Ruh Roh, bitcoin on the radar of the IMF?

[telemaco]

Another issue. What would happen on a war economy. We have been living a long period without wars but that won't continue for long (i hope that is not true). On a war economy and under war laws states could exert extreme violence to anyone using bitcoin or entire regions of countries could just shutdown the internet like north korea or lybia during revolts. What would happen? many forks?

Haven't we been at war for the last 12 years?

we the US,  has been at war since ww2

But ya that wont ever really be a problem in my lifetime, we have two very large oceans that do a damn good job of protecting us from wars on our land. Barring an EMP from some terrorist/China/NK(hahahahaha ya right, you need a functioning ICBM for that)/Russia/Iran?all-the-other-palces-that-hate-us we should be ok.

I wouldn't put much faith on those canadians, you never know 

[acoindr]

There is a difficulty target which recalculates about every two weeks to see whether the difficulty should rise or be lowered. A single retarget never changes by more than a factor of 4 to prevent large changes in difficulty.

Difficulty is recalculated every 2016 blocks regardless of the time it took to make them. It's *suppose* to be 2 weeks, but in the context of some cryptographic super horsepower device that can do googolhashing, it only lasts a very short while. only about 8000 blocks can be generated in a short time before it goes back to 10 minute blocks at that hash power.

Yes every 2016 blocks is right. I included the target link but I probably should have put that in parentheses too.

The super horsepower device would quickly be detected and probably provoke a response from the Bitcoin network of support. The super device might win a fair number of blocks before the Bitcoin network caught and surpassed it, but it wouldn't mine all the bitcoins which is the original point.

[BCB]

Ah, the chicago school of economics...  Fascist scumbags, brainwashed idiots, and psychopathic criminals.

I will contact them again. I spoke to them in 2011 and was invited to come back. Let's charm them, not hate on them. If they can be brainwashed once, then I can do it to them also.  

http://www.chicagobooth.edu/alumni/events/showEvent?eventId=2868
Look at this.

RodeoX

That would be awesome if you could go bank and help them UNDERSTAND!

[marcus_of_augustus]

"Since the proposed system relies on the completely voluntary participation of Bitcoin users, the incentive to hold on to Bitcoins creates a serious problem."

Can't believe this guy wrote this statement. Do they have a cookie-cutter for producing facists in economics somewhere?

"Bitcoin is our currency, but it is your problem" ... fits about here I think.

[wachtwoord]

"Since the proposed system relies on the completely voluntary participation of Bitcoin users, the incentive to hold on to Bitcoins creates a serious problem."

Can't believe this guy wrote this statement. Do they have a cookie-cutter for producing facists in economics somewhere?

"Bitcoin is our currency, but it is your problem" ... fits about here I think.

To them, voluntary is a swear word apparently. Who put them in charge again?

[bitzox]

we the US,  has been at war since ww2

+ like several thousand to this...fucking military industrial complex

[jedunnigan]

Wrote about it a few days ago. Pulled out the highlights. Some commentary at the end: https://btcgsa.wordpress.com/2013/06/03/bitcoin-and-the-imf-friends-fornever/

[johnyj]

Who wrote this article??? Lack of basic understanding of shorting a currency. If IMF really helped, Soros won't beat the bank of england by shorting Pounds, won't attack the southeast asia by shorting their currency either. Speculative attack typically happens when a country is overly loaned and there are plenty of fiat can be borrowed at a low interest

To short a currency, you just borrow it and then sell, in forex trading you can use leveraged trading to add to your power, and buy it back at a lower price. You can always short a currency on forex market, no matter there is bitcoin or not. And there is no such thing like you must support the currency exchange price by using bitcoin to buy your currency, you can always use USD reserve to support your currency exchange price

The only valid concern is that BTC might have devastating power over some small countries if its value gained too much, but that is another topic: What rich people will gain by destroy poor people's life???

[cypherdoc]

"Bitcoin is our currency, but it is your problem" ... fits about here I think.

Lol!

Best post of the month year !

[darkmule]

Other possibility. What happens with bitcoin when there is no internet, when 3G lines are switched off and there are not even mobile lines for failing infrastructures or in zones with inhibitors? What would happen with Bitcoin?

What happens when pigs grow to gigantic sizes, grow enormous wings, and start dropping nuclear pig shit on all of us?

[xavier]

Screw all of them!!

Bitcoin will win eventually, just you see..

[pimms4london]

The author also had a lot of good things to say about Bitcoin. For example, he said that digital currencies are a superior medium of exchange, a superior measure of worth, and a superior store of value. Those are the core principles of any currency.

And, my favorite:

Hayek’s predictions about private currencies seem to be coming true before our very eyes: as the world struggles to recover from the recent global economic crisis, more and more people are losing confidence in traditional currencies and turning to Bitcoin as a private, easy-to-use, digital alternative.

[eMansipater]

Agreed.  How on earth could this paper be spun as anti-Bitcoin?  Who all here actually read it before jumping on the FUD bandwagon?

Both proposals for how the IMF member countries can reduce their risk with respect to Bitcoin require them to purchase bitcoins at market rates.  This paper is incredibly forward-looking and valuable, even if it is in an obscure journal.  Some slight misunderstanding of the block chain, mining, and the mt gox hack, but overall not too shabby.  This person's understanding of Bitcoin will only increase over time, and it's valuable to have people who understand Bitcoin publishing papers on opportunities for the IMF.

[pimms4london]

I agree. I feel like BTC supporters are so used to being a misunderstood minority that we react with hostility to things we don't really understand (another example: Ripple). Despite the negative reactions here, I think that this is overall a positive article.

[bitcoinism]

Who wrote this article??? Lack of basic understanding of shorting a currency. If IMF really helped, Soros won't beat the bank of england by shorting Pounds, won't attack the southeast asia by shorting their currency either. Speculative attack typically happens when a country is overly loaned and there are plenty of fiat can be borrowed at a low interest

To short a currency, you just borrow it and then sell, in forex trading you can use leveraged trading to add to your power, and buy it back at a lower price. You can always short a currency on forex market, no matter there is bitcoin or not. And there is no such thing like you must support the currency exchange price by using bitcoin to buy your currency, you can always use USD reserve to support your currency exchange price

The only valid concern is that BTC might have devastating power over some small countries if its value gained too much, but that is another topic: What rich people will gain by destroy poor people's life???

I don't understand that either. Does anyone know why bitcoin would make such an attack more feasible? I guess maybe it's just that the IMF has plans in place to try to stop a traditional attack but hasn't spent much time thinking about bitcoin.

[Anenome5]

There is an easy way for them to deal with bitcoin, all they have to do is buy them all and erase the wallets.

Actually we could run the entire world economy on one bitcoin. I don't think they'd be able to buy them all by any means. The attempt would only make the price shoot through the roof and speed adoption of bitcoin.

But alt currencies are like potato chips, we'll make more.

Indeed. They're likely to try their best to saddle bitcoin with fetters rather than trying to destroy it because bitcoin the idea is a hydra with a thousand heads, and lopping off the first will avail them nothing except to rile up users who will fight back at the injustice of it with renewed energy. They don't want to make a martyr of bitcoin, they want to make a compromiser out of it, to adopt it into the fold and corrupt it with pernicious choices. They don't understand it, and they won't outright destroy that which they don't understand for fear of provoking the sleeping beast to anger by a misdirected attack.

Ultimately what I expect is for their own activities to lead them into crisis on their own terms and bitcoin to simply take over from the resulting chaos. When the crowd moves they have no choice. It will be a grand day when that happens.

[Anenome5]

...which means that IMF's member countries (ie the world over, the exception being North Korea) would have to buy ... you guessed it ... bitcoins!!!

$1mil per bicoin anyone?

Yeah! I actually expect they'll choose to do this at some point. That will make today's price look cheap. Again, the incentives regarding bitcoin urge early adopters to move fast and hard. The first central bank to buy a substantial reserve of bitcoin is likely to see that reserve double and triple in value by the time the news hits. And I would expect China to be the first one to do it, just as a wild guess.

[Anenome5]

I think bitcoin would be far more secure if there were some kind of open wifi or similar project around the world to provide internet no matter what happens.

/r/meshnet?

[cdog]

If you want to know more about the IMF, this is an interesting read: http://www.amazon.com/Confessions-Economic-Hit-John-Perkins/dp/0452287081

[Luckybit]

Just ran across this paper by University of Chicago professor Nichloas Plassaras, titled "Regulating Digital Currencies: Bringing Bitcoin Within the Reach of the IMF." Hope you've got your barf bags ready:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2248419

Things get interesting (not in a good way) starting with page 17: "The Dangers of an Unregulated Bitcoin." It begins, "As Bitcoin continues to grow in popularity and value, it poses an increasingly serious threat to the stability of the foreign currency exchange and, by extension, international commerce. Recall that the IMF was created to tackle two global economic problems: the artificial devaluation of one’s currency to gain an economic advantage; and unstable exchange rates between various currencies. Bitcoin cannot trigger the first concern because the algorithm that supports it prohibits users from artificially manipulating its value. Bitcoin does, however, have the potential to create severe and possibly irreversible fluctuations in the foreign currency exchange. Specifically, Bitcoin poses a liability to the IMF and its member nations in the event it is used in what is referred to as a 'speculative attack' on another currency."

Did anyone catch that little slight of hand? It took me a couple readings before it dawned on me: "Bitcoin cannot trigger the first concern [artificial currency devaluation] because the algorithm that supports it prohibits users from artificially manipulating its value. " In other words, bitcoin is IMPOSSIBLE to devalue by direct manipulation—the oldest and most powerful destabilization tool in the IMF's playbook!—which is precisely WHY bitcoin is such a threat to the global central banking system. This paper is teeming with this kind of Orwellian doublespeak.

Now, I don't fancy myself the least bit knowledgeable about currencies, or about the IMF's role in managing global currency exchanges; if I had to hazard a guess I'd say that the IMF's boilerplate description of its own role is probably a gross distortion of its true purpose, at best. However, I DO know a bit about the IMF's record in other arenas, which generally involves looting the economies of underdeveloped nations by saddling them with unsustainable debt and then attaching draconian "conditionalities" to their repayment plans—forcing them to sell off public infrastructure and utilities, slash public payrolls, raise taxes and fees, etc.—all so that their victim's budget can replace these "luxuries" with astronomical debt service. I also know it's played a major role in destabilizing countries' currencies over the last 4 decades, particularly in South America (in direct contradiction of its stated mission, obviously). So needless to say a paper begging for the IMF's intervention into bitcoin made the hairs on the back of my neck stand up.

While there's too much nonsense here to parse paragraph by paragraph, check out some of the absolutely absurd assertions in this paper (page 18, last graph):

"Herein lies the threat posed by Bitcoin. In the event that a wealthy Bitcoin investor—or a number of Bitcoin investors—launch a speculative attack on a currency, what can be done to counter it? In theory, individual countries could diversify their reserve portfolio by purchasing Bitcoins from an online exchange. But if a central bank’s reserve is unable to absorb the maturity mismatches suffered by its central banks, who can it turn to? The IMF has no supply of Bitcoins; indeed it has almost no way to obtain them directly. The IMF obtains currency via the quota system and the IMF can only collect quotas from its members. Bitcoin is neither a member of the IMF, nor could it become one if it wanted to—IMF membership is only open to nation-states. The IMF could try to purchase its own reserve of Bitcoins, but whose money would it use? Which part of the IMF’s general fund would it deplete? In short, Bitcoin’s potential to become a major player in the foreign currency exchange raises a number of substantial questions for the IMF. In its current state, the IMF would be unable to supply the currency needed to counter the destabilizing effect of a speculative attack by Bitcoin users on a member nation’s currency."

The IMF has no way to obtain bitcoins, because it can't decide which of its funds to tap, and it's physically incapable of buying them? A few wealthy bitcoin investors have the juice to bring down entire currencies? What a load of horseshit. The true meaning of this paper should be absolutely clear: bitcoin has the potential to be a direct threat to the global central banking regime because it is immune their manipulation/politicization, and it must be regulated or controlled before it becomes big enough to be a serious competitor. Take this proposed "solution" to the "danger" of bitcoin (page 21):

"There are, however, two ways to incorporate Bitcoin into the IMF’s regime. The first option is to grant the IMF indirect control over Bitcoin by expanding the interpretation of an already-existing provision of the IMF. This approach requires the least amount of change and leaves the overall IMF framework mostly intact. The second option is to grant the IMF more direct control over Bitcoin by granting it and other digital currencies quasi-membership status. This more radical approach would require and amendment of the Articles of Agreement and would fundamentally alter the existing framework’s conception of a non-state actor’s role in the IMF."

Again, I don't claim any special knowledge about global currencies, economics, or finance; however, when a professor from a neo-liberal training ground like UC makes a statement like "the first option is to grant the IMF indirect control over bitcoin" (on what authority?)—and suggests that the financial powers-that-be should be willing to consider re-writing IMF treaties and bylaws and literally RESTRUCTURING THEIR ORGANIZATION in order to assimilate bitcoin—you'd better believe that the digital p2p currency revolution has the full attention of the global financial terrorists.

Thoughts?

All the IMF has to do to protect itself from that mythical threat is to buy Bitcoins. No one is stopping them. Most of the Bitcoin community would welcome them to do it because the values would go up. I don't see the issue. The IMF has billions and can become a Bitcoin shareholder itself.