New block chain owned by the banksters?

[mpfrank]

I just had a troubling thought...  Bear with me for a scenario.

What if some smart person high up in the echelons of international banking took a close look at Bitcoin, and said, "You know, this would be a great mechanism for storing bank reserves, to handle inter-bank transfers and international settlements, to back sovereign currencies and make hyperinflation impossible, etc., etc."

They then convince their higher-ups at the World Bank, IMF, Federal Reserve, Bank of International Settlements, etc., to, by group consensus (and pressure on the world's governments, their puppets), institute a new kind of "gold standard," but one that was based on easily transferable, easily verifiable Bitcoins instead of on actual gold.

But, they consider, why give all the early adopters of the existing Bitcoin network a handout?  Let's instead just start a brand-new block chain, and a brand-new peer-to-peer network (from scratch), and agree among ourselves to use it instead of the existing one.  Outsiders (outside the financial industry) could be locked out of the new network, by some proprietary VPN with a login scheme known only within the banker old-boy network, never to be leaked (under penalty of Uncle Guido from Sicily coming to your house and breaking all your family's legs).

These "New Bitcoins" would exist only at the "back end" of the international banking system, and would never be seen by most people (any more than gold bullion is today).  Ordinary Dollars and Euros and so forth might come to be backed by them, and be theoretically convertible to them, but most people wouldn't be able to do so (because they don't have access to the bankers' internal network which is the only place that exchanges them).

So, the point of this post is, I'm worried that instead of *ever* accepting *our* (today's) Bitcoins, the bankers would just do the above instead - because it maintains power and control of the monetary system in their hands.  They are all about power.

Any thoughts?

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[FreeMoney]

A new restricted chain is not as good as an old open chain. It's just a bunch of bits, it gets it's value from people wanting to have it.

If you want to restrict access just pick someone to hold the database. What you describe has the expense of hashing and not the benefit of being decentralized.

[cunicula]

Currently the reserve currency is the USD. I hope you don't mind if I am a little flippant.

World Bank, IMF, Federal Reserve, Bank of International Settlements = Bitches of the US gov't

US gov't = happy that the reserve currency is the USD.

New plan = could open up opportunity for countries like China, Russia, which don't like using USD a reserve currency

->

World Bank, IMF, Federal Reserve, Bank of International Settlements = "status quo helps maintain stability of international financial markets"


I'd be more worried about private entrepreneurs developing a better bitcoin rather than the gov't doing it.

[mpfrank]

A new restricted chain is not as good as an old open chain. It's just a bunch of bits, it gets it's value from people wanting to have it.

If the bankers all agreed to use it as their reserve currency, *they'd* want to have it.  All the banks would set up big mining rigs in their basements.  

If you want to restrict access just pick someone to hold the database. What you describe has the expense of hashing and not the benefit of being decentralized.

It would be decentralized to a limited extent, among the banks.  It would not necessarily be any smaller than today's network.  Suppose today there are 60,000 nodes (number of Mt. Gox accounts).  There are probably at least that many banks in the world.

[faille]

bitcoin gets it's value from being open source and transparent. Having a closed system that uses sometime similar loses a lot of that value.

[myrkul]

[FreeMoney]

A new restricted chain is not as good as an old open chain. It's just a bunch of bits, it gets it's value from people wanting to have it.

If the bankers all agreed to use it as their reserve currency, *they'd* want to have it.  All the banks would set up big mining rigs in their basements.  

If you want to restrict access just pick someone to hold the database. What you describe has the expense of hashing and not the benefit of being decentralized.

It would be decentralized to a limited extent, among the banks.  It would not necessarily be any smaller than today's network.  Suppose today there are 60,000 nodes (number of Mt. Gox accounts).  There are probably at least that many banks in the world.

Why would a bank want to hold these things? They can't loan them out to people, they can't buy stuff from people. It's just a database to them and it may as well not be in a block chain.

[blogospheroid]

Nobody wants a currency that cannot be inflated EXCEPT PRODUCTIVE HUMAN BEINGS. Except a network of productive human beings.

The reserve currency is a burden that no country wants, provided the country as an entity, could think.

China, if it wants today, can overthrow the USD without any issues. It has a huge manufacturing capacity. With the Yuan, you can buy almost every manufactured good in the world. Yet China is only slowly expanding the usage of the yuan in trade, because it is afraid that seeing the future, a bunch of speculators will come and buy the yuan, reducing any cost advantage that chinese exporters have.

China has NUCLEAR WEAPONS, people. China is not afraid of the US dollar becoming too expensive, China is afraid of the US dollar becoming too cheap. If it were not for their relentless purchasing of treasury bonds, the USD would have become toilet paper a long time ago.

If the bank coin gets created, what is the incentive of the powerful to give up their trust based system to move to a non-trust based system, a proof-of-work system? In the trust based system, they are king, in a non-trust based system, they are another node.

If bankers wanted a non-inflationary system, they could have stuck to gold.

[becoin]

The reserve currency is a burden that no country wants, provided the country as an entity, could think.

This is completely wrong. If your domestic currency is the world reserve currency as well this is not a burden, but a huge competitive advantage! Some countries are even willing to start wars to keep the status quo.

[markm]

It turns out that various people high up in the echelons of intergalactic banking took a close look at Bitcoin, and said, "You know, this would be a great mechanism for storing bank reserves, to handle inter-bank transfers and intergalactic settlements, to back sovereign currencies and make hyperinflation impossible, etc., etc.", thus giving rise to Martian BotCoins, United Kingdom Britcoins, Canadian Digital Notes, CZech Bitcoins, {galactic|} United Nations Shares and on and on and on.

So don't worry about a few puny earthling bankers on one puny planet in one minor galaxy, they are not nearly as important as some of them might like to think they are.

-MarkM-

[TraderTimm]

Banks are ponderously slow organizations. They fear new things, mostly because it has taken them so long to even integrate technology like Automated Teller Machines, and they don't like change. (Or spending anything on change. Don't snort, try working in an IT department in a bank. Bare minimum budget.)

They already have a method to transfer money on a private network. It's called SWIFT.

http://www.swift.com/about_swift/index.page?

What we're trying to do is circumvent them entirely, and we will, it just takes some time to have the idea percolate completely through the internet out into the world. Don't worry about concocting scenarios where bitcoin fails, rather, try to conceive of ways bitcoin can be integrated into transactions 'out there'.

The rest will follow, naturally.

[3phase]

Banks are ponderously slow organizations. They fear new things, mostly because it has taken them so long to even integrate technology like Automated Teller Machines, and they don't like change. (Or spending anything on change. Don't snort, try working in an IT department in a bank. Bare minimum budget.)

They already have a method to transfer money on a private network. It's called SWIFT.

http://www.swift.com/about_swift/index.page?

True, and SWIFT sucks. I pay fees of 0.5-1%, I have to submit EVERY TIME anti-money laundering documentation to prove that I am not an elephant, my money disappears for a few days, and they magically appear in the receiver's account. In the meantime, NOBODY can answer where is the money. It's supposed to be "moving". Plus I need to ask EVERY TIME for the bank to send me a receipt.

WAIT!!! Eureka !!! Maybe they are already using Bitcoin and they are waiting for 120 block confirmations !!!!! That's why it takes so long. Bastards...

[beeph]

what you probably consider lots of money like 30 million to some early founders is nothing to a bank and they wouldnt even flinch at it..
many startup companies are valued in the billions when the banks come in and start buying shares/IPO'ing them

if they start a new block chain it will be for some other reason, the early founders having some chump change wont even enter their decision making process.

[blogospheroid]

The reserve currency is a burden that no country wants, provided the country as an entity, could think.

This is completely wrong. If your domestic currency is the world reserve currency as well this is not a burden, but a huge competitive advantage! Some countries are even willing to start wars to keep the status quo.

It is an advantage to the currency issuers, but not to those whose costs are denominated in that currency - which basically means almost all productive people in that country.
The only way that people will be happy with having a reserve currency is if the newly issued money is given to them.

[mpfrank]

what you probably consider lots of money like 30 million to some early founders is nothing to a bank and they wouldnt even flinch at it..
many startup companies are valued in the billions when the banks come in and start buying shares/IPO'ing them

if they start a new block chain it will be for some other reason, the early founders having some chump change wont even enter their decision making process.

If Bitcoin truly took over the world economy, the founders' piece of it would no longer be chump change.  There is ~$2 trillion in physical US bills (Benjamins etc.) out there, and only at most about 20 million BTC, so if Bitcoin was as widely used (as a base currency) as the US dollar is, then each BTC would be worth ~$100,000.  So, if Satoshi (for example) holds something like 1 million BTC, then he becomes worth the equivalent of *100 BILLION* US dollars.  Not that he doesn't deserve it.