith wants to transfer $10,000 remotely to Jones, he need not go to a bank or Western Union office. He can accomplish the task by (a) purchasing $10,000 in Bitcoin, (b) transferring the BTC online to Jones, and (c) letting Jones sell them for dollars (or not). The authorities would of course like to plug this “loophole.” But the internet, unlike the interbank clearing system, is not a limited-access conduit whose users can be commandeered to track and report on its traffic. No financial institution is involved in a peer-to-peer bitcoin transfer. Granted, Smith will have a hard time purchasing $10,000 worth of Bitcoins without using a bank deposit transfer to pay for them, which pings the authorities, but in principle he could quietly buy them in person with cash.
Hmm. Interesting bit.
In another post, Orange Peel Investments says how central banks are missing the point on bitcoins by trying to get into the space. The whole point of bitcoins is to keep the state away from such ideas. But trust central banks to do this as all monopolists are scared of losing their powers:
An article in the Wall Street Journal last week mentioned that Central governments could potentially try and incorporate blockchain as one of their methods for distributing currency. Citing the good things that have come with bitcoin, including decentralization and easy person to person transfers, Central Banks are apparently now considering using blockchain for quantitative easing. The Wall Street Journal stated,
When it comes to bitcoin and digital currencies, central banks might be considering the adage: “If you can’t beat them, join them.”
In a research paper published on Monday, economists at the Bank of England advocated that central banks issue their own kind of digital currency. Using the U.S. as a case study, they argued it could give a permanent boost to the economy of around 3%, as well as providing policy makers with more effective tools to tame financial booms and busts.
BOE economists John Barrdear and Michael Kumhof write that “reductions in real interest rates, distortionary taxes, and monetary transaction costs” would boost the economy.
Much like physical cash, digital currencies like bitcoin allow direct payment from one person to another, but they also have all the advantages of bank transfers, because large payments can be made instantaneously across the globe.
We think this idea is ridiculous and it goes to show how clueless central banks are.
Talk about missing the point. Bitcoin is a great idea and it is going to be around for a while simply because it is decentralized. The point is that its users don’t want Central Banks involved with it at all. They want a currency that they can move amongst themselves without being intervened by the government.
It’s funny. It is almost as if the Federal Reserve decided that they can’t physically print money fast enough and that making it digital would be an easier way to simply gush out cash to stimulate their respective economies quicker. The central banks are missing the point that digital currency is not there to be their tool to continue to ruin the economy.
It was created because it has a finite supply and doesn’t involve anyone (P2P) while at the same time having checks and balances that involve everyone (the blockchain). It’s the Wikipedia of currency. There is nowhere in that equation for the government to fit in. It was created for the purposes of transparency. Nobody that is interested in digital currency today is going to buy into the concept of a government issued digital currency because it is going to face the same issues as convectional currency.
This point is basically lost on most people. And guess what, we already have an article on Indian central bank issuing its own bharatcoin based on bitcoin technology. Just copy what others do…