VP of FED Bank of St.Louis:"Bitcoin could be the world's next great safe asset"

[Denker]

http://andolfatto.blogspot.de/2016/03/is-bitcoin-safe-asset.html

David Andolfatto, vice president and research director of the St. Louis Federal Reserve Bank might be known to a few from former articles in crypto media.
In his newest blog post he is speaking about Bitcoin and it's potential being the next global great safe asset.
It's a wall of text but definitely worth a read.
Check out the comment section as well.

[...] Cash and gold are "simple" objects. The fact that they pay no interest makes them even simpler. In particular, there's no need to spend time investigating the reliability of a dividend paid by "barren" asset--everyone can agree right away that the dividend is zero. This type of informational symmetry appears to be in high demand in times of financial uncertainty (when nobody knows for sure what other people know about the securities they're selling.) Of course, the situation is somewhat more complicated when counterparties (intermediaries) are involved, but this is true of any asset.

This brings me to Bitcoin. I think that Bitcoin could be the world's next great safe asset. At least, it certainly seems to have all the properties that are desired in a safe asset.

Importantly, it is a "simple" asset. It's simple in the sense that it's a pure fiat object--the monetary objects (called bitcoin) constitute no legal claim against anything of intrinsic value. Bitcoin is simply a record-keeping technology (and economists have known for a long time that money is memory). It pays no interest. Possession corresponds to ownership (unless counterparties are involved). The ledger has proven itself secure (not a guarantee that is can never be compromised, of course)

[Lauda]

I've recently read this on Reddit and I guess it would be classified as 'bullish news' by some (especially in the speculation section). This part is also interesting:

do you require Bitcoin to be a payment-processing system comparable to Visa's in order for it to achieve money status?

His answer to this question is yes, ergo he feels that Bitcoin has to have a comparable transaction capacity in order to do so. Seems like Bitcoin will definitely rely on 'innovations' such as the LN. It might just be a matter of time before the wording changes from "could" to "will be".

If he can't get the details right when they fall within his own area of specialty..

That does not even surprise me.

[Denker]

I've recently read this on Reddit and I guess it would be classified as 'bullish news' by some (especially in the speculation section). This part is also interesting:

do you require Bitcoin to be a payment-processing system comparable to Visa's in order for it to achieve money status?

His answer to this question is yes, ergo he feels that Bitcoin has to have a comparable transaction capacity in order to do so. Seems like Bitcoin will definitely rely on innovation such as the LN. It might just be a matter of time before the wording changes from "could" to "will be".

Yes that's what I found interesting as well.
That's why I wrote to check out also the comment section.
Some interesting Q&A there.

[Carlton Banks]

Importantly, it is a "simple" asset. It's simple in the sense that it's a pure fiat object--the monetary objects (called bitcoin) constitute no legal claim against anything of intrinsic value.

Can't take the man seriously, the above sentence is a pure contradiction in terms. The definition of a "pure fiat object" is the complete and total opposite of that stated above.


If he can't get the details right when they fall within his own area of specialty, I don't know why we should take anything else he says particularly seriously, especially walls of text.

[KoinKartel]

This brings me to Bitcoin. I think that Bitcoin could be the world's next great safe asset. At least, it certainly seems to have all the properties that are desired in a safe asset.

Importantly, it is a "simple" asset. It's simple in the sense that it's a pure fiat object--the monetary objects (called bitcoin) constitute no legal claim against anything of intrinsic value. Bitcoin is simply a record-keeping technology (and economists have known for a long time that money is memory). It pays no interest. Possession corresponds to ownership (unless counterparties are involved). The ledger has proven itself secure (not a guarantee that is can never be compromised, of course)

The fact that he refers to Bitcoin as a record-keeping technology that represents no legal claim against anything of intrinsic value shows he has a deep understanding of Bitcoin, at least from a financial standpoint - and I'm starting to realise that most central bankers have this exact same view, which is a great thing in my books.

To me, it shows that central bankers have known the potential of bitcoin from the very beginning - and could, perhaps, be more involved with the technology than they publicly let on

[LiteCoinGuy]

I've recently read this on Reddit and I guess it would be classified as 'bullish news' by some (especially in the speculation section). This part is also interesting:

do you require Bitcoin to be a payment-processing system comparable to Visa's in order for it to achieve money status?

His answer to this question is yes, ergo he feels that Bitcoin has to have a comparable transaction capacity in order to do so. Seems like Bitcoin will definitely rely on 'innovations' such as the LN. It might just be a matter of time before the wording changes from "could" to "will be".

If he can't get the details right when they fall within his own area of specialty..

That does not even surprise me.

bullish! 

[LFC_Bitcoin]

It is bullish news but I've seen a number of articles like this over the last year or so. When is something going to give bitcoin a shot in the arm & make the price rise uncontrollably

[tobacco123]

To convince people, he should let people know if he is holding any bitcoins. I hope he is investing...

[alyssa85]

This brings me to Bitcoin. I think that Bitcoin could be the world's next great safe asset. At least, it certainly seems to have all the properties that are desired in a safe asset.

Importantly, it is a "simple" asset. It's simple in the sense that it's a pure fiat object--the monetary objects (called bitcoin) constitute no legal claim against anything of intrinsic value. Bitcoin is simply a record-keeping technology (and economists have known for a long time that money is memory). It pays no interest. Possession corresponds to ownership (unless counterparties are involved). The ledger has proven itself secure (not a guarantee that is can never be compromised, of course)

The fact that he refers to Bitcoin as a record-keeping technology that represents no legal claim against anything of intrinsic value shows he has a deep understanding of Bitcoin, at least from a financial standpoint - and I'm starting to realise that most central bankers have this exact same view, which is a great thing in my books.

To me, it shows that central bankers have known the potential of bitcoin from the very beginning - and could, perhaps, be more involved with the technology than they publicly let on

I think the central bankers are looking forward to the next financial crisis. They had to bail out the banks in 2008 because no alternative payment processor existed (bitcoin hadn't yet been invented) and they were worried about employers being able to pay employees, pay suppliers and so on. Now that an alternative exists, do they need to bail out banks, or do they simply switch people to a blockchain and commerce carries on regardless of the banks.