Bitcoin Forum

 :D FAIL!!!! which part of decentralised currency sounds like centralised to them I wonder?

http://www.coindesk.com/ing-future-bitcoin-protocol-include-central-bank-functions/ (http://www.coindesk.com/ing-future-bitcoin-protocol-include-central-bank-functions/)

go short ING shares? ... good troll or just completely zero clue? hard to say really.

Buahahaha!  :D

Gee, I wonder who they think should be that bank?

"efficiently"… I'm tempted to stop reading at this point.

If that were ever to happen I would divest in a heart beat. No central controlling authority is exactly the reason bit coin works.

I can summarize my feelings regarding this article succinctly in two words:

SCREW That!!!

The impression I got from the video itself wasn't that they were proposing a central bank for bitcoin, but rather an algorithmic solution for the generation of new coins to match demand.  Maybe someone at ING has just patented the idea, but has no idea how to make it happen.  If they plant the thought in people's heads, maybe they'll get lucky and someone will code it for them, heh.  Whatever their reasons and motives, I have no idea whether such an idea would be feasible.  As concepts go, it's actually not that bad.  If it was done correctly, it would still be in line with the general ethos of crypto, unless a fixed supply is a sticking point for you as an individual.

The only thing we need is bankers to start controlling bitcoin. Imagine, customer comes to the bank to buy bitcoin and is told that his credit rating is not good enough. :-)

Why would one prefer a fiat crypto over a decentralized crypto? Maybe it goes well until the next economic or political crisis and the people in power will throw the algorithm over board just in order to preserve their own power. This happened in history all the time. To prevent abuses by a central power, decentralization is the key.

It is not their nature to fully understand how "evil" banks really are, so I would vote for "zero clue".

ING: Future Bitcoin Protocol Should Include Central Bank Functions

Just went what was that about.

The inventors of that successful algorithm would make such a momentous step forward that they would surely qualify for the Nobel Prize in economics.”

Ha-ha congrats satoshi you already did it lol

Could someone tell them to change brands, the socks they smoking now, is doing strange things to their minds.  ::)

Who wants Central Banks as part of the bitcoin protocol? Hands up? Anyone ...Anyone? Ok.. Bankers sit down. You already messed up the world economy once, now you want to do it again with bitcoin?

No thanks, I think we will cope, just fine.

FEDCoin  ::)

Oh God. Enough with the flexible money supply nonsense. Actually I blame Milton Friedman.

When will people get it into their heads that an elastic money supply is (1) pointless (2) damaging?

It is pointless because the purchasing power of money automatically adjusts to the demand for money holdings. If the value of your money goes up and you want constant purchasing power, you just hold less of it. Duh.

It is damaging because it disrupts economic calculation and induces business cycles.

Anybody who wastes time trying to come up with some stupid algorithm for adjusting the money supply of a crypto-currency is an idiot. The only reason why the BTC money supply has been set to increase (at a reducing rate) is to fund the network and provide a means of initial distribution.

http://www.coindesk.com/ing-future-bitcoin-protocol-include-central-bank-functions/

Banksters' dream. They would be delighted seeing this.

In other news, Exxon Mobil have suggested future Tesla vehicle design should include V8 combustion engines and the New York Times proposes the internet be 'updated' to allow delivery to households in a daily broadsheet format.

 ;D

Wind farms with backup diesel generators, so they can put all the excess wind they've stored back into the "network"

(3) ... and it's only needed when you have "fractional reserve" fiat banking. Without the central bank (lender of last resort of fiat) banks would go bankrupt quickly, because they are all leveraged. If you don't have these "magic" money reserves, you must leverage less or even not at all, which means much lower profits for a bank. That's why every banker hates an inelastic money supply - that's the main reason. Flexible money supply is not essential for capitalism and the overall economy. Capitalism worked well before the introduction of the central bank when gold and silver was money and the money supply could not just be adjusted by a central authority.



 

Fair enough if you feel that way.  Mostly I'm just pointing out the misleading nature of the article and everyone working under the assumption that they were proposing a bank to be in charge when they aren't.  Fact is, though, it's been quite a while, historically, since we had a completely 100% fixed money supply and we don't know for certain if it is going to cause problems down the road.  At some point I'm guessing someone's going to start trying to throw fractional reserve into the mix on a large scale and that's probably going to end badly.  Adding decimal places in the future might be a workable solution if Bitcoin is still going in 50 years and 1 satoshi can buy a pint, but again, I don't think anyone is in a position to say with absolute certainty that there won't be repercussions to that.  For what it's worth I hope you're right.  We'll see how it turns out.

Fractional reserve will never work with Bitcoins.

Agreed, but that won't stop people trying (and failing).  It's all the finance sector know and they're bound to get involved at some point.  I bet it's the first idea that pops into their empty little heads.  They'll use off-chain transactions and fill their users' wallets with IOUs.  The last thing we need is for new users to start getting burned by some botched attempt at it.  We need to remain vigilant to make sure they don't get involved with any such silly schemes.   

Bankers realized that people won't depositing Bitcoins in a bank, because it's not needed for utility, security and store of value. Now they want some tweaks (control of supply), which forces people depositing them with a bank or lose value through inflation. 

That's not fractional reserve banking.

Also, nominal interest rates are bogus for economic decisions. Why would someone borrow Bitcoins for 6%/year, when Bitcoin value goes up only 20%/year? The real interest rate will be 26%. If I can borrow Dollars for 6%/year, and the Dollar loses 2%/year, the real interest rate will be 4%.  Borrowing Bitcoins makes no sense economically.

What you described is traditional money lending business (loans from prior deposits).

"Fractional reserve" is something different. In a nutshell: Banks leverage their reserves, they create e.g. $10 loans from $1 reserves. These loans become deposits through economic activities (e.g. somebody is buying a car on a loan and the seller will most likely deposit the money with a bank) to the most part (only a small portion of the cash remains in circulation). Depositors, who want to withdraw their money, get paid from the bank's reserves.  Now do the math. The bank can satisfy only a fraction of the deposits (less than $10, most likely $9) from their reserves ($1) - that's why it's called fractional reserve.  ("...a bank holds reserves in an amount equal to only a portion of the amount of its customers' deposits.." [quoted from your quote above]).


That's why it will fail.

Nope, your deposits are locked for a year. Why they need reserves?

People put money in the bank for two reasons.

First to look after it. There is less need for this with BTC but there will still be some demand for it. But the publicly auditable nature of BTC means that firms that do this will be custodians rather than banks. So no fractional reserve banking there.

The second reason is to earn interest. This will apply to BTC just like anything else. So some amount of fractional reserve banking is inevitable with BTC. But as with gold, it is fundamentally constrained by the inability of central banks to print BTC. So the mischief of FRB is very limited under BTC. The market is a good discipline when it is allowed to function.

But if this stupid idea for a BTC printing algorithm were ever to take off (but HINT - IT WON'T!), we will be right back to square one.

Which is why the ING man is such a moron.

I don't think everyone understands that this guy is talking about an algorithm (something that would be a part of the code) and not an actual central bank. I think it would be great to have an algorithm that could dynamically adjust coin generation based on the global supply and demand of the coin, which would damper price flucuations. But the issue to do it in a way that was clear and transparant, and couldn't be manipulated by miners, whales, exchanges, etc. It might not be possible because there's no obvious way to sample the supply and demand of bitcoin since that happens outside of the code, in exchanges or private transactions.

On that same note,  bitcoin would be just as useful even if it didn't have a 21M cap or halving every 4 years. The key isn't the total fixed supply, it's the predictability of the generation. It's factored into the determination of price, which is why the first bitcoin halving didn't have a significant effect on the price (Other than assuring the market that the network wouldn't break, lol). Bitcoin could have kept generating 50 coins/10 minutes forever, and bitcoin wouldn't lose any real capability. And prices would have still risen because the demand has far outpaced coin generation.

... all these models suffer from a disconnect with reality. How do you measure and monitor the economy sufficiently accurately enough in a manner that is not prone to centralised failures?

You cannot feed inputs into a system that bases its utility on a distributed network, via a centralised measuring/monitoring signal and expect it to retain the robustness that makes it superior.

There are always two parts of an equation. Who will borrow BTCs at a real rate of 100%? 

 "....a bitcoin algorithm needs to be developed that “smoothly matches money supply and demand”." Will it be the BTC then?