WHAT IF?

[maxwellprosody]

Hello there am a computer scientist student and through my studies and random research came upon bitcoins like one year ago. My question or what i wish to discuss with those willling to talk to me is the topic if bitcoin would be more widely used and better priced if they either had a brand like paypal introduced it. what i mean a big company, since where am from, kenya, we have M-pesa a platform to transfer cash from one mobile to another, where money is deposited and withdrawn  through agents, similiar to western union. The success of that platform was many because of the mobile provider's trust thus people new there money was safe. So back to what i was saying bitcoins have no "trust" in the traditional sense thus the slow penetration not cuz its not such a strange concept. I feel though most of us not trust central bank, one should be established in the bitcoin network, but instead of the "one man making all the decisions" we have like a p2p centralbank board where miners and exhanges and other users are participates in the decisions. what are ur views

[Wilhelm]

I think the m-Pesa is quite like Bitcoin except for the fact that Bitcoin is an economy on it's own.
Bitcoin is not owned by anyone, so a company introducing it is simply not possible. They can only utilize, accept or deny it.
There are many e-money ideas that didn't really make it for example Apple iCash and Google Wallet.

The one point of Bitcoin that is a major advantage and disadvantage is it's lack of control.

On one hand nobody can touch what is yours and you control who gets money and nobody can stop you doing what you want.
On the other hand nobody can help you if you get robbed. Bitcoin is as good as gold and cash. You must protect it at all cost.
Bitcoin is financial anarchy and we're all pirates arrrr....

We do not trust banks yet a lot of our societies are dependant on loans and the security of your money in banks.
Currently banks can use backing of "real" cash to loan out "fake" cash as long as they have liquidity. (All cash is fake but I will stick to the government propaganda for now...).
Problem is that you cannot loan out more bitcoins than you have so you will always need an IOY system and that happens to be fiat.
If you do not have an IOY system there would be no business case for a bank unless they skim a few satoshi.

Then again....
- Like gold, bitcoin can back IOYs and thus back up fiat.
- Like gold, bitcoin can be held in your own posession.

However all govenments have broken the fiat-gold and fiat-silver backing so why in the hell would they consider backing fiat by Bitcoin?


Other points to think about are governments, how are they expected to function if they have no control?!? Anarchy is not the solution, neither is a dicatorship.

So my conclusion is that there is no optimal situation and we will always get screwed or screw other people....

[maxwellprosody]

I agree with what you say and esp the bank part and "fake money", which is the reserve asset ratio. but think what would happen when all 21million bitcoins are mined and the value of bitcoin is so high that a satoshi is like 100bucks how will this be dealt with by making more decimal points  on my opinion like creating more money bt dont kne if u can call it "fake money"

[rebuilder]

Before we go into whether there *should* be a Bitcoin central bank, we should ask if there *could* be one. What should such a central bank do, exactly? How would they enforce their decisions?

[Patatas]

You have a good question but unfortunately that's not how bitcoin technology works.Just say, its too technical for central banks to handle it.What you're trying to imply with the M-pesa example is their commercial success which comes with its own responsibilities.In case of bitcoins,that would be the corrupt government who will introduce all sorts of taxes and restrictions on such a beautiful technology.I'd rather want bitcoins left to individuals and how they want to handle it.

[maxwellprosody]

Before we go into whether there *should* be a Bitcoin central bank, we should ask if there *could* be one. What should such a central bank do, exactly? How would they enforce their decisions?

i think that the central bank would ensure that the bitcoin is at a stable price using monetary policies, like am thinking of bitcoin banks(banks holding deposits in bitcoins), so the bitcoin banks would have a certain interest thy pay on deposits and interest thy charge on loans. then there is controlling the liquidity.

[8up]

there will be stable prices once bitcoin is big enough. however any fluctuation of the price is valueable information! we became used to stable prices, that lost all there original meaning. in the digital world fixed (or stable) prices won't matter as much as today as contracts and hedging will be done by machines and  not so much by humans.

[rebuilder]

i think that the central bank would ensure that the bitcoin is at a stable price using monetary policies, like am thinking of bitcoin banks(banks holding deposits in bitcoins), so the bitcoin banks would have a certain interest thy pay on deposits and interest thy charge on loans. then there is controlling the liquidity.

"monetary policies" such as? Are you proposing we lift the 21M BTC issuance cap and allow a trusted party to issue new BTC at will? If not, how would the central bank gain the leverage to enforce any policies? Trying to dampen volatility by selling and buying large amounts of coins seems like a great way to go bankrupt.

[maxwellprosody]

i think that the central bank would ensure that the bitcoin is at a stable price using monetary policies, like am thinking of bitcoin banks(banks holding deposits in bitcoins), so the bitcoin banks would have a certain interest thy pay on deposits and interest thy charge on loans. then there is controlling the liquidity.

"monetary policies" such as? Are you proposing we lift the 21M BTC issuance cap and allow a trusted party to issue new BTC at will? If not, how would the central bank gain the leverage to enforce any policies? Trying to dampen volatility by selling and buying large amounts of coins seems like a great way to go bankrupt.

firstly a central bank acts like the bank of the banks so in that principle  the BTC cental banker can then control btc by let say holding accounts for like large exchanges or if we ever have btc based banks. by being their bank it would provide interest to their deposit but can also give a reserve ratio that can be used to control liquidity. Having a body that can then place a underline fee of transactions, and using this power then the btc central bank can then control velocity of btc since higher transaction fee would lower speed btc is exchanging hands

[rebuilder]

So basically we're talking about off-chain transactions, essentially creating a centrally issued currency backed by BTC? That's what I get from the idea of controlling velocity by charging fees. The incentive for large holders to deposit BTC would be interest paid on deposits. Where would the money come from to pay this interest? If it's transaction fees, then essentially it's a zero-sum game - fees must equal interest payments, but then there's overhead to account for as well, meaning you either need an additional source of income or depositors will end up with a negative return overall.

 don't see the attraction.

[Kprawn]

I would much rather have full control over my own finances, than trusting a central entity to do it for me. You can only use M-Pesa if you trust your mobile operator to support it. These mobile operators have

already turned against BitPesa. What is stopping them from turning against M-Pesa? They have full control over your finances... When you spend it, depends on the availlability of their services. Bitcoin gives you

the freedom to make payments from person to person, without any intermediateries. Some people use third parties, but you can do it without them.   Do not trust banks .... Ask the Greeks.  

[Soros Shorts]

The concept of a p2p central bank is vague to me. Maybe if the OP would lay out more specific details on how all this would work people could give better comments.

For example, how do I become part of the central bank and how can I effect its decisions?

[Amph]

The concept of a p2p central bank is vague to me. Maybe if the OP would lay out more specific details on how all this would work people could give better comments.

For example, how do I become part of the central bank and how can I effect its decisions?

it sounds like an oximoron, it's impossible to have a decentralized-centralized system, it will result always in centralization

but i can see something like, a big net of all bank connected that work with blockchain and offer security for their citizens, while the final decision which involves all the banks will remain decentralized

[Mickeyb]

No we don't need a central bank in Bitcoin, ever! Even though some kind of central authority like this would speed up decision making processes and even make us adopted faster with some big company maybe, in the end it would make us much more weaker as an ecosystem.

The decentralized path that we have taken is a way to go. Even though it's much slower way to go, once we gain a momentum, we will be unstoppable!