[2017-08-18] Bank of Canada Consultant Proposes Bitcoin-based Financial System

[moriskarlov]

Bank of Canada research consultant Warren E. Weber proposes a financial system that uses the cryptocurrency Bitcoin as the standard currency instead of the fiat currencies.

In his 37-page long research report, Weber referred the digital currency as the “Bitcoin standard.”

Major points of the report

In his report, Weber examined the similarities between the gold standard and Bitcoin standard.

Among the most glaring alikeness between gold and Bitcoin is the absence of control of central banks or monetary authorities, as well as the limit of their supply.

Under Bitcoin’s algorithm, there are only 21 mln tokens that are allowed to be mined and circulated, while the amount of gold on earth can only be found in finite quantities.

The report also showed that like gold, there will also be three distinct media of exchanges under the Bitcoin standard.

Under the standard, Bitcoin will become the main currency, while there will be fiduciary currencies that will be issued by the central banks of different countries, as well as fiduciary currencies like banknotes or deposits that will be issued by commercial banks.

Expected benefits of the Bitcoin standard

Weber’s report also cited the possible economic benefits of adopting the Bitcoin standard. One major benefit is that the people will be able to forecast the price level of the digital currency more easily due to the “known, deterministic rate” at which the cryptocurrency is established.

Another key benefit is that the investment resources that are presently allocated to hedging against fluctuations in the currency exchange rates will be freed up and can be used more productively.

Weber, however, believes that the Bitcoin standard will not become a reality due to the expected heavy opposition that will be raised by central banks and governments around the world.

    “If the Bitcoin standard becomes real, neither the governments nor the central banks will be able to implement interest rates to affect their economies, neither could they generate seigniorage revenues obtained from their ability to ‘almost costlessly create money.”

>>> https://cointelegraph.com/news/bank-of-canada-consultant-proposes-bitcoin-based-financial-system

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[iram1011]

Bank of Canada research consultant Warren E. Weber
Weber, however, believes that the Bitcoin standard will not become a reality due to the expected heavy opposition that will be raised by central banks and governments around the world.

    “If the Bitcoin standard becomes real, neither the governments nor the central banks will be able to implement interest rates to affect their economies, neither could they generate seigniorage revenues obtained from their ability to ‘almost costlessly create money.”

Definitely there would be a heavy resistance from the government and central authorities. They can't let a decentralised currency to become a standard currency where they won't have any control. Government and banks were already wary of Bitcoin and Altcoins and they are just legalizing it in some countries because unfortunately they can't kill it, so are developing a give and take system with Bitcoin and thus ensuring a control over exchanges.

[Siren]

Bank of Canada research consultant Warren E. Weber
Weber, however, believes that the Bitcoin standard will not become a reality due to the expected heavy opposition that will be raised by central banks and governments around the world.

    “If the Bitcoin standard becomes real, neither the governments nor the central banks will be able to implement interest rates to affect their economies, neither could they generate seigniorage revenues obtained from their ability to ‘almost costlessly create money.”

Definitely there would be a heavy resistance from the government and central authorities. They can't let a decentralised currency to become a standard currency where they won't have any control. Government and banks were already wary of Bitcoin and Altcoins and they are just legalizing it in some countries because unfortunately they can't kill it, so are developing a give and take system with Bitcoin and thus ensuring a control over exchanges.

The report was quite intriguing. Although he raises some valid points, but I don't think also that any government would simply allow crypto's to rule over fiat. For sure this will create a lot of stir around the country, but it makes sense to me because I think Canada is has a lot of bitcoin enthusiast however, the government is in gray area as far as bitcoin adoption is concern.

I hope Weber is not pro bitcoiners and he created this report unbiased on the current situation. Let's see how the government of Canada will react to such controversial report.

[HTracer]

Bitcoin Standart is excellent research. Found PDF on Bank of Canada site and downloaded to look through on weekend. The proposed approach with fiduciary issues by local banks would be solution for a community usage cryptocurrencies in everyday life.

[JemmaColin]

Bitcoin Standart is excellent research. Found PDF on Bank of Canada site and downloaded to look through on weekend. The proposed approach with fiduciary issues by local banks would be solution for a community usage cryptocurrencies in everyday life.

The main thing is that bitcoin does not become centralized after such actions. I do not understand why banks want to use bitcoin. They are created for a centralized currency, not for the Crypto currency