Bank of England hints at Bitcoin crackdown

[Apepa]

37 minutes ago, Master Disaster said:

You do understand how inflation works, right? A country can't "just print more money to solve debt", a perfect example of why is the frankly stupidly high inflation rates in Zimbabwe.

 

 

Yes, I know all about Zimbabwe, but I'm not suggesting that the Greeks could try and wipe out their debt entirely by printing more money. I'm suggesting that by printing some more money to release into their economy, they would introduce some inflation and devalue their currency relative to the Euro.

 

This has the advantages of:

 

a) Making exports and tourism cheaper and more competitive.

b) Lowering real wages through inflation, without the loss in tax revenues. Can also make the country more appealing to foreign investors.

c) Lowering the real value of the debt, as bonds would have been issued in the Drachma and would have retained the same nominal value even when the currency was devalued.

 

This is opposed to what did happen in Greece, which experienced both general deflation and a massive drop in real and nominal wages, which resulted in tax revenues lowering further, and the debt becoming a larger proportion of the shrinking GDP.

 

If they had been able to intentionally introduce inflation, the real drop in prices and wages could have happened quickly without the risk of a deflationary cycle, and would have at least lessened if not prevented the accompanying drop in tax revenues.

 

The drop in real prices and wages would have happened anyway, as the economy was moving towards a new supply and demand equilibrium. But inflation happened because Greece is in the Euro, and monetary policy for the Euro is designed to suit the needs of the Eurozone as a whole (read: Germany). This was a problem for a lot of countries as some entered recovery before the others did, meaning they had differing needs when it came to monetary policy,

 

And yes, Zimbabwe used to the US dollar in order to stabilise prices. It's a fairly common strategy in these situations.

[Misanthrope]

6 hours ago, huilun02 said:

They gonna crack down by taxing miners or something. Governments always after the $$ and not really solving anything

 

5 hours ago, mr moose said:

what? you mean taxing people who generate an income from an activity is greed and not to cover the cost of running a country?

 

Pretty much but I would add that people who love tax free, anonymous funds besides those who do for ideological reasons are well, criminals. From the harmless kids selling weed to pay for college to the fucking scumbags that have turned places in my country a veritable fucking battlefield.

 

So I am not getting political (this time) but suffice to say that the concerns expressed here, even if ultimately mishandled and misused by central banks, are still valid.

[Energycore]

13 hours ago, Apepa said:

https://www.theguardian.com/business/2018/mar/02/bitcoin-faces-regulatory-crackdown-bank-england-warns

 

He has a point, but I think the big question for most of us is whether the looming threat of regulation might cause Crypto prices to fall so the GPU market can get back to normal.

 

He also mentioned the cost of mining, which is also a pretty interesting topic, as governments around the world will have to take into account the toll mining takes on our energy infrastructure.

So the first argument, that criminals use bitcoin, is something we've already talked about and I don't see as a compelling argument, but to the second point of power consumption which is something that worries me so, I was shown an estimation of how much power visa uses and it's higher -

https://hackernoon.com/the-bitcoin-vs-visa-electricity-consumption-fallacy-8cf194987a50

[Apepa]

32 minutes ago, Energycore said:

So the first argument, that criminals use bitcoin, is something we've already talked about and I don't see as a compelling argument, but to the second point of power consumption which is something that worries me so, I was shown an estimation of how much power visa uses and it's higher -

https://hackernoon.com/the-bitcoin-vs-visa-electricity-consumption-fallacy-8cf194987a50

That's really poorly thought out. He defines Visa as the entire global banking system (including branches and employees). He compares BitCoin to this system, despite the fact that banks do far far more than simply handle payments, and aren't restricted to just one currency either, and he ignores the vastly higher number of payments using the global banking system.

 

And also, that's just bitcoin. What about everything else?

[Energycore]

Just now, Apepa said:

That's really poorly thought out. He defines Visa as the entire global banking system (including branches and employees). He compares BitCoin to this system, despite the fact that banks do far far more than simply handle payments, and aren't restricted to just one currency either, and he ignores the vastly higher number of payments using the global banking system.

 

And also, that's just bitcoin. What about everything else?

The other 3 big mining coins are Litecoin, Bitcoin Cash and Ethereum. They assuredly consume less power than the big boi but I don't have numbers atm.

 

It's true that there's a lot more payments being handled by banks, the nice thing about the blockchain technology is that to a certain limit, you can scale its size without increasing power consumption (assuming the way dynamic proof-of-work difficulty works the way I think it does). The important thing to me from this argument is not "actually Visa consumes more so suck it" but rather, we should realize that it's not wasted power, not to the full extent at least.

 

Though I would much rather non-minable coins became the norm in the future. That or have the mining process take significantly less power (one way to do this is coins that are secured via storage-based PoW that uses less power especially on SSDs).

[DrMacintosh]

The technology behind Crypto is amazing and should be applied to the world.......just not Currency. 

 

The government being able to see your transactions and trace them back to you are a good thing. The appeal to crypto is that it is all anonymous and decentralized, the problem with that is it’s going to be used predominantly for black markets and illegal activities because that’s what humans do, they take advantage of a system. 

 

Oh and not to mention how much damage Crypto might do to an economy in the long term. Millions of people, literally printing money and withdrawing it in their governments money when that money would have never existed could be a big problem for inflation. 

[mr moose]

6 hours ago, Energycore said:

So the first argument, that criminals use bitcoin, is something we've already talked about and I don't see as a compelling argument, but to the second point of power consumption which is something that worries me so, I was shown an estimation of how much power visa uses and it's higher -

https://hackernoon.com/the-bitcoin-vs-visa-electricity-consumption-fallacy-8cf194987a50

I'm afraid that bloke does not understand how comparative analysis works.  There is no breakdown to transaction level between the two types of transaction, there is no definition of compute power per transaction (I imagine this is hard to ascertain), there is no allowance for the reconciliation process (where more power is consumed outside of the actual transaction), he operates on the best case scenario for mining (using the most efficient altminer and ignoring the vast arrays of GPU powered miners).   And the big one,  it doesn't appear that he has addressed the sheer number of transactions the banking system does versus bitcoin.   Mastercard alone transacts 3.4Billion a day while bitcoin is only 213,000 (EDIT: looking at blockchain it is about 260K average a day).     Which is 15 thousand times more on just MC alone, so when you include all eftpost and Visa transactions plus internet transfers and DD/DC, the conventional banking system (which he has accounted for already in the "entire banks" estimates) would appear to blow crypto out of the water for power efficiency.  

 

 

[mr moose]

3 hours ago, DrMacintosh said:

The technology behind Crypto is amazing and should be applied to the world.......just not Currency. 

It will, blockchain was around before bitcoin and is being looked at seriously for everything thing from business contracts to voting and government accounts. The issue is it requires a new implementation, swapping systems is very difficult so the new system has to offer absolute better performance in all areas justify the effort.   

 

3 hours ago, DrMacintosh said:

The government being able to see your transactions and trace them back to you are a good thing. The appeal to crypto is that it is all anonymous and decentralized, the problem with that is it’s going to be used predominantly for black markets and illegal activities because that’s what humans do, they take advantage of a system. 

 

Many online security experts have detailed the link between bitcoin and increases in crypto malware attacks.  Not too mention the who silk road would not exist without bitcoin. 

 

3 hours ago, DrMacintosh said:

Oh and not to mention how much damage Crypto might do to an economy in the long term. Millions of people, literally printing money and withdrawing it in their governments money when that money would have never existed could be a big problem for inflation. 

 

Economies are good at self regulating.  In order for you to get conventional currency, someone has to be willing to pay it to you, so it technically it shouldn't effect the economy in the same way inflation might from printing money.  But your fears aren't unfounded, as some members here have pointed out before, some of Greece's issues stemmed from them not being able to regulate their economy due the principal currency value being independent.

[Froody129]

They can tax what they like, the beauty of crypto is that it’s anonymous. As you can see in Asian countries where they tried to ban/tax it it hasn’t actually done anything to the market 

[jagdtigger]

7 hours ago, Froody129 said:

They can tax what they like, the beauty of crypto is that it’s anonymous. As you can see in Asian countries where they tried to ban/tax it it hasn’t actually done anything to the market 

Not if you want to withdraw it in cash. Plus you seem to forget that governments can go after the infrastructure... (And i really hope they gonna do it.)

[Froody129]

4 minutes ago, jagdtigger said:

Not if you want to withdraw it in cash. Plus you seem to forget that governments can go after the infrastructure... (And i really hope they gonna do it.)

Given that the idea is to replace normal currency with crypto there’s no need to withdraw in cash.

 

As far as I know governments trying to take it down would be like them trying to take the internet down. It’s not one cohesive entity that can be challenged, it’s spread over millions of places all over the world and you can’t go delete all of the copies 

[jagdtigger]

17 minutes ago, Froody129 said:

Given that the idea is to replace normal currency with crypto there’s no need to withdraw in cash.

 

As far as I know governments trying to take it down would be like them trying to take the internet down. It’s not one cohesive entity that can be challenged, it’s spread over millions of places all over the world and you can’t go delete all of the copies 

Its enough if they shut off the servers that are managing transactions and distribution of mining work. Take out the brain and all that data scattered around becomes useless.

[mr moose]

8 hours ago, Froody129 said:

Given that the idea is to replace normal currency with crypto there’s no need to withdraw in cash.

 

As far as I know governments trying to take it down would be like them trying to take the internet down. It’s not one cohesive entity that can be challenged, it’s spread over millions of places all over the world and you can’t go delete all of the copies 

Who's idea is that then?  It can't replace conventional currencies without become exactly the same as conventional currency, therefore whatever ideal people place on crypto is flawed.    Also governments and banks don't want to kill crypto, they just don't want it to be an chaotic product that disturbs the market.   Economic structure and regulation have evolved over centuries into what it is today. The reason we see less and less financial crisis over time is because of said regulation.   Introducing new currencies and financial products must be done with caution. 

 

I surmise that the biggest issue with bitcoin and most cryptos is the interest it gets is from tech enthusiasts who don't understand the economy then get scared when banks and governments move to protect it.  Which is vastly evident on these forums.