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Author Topic: Good news; ECB 2012/10 report on virtual currencies  (Read 3460 times)
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October 29, 2012, 07:23:45 PM
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Just read through this http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemes201210en.pdf

Half of this 55 page report concerns Bitcoins, ranging from legal, technical and political issues.

The conclusion is quite positive as it states that Bitcoin is not violating any EC virtual money or currency laws.

The paper also expresses the usual concerns; ponzi, money launder, non backed, terror funding,  but find the risk of such transactions happening at any scale, very low.

Their main concern, which is mentioned in 3 different chapters, is that if there are more conventional banking fuck-ups, Bitcoin can gain traction fast, if supported by mass media, and be a threat to the trust in established financial institutions.

Strait talk report, high quality level of research into different aspects around Bitcoin.

Worth a read and to take along, if you have some explaining to take care of, with your local IRS office.

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October 29, 2012, 07:26:24 PM
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Their main concern, which is mentioned in 3 different chapters, is that if there are more conventional banking fuck-ups, Bitcoin can gain traction fast, if supported by mass media, and be a threat to the trust in established financial institutions.

And it's a valid fear. Fuck up enough times, and people sho'nuff gonna drop you like a hot rock.

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October 29, 2012, 07:47:18 PM
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Seems like a fair and objective study when you take in to account the likeley backround of the people who put this together. Im loving it.

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October 29, 2012, 07:49:16 PM
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Wow, reading it as I type...

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October 29, 2012, 07:56:22 PM
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Wow, reading it as I type...

It seems the reading is more captivating than the typing Wink

From what you guys summarize, this seems pretty well researched... will print and read on train to work.

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October 29, 2012, 07:58:35 PM
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Their main concern, which is mentioned in 3 different chapters, is that if there are more conventional banking fuck-ups, Bitcoin can gain traction fast, if supported by mass media, and be a threat to the trust in established financial institutions.

And it's a valid fear. Fuck up enough times, and people sho'nuff gonna drop you like a hot rock.

we should send this to the press so next time banks fuck up, the press know what to write about, hehehehe.

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October 29, 2012, 08:05:01 PM
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Their main concern, which is mentioned in 3 different chapters, is that if there are more conventional banking fuck-ups, Bitcoin can gain traction fast, if supported by mass media, and be a threat to the trust in established financial institutions.

And it's a valid fear. Fuck up enough times, and people sho'nuff gonna drop you like a hot rock.

we should send this to the press so next time banks fuck up, the press know what to write about, hehehehe.

Make it part of the official Bitcoin press kit.

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October 29, 2012, 08:16:22 PM
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Quote from: ecb, page 10
Virtual currencies resemble money and necessarily come with their own dedicated retail payment
systems; these two aspects are covered by the term “virtual currency scheme”. Virtual currency
schemes are relevant in several areas of the financial system and are therefore of interest to central
banks. Virtual currency schemes have been subject to increased press coverage, even being featured
in respectable media publications. The ECB has been contacted a number of times in recent months
by academics, journalists and concerned citizens, who want to know its view or want to warn the
institution about potential problems with virtual currency schemes. In this context, it was considered
advisable to strive for a common understanding and, thereafter, to formulate a coordinated response.
This explains the ECB’s interest in carrying out a more detailed analysis, especially in view of its
role as a catalyst for payment systems and its oversight role. The present report is the result of this
analysis. It is a first attempt to provide the basis for a discussion on virtual currency schemes.
(emphasis mine.)

This sounds pretty prudent and promising to me.

and later:

Quote
Money is a social institution: a tool created and marked by society’s evolution, which has exhibited
a great capacity to evolve and adapt to the character of the times. It is not surprising that money has
been affected by recent technological developments and especially by the widespread use of the
internet.

interesting, no FUD so far or misinformation or misunderstandings, just facts I can agree with... this is weird, I'll keep reading.

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October 29, 2012, 08:25:29 PM
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Quote from: ecb, page 10
Virtual currencies resemble money and necessarily come with their own dedicated retail payment
systems; these two aspects are covered by the term “virtual currency scheme”. Virtual currency
schemes are relevant in several areas of the financial system and are therefore of interest to central
banks. Virtual currency schemes have been subject to increased press coverage, even being featured
in respectable media publications. The ECB has been contacted a number of times in recent months
by academics, journalists and concerned citizens, who want to know its view or want to warn the
institution about potential problems with virtual currency schemes. In this context, it was considered
advisable to strive for a common understanding and, thereafter, to formulate a coordinated response.
This explains the ECB’s interest in carrying out a more detailed analysis, especially in view of its
role as a catalyst for payment systems and its oversight role. The present report is the result of this
analysis. It is a first attempt to provide the basis for a discussion on virtual currency schemes.
(emphasis mine.)

This sounds pretty prudent and promising to me.

and later:

Quote
Money is a social institution: a tool created and marked by society’s evolution, which has exhibited
a great capacity to evolve and adapt to the character of the times. It is not surprising that money has
been affected by recent technological developments and especially by the widespread use of the
internet.

interesting, no FUD so far or misinformation or misunderstandings, just facts I can agree with... this is weird, I'll keep reading.


Can't agree more, strange...

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October 29, 2012, 08:31:15 PM
 #10

We could use this to help define our terms as we continue to refign how we communicate what bitcoin is to a non-users.

I've hear people refer to bitcoin as electronic money, which according to this paper would refer to a unit of account that has a physical counterpart with legal tender status, ie western union.


Virtual currency schemes differ from electronic money schemes insofar as the currency being used as the unit of account has no physical counterpart with legal tender status.
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October 29, 2012, 08:34:33 PM
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We could use this to help define our terms as we continue to refign how we communicate what bitcoin is to a non-users.

I've hear people refer to bitcoin as electronic money, which according to this paper would refer to a unit of account that has a physical counterpart with legal tender status, ie western union.


Virtual currency schemes differ from electronic money schemes insofar as the currency being used as the unit of account has no physical counterpart with legal tender status.

This also means that since the only difference between bitcoins and dollars is that bitcoins' physical counterparts aren't legal tender that they admit dollars, euros and the rest of the fiat currencies are essentially virtual currencies.

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October 29, 2012, 08:42:57 PM
 #12

Seriously this is very good.

And very very good news.

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October 29, 2012, 08:57:19 PM
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hazek

[snip]This also means that since the only difference between bitcoins and dollars is that bitcoins' physical counterparts aren't legal tender that they admit dollars, euros and the rest of the fiat currencies are essentially virtual currencies.[/snip]

I don't follow.
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October 29, 2012, 09:03:15 PM
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hazek

[snip]This also means that since the only difference between bitcoins and dollars is that bitcoins' physical counterparts aren't legal tender that they admit dollars, euros and the rest of the fiat currencies are essentially virtual currencies.[/snip]

I don't follow.

bitcoins - virtual currency with physical counterparts (Casascius, bitbills, ect..)

euros - "electronic" currency with physical counterparts that are legal tender

Seems to me, there is only one difference between these two currencies and it's not that one is a virtual currency and the other isn't.

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October 29, 2012, 09:03:34 PM
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We could use this to help define our terms as we continue to refign how we communicate what bitcoin is to a non-users.

I've hear people refer to bitcoin as electronic money, which according to this paper would refer to a unit of account that has a physical counterpart with legal tender status, ie western union.


Virtual currency schemes differ from electronic money schemes insofar as the currency being used as the unit of account has no physical counterpart with legal tender status.

somewhere else they explain another difference:

Quote from: ecb page 17
In electronic money schemes the link between the electronic money and the traditional money
format is preserved and has a legal foundation
, as the stored funds are expressed in the same unit
of account (e.g. US dollars, euro, etc.). In virtual currency schemes the unit of account is changed
into a virtual one (e.g. Linden Dollars, Bitcoins).

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October 29, 2012, 09:03:56 PM
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Quote from: ecb, page 10
Virtual currencies resemble money and necessarily come with their own dedicated retail payment
systems; these two aspects are covered by the term “virtual currency scheme”. Virtual currency
schemes are relevant in several areas of the financial system and are therefore of interest to central
banks. Virtual currency schemes have been subject to increased press coverage, even being featured
in respectable media publications. The ECB has been contacted a number of times in recent months
by academics, journalists and concerned citizens, who want to know its view or want to warn the
institution about potential problems with virtual currency schemes. In this context, it was considered
advisable to strive for a common understanding and, thereafter, to formulate a coordinated response.
This explains the ECB’s interest in carrying out a more detailed analysis, especially in view of its
role as a catalyst for payment systems and its oversight role. The present report is the result of this
analysis. It is a first attempt to provide the basis for a discussion on virtual currency schemes.
(emphasis mine.)

This sounds pretty prudent and promising to me.

and later:

Quote
Money is a social institution: a tool created and marked by society’s evolution, which has exhibited
a great capacity to evolve and adapt to the character of the times. It is not surprising that money has
been affected by recent technological developments and especially by the widespread use of the
internet.

interesting, no FUD so far or misinformation or misunderstandings, just facts I can agree with... this is weird, I'll keep reading.


Can't agree more, strange...
As much as it can be frustrating to deal with bureaucracy in the EU, Canada, etc. - it is refreshing to see disinterested, non-corrupted bureaucrats do their jobs well, and provide service to the paying public. This study is a good example.

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October 29, 2012, 09:10:28 PM
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hazek

[snip]This also means that since the only difference between bitcoins and dollars is that bitcoins' physical counterparts aren't legal tender that they admit dollars, euros and the rest of the fiat currencies are essentially virtual currencies.[/snip]

I don't follow.

bitcoins - virtual currency with physical counterparts (Casascius, bitbills, ect..)

euros - "electronic" currency with physical counterparts that are legal tender

Seems to me, there is only one difference between these two currencies and it's not that one is a virtual currency and the other isn't.


no one is legal tender and the other is not, yes?
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October 29, 2012, 09:14:01 PM
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As much as it can be frustrating to deal with bureaucracy in the EU, Canada, etc. - it is refreshing to see disinterested, non-corrupted bureaucrats do their jobs well, and provide service to the paying public. This study is a good example.

True. Still, I'm only 1/3rd through and not into the bitcoin part yet.

I'm still suspecting an "agenda" and my initial enthusiasm got dampened a bit:

Quote
These schemes can have positive aspects if they
contribute to financial innovation and provide additional payment alternatives to consumers.
However, it is clear that they can also pose risks for their users, especially in view of the current
lack of regulation.
In essence, virtual currencies act as a medium of exchange and as a unit of account within a
particular virtual community. The question then arises as to whether they also fulfil the “store of
value” function in terms of being reliable and safe
, or whether they pose a risk not only for their
users but also the wider economy.

Incidentally that question arises also with the EUR the ECB is currently issuing like mad Wink


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October 29, 2012, 09:14:44 PM
 #19

Yes, this actually is a really good report.

hazek

[snip]This also means that since the only difference between bitcoins and dollars is that bitcoins' physical counterparts aren't legal tender that they admit dollars, euros and the rest of the fiat currencies are essentially virtual currencies.[/snip]

I don't follow.

bitcoins - virtual currency with physical counterparts (Casascius, bitbills, ect..)

euros - "electronic" currency with physical counterparts that are legal tender

Seems to me, there is only one difference between these two currencies and it's not that one is a virtual currency and the other isn't.

What is the difference between an electronic and a virtual currency...  Huh

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October 29, 2012, 09:15:46 PM
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hazek

[snip]This also means that since the only difference between bitcoins and dollars is that bitcoins' physical counterparts aren't legal tender that they admit dollars, euros and the rest of the fiat currencies are essentially virtual currencies.[/snip]

I don't follow.

bitcoins - virtual currency with physical counterparts (Casascius, bitbills, ect..)

euros - "electronic" currency with physical counterparts that are legal tender

Seems to me, there is only one difference between these two currencies and it's not that one is a virtual currency and the other isn't.


no one is legal tender and the other is not, yes?

yes, or in other words:

Quote
In electronic money schemes the link between the electronic money and the traditional money
format is preserved and has a legal foundation,[...]

is this the same as saying: electronic money has a fixed exchange rate to fiat currency while virtual currency floats?

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