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April 28, 2013, 10:06:37 PM |
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Ok. I think that not many people have realised what is going to happen. One day in the not so distant future, somebody in the Bank of England (or USA) is going to notice the bitcoin transactions happening online and in person and they are going to realise something that everybody else seems to be missing. Crypto currency will work just as well for the pound note or the dollar or for any other cash. Crypto currencies and decentralisation are not mutually dependent! Crypto currencies and inflationary centralised currencies will work just fine. The banks and governments will realise that if they issue digital pound notes and dollars secured by cryptography it will have huge advantages for them and virtually no disadvantages. They won't have to keep manufacturing silly little tokens, cash transactions will be simpler, it will be easier for them to keep track of cash transactions, reduce tax avoidance, makes robberies and counterfeiting difficult or impossible, invalidate stolen cash through the central servers. Also it will be quite simple to implement it transitionally. In fact bitcoin will be quite useful in introducing everybody to the concept. Everybody will be scanning QR codes with their phones and nobody even has to do any maths to work out change. This will happen! Cash fiat currency will become a crypto currency.
When it does happen the problem of exchanging fiat for deflationary decentralised currencies will not be such a problem. And hopefully we will already have built the solution to centralised exchanges: A p2p incremental exchange! I want to exchange my LTC or BTC for digital fiat. I register and deposit the increment of, say, 1BTC,with the exchange. I put in my bid or offer to exchange my BTC with LTC. Bids and offers are matched, p2p, and the exchange begins between our multi currency wallets. The exchange happens in increments of 1BTC (or equivalent in LTC). The exchange happens directly between the client wallet software. 1BTC is transferred one way then the equivalent in LTC is transferred in the other direction. This continues, 1 BTC (or LTC equivalent) at a time, until the exchange is complete. This is automated by the wallet software. If either client stops the transaction the server holds the increment amount to even up the transaction. The increment value can be raised. Transactions happen client to client and the exchange only has to hold the increment amount.
All that is left is to build open source client and server software. A multi currency wallet with ability for incremental p2p transactions and open source exchange software. When fiat currency becomes a crypto currency it can easily be integrated.
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