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Author Topic: ‘We Welcome Anonymous Cryptocurrencies’ : US Federal Reserve Breaks Down Bitcoin  (Read 125 times)
Victorycoin (OP)
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April 24, 2018, 06:49:36 AM
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The Federal Reserve Bank of St Louis, one of 12 regional Reserve Banks that make up the United States’ central bank, has conducted a study asking some of the biggest questions in cryptocurrency today – and they may have found some real answers.

Their researchers investigated the control structure of various currencies and looked into whether central banks will adopt cryptocurrencies as a form of payment.

Commodity, Cash, or Digital?
In an effort to assign Bitcoin one of the above monetary categories, the researchers concluded that Bitcoin actually defied traditional categorization – it’s none of the above, as shown in the chart below.

https://www.ccn.com/us-federal-reserve-bitcoin-study/

I didn't see the usually finger pointing at Bitcoin by the authorities - Bitcoin facilitates crimes blah blah blah! Can we say, they're now beginning to think straight, especially as there're emerging news of the authorities from different climes, like South Korea,Sweden, etc becoming quite upbeat about Bitcoin and cryptocurrency?



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jseverson
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April 25, 2018, 08:53:00 AM
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Wow, this is so surprising I don't even know what to say lol. They basically acknowledged that Bitcoin is money and gold in a single package, and actually lauded decentralization. Very objective take on the subject in my opinion.

The bank feels that it is naive to expect a central bank to issue a cryptocurrency given the logistical problems and unnecessary risks involved. Because of the option of complete anonymity, the bank would risk facilitating money laundering and other crimes which commercial banks are obligated by law to take measures against.  The researchers acknowledge the benefits of allowing anonymous transactions in situations where a government is oppressing citizens, but feel that it is not appropriate for any government authority to actively facilitate anonymous transactions due to their obligation to collect tax and prevent money laundering.

This is what truly stood out to me though. This just seems to relevant because so many countries seem to want to release their own crypto lately. This, of course, is their own view of the matter, and others may have different opinions, but this tells us those who are interested in releasing their own aren't releasing true cryptos. They're not going to be anonymous, they're not going to be centralized, and they're going to be made not for the people, but for the government itself. One example is Petro, which is Venezuela's answer to sanctions.

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April 25, 2018, 09:43:33 PM
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...

This is what truly stood out to me though. This just seems to relevant because so many countries seem to want to release their own crypto lately. This, of course, is their own view of the matter, and others may have different opinions, but this tells us those who are interested in releasing their own aren't releasing true cryptos. They're not going to be anonymous, they're not going to be centralized, and they're going to be made not for the people, but for the government itself. One example is Petro, which is Venezuela's answer to sanctions.
There's a common misunderstanding when it's about governments (or the central banks) and the national cryptos. Countries are not going to release a new kind of cryptocurrency for themselves. All they want to do is to change the backend of the current 'digital fiat' in order to cut the costs of the current systems, which requires a lot of manual interventions and checks. If they can upgrade their current system to a blockchain-like system (more or less automated system) they will have some great improvements, compared to the current systems. This means they will be able to track the transactions more easily and they will need less staff who manages the system (less headcount, less cost).
The governments won't create anything decentralized or anonymous, that's not their interest...
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April 25, 2018, 09:58:03 PM
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Isn't it interesting how a lot of institutional money reportedly entered in to bitcoin in 2017 and now in 2018 we are starting to see more of an acceptance from these institutions and the governments that they so often manipulate through one means or another.

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April 25, 2018, 10:53:10 PM
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I found the article quite misleading. At first the researchers from one of the regional central banks of USA said,
Quote
“We believe that there is a strong case for central bank money in electronic form […] central bank electronic money satisfies the population’s need for virtual money without facing counterparty risk."

This above statement talks about counter party risks that may arise from the adoption of cryptocurrency. This statement actually talking positive about the bank issued virtual currency. No mention of cryptos. Now the second statement is,

Quote
“it makes little sense for central banks to issue cryptocurrencies even though it would be straightforward from a technological point of view to do so”

This statement essentially negates the need of cryptocurrency to be infused into banking system. While the earlier statement maintains the positivity towards bank issued virtual currency which will be strictly centralized and controlled by the banks. Now the third statement says,

Quote
“Once we remove the decentralized nature of a cryptocurrency, not much is left of it. As shown in Figure 1, virtual money that is centralized and issued monopolistically by a central bank is electronic central bank money.”

They are talking about removing the decentralized nature of cryptocurrency!! It is like a change in basic characteristic of cryptos. This statement is adding more weight to the monopolistically issued cryptocurrency that will be controlled centrally and they are mentioning such kind of cryptocurrency can be one alternative to the virtual currency issued by banks.

I see no positive though towards any open market cryptocurrency in the entire article. They could not even categorize bitcoin as a form of currency. This article and the subject line is misleading and US banks are maintaining the stance against decentralized cryptocurrency. Nothing to cheer about!

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April 26, 2018, 07:40:03 AM
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There's a common misunderstanding when it's about governments (or the central banks) and the national cryptos. Countries are not going to release a new kind of cryptocurrency for themselves. All they want to do is to change the backend of the current 'digital fiat' in order to cut the costs of the current systems, which requires a lot of manual interventions and checks. If they can upgrade their current system to a blockchain-like system (more or less automated system) they will have some great improvements, compared to the current systems. This means they will be able to track the transactions more easily and they will need less staff who manages the system (less headcount, less cost).
The governments won't create anything decentralized or anonymous, that's not their interest...

That was initially my understanding as well, but then Petro came along, which was completely discrete from the Bolivar. I realize it may be a special case, but it's the only case we have at the moment.

-snip-

The point the section you quoted was trying to make is that it would make no sense for banks to create their own cryptocurrency.

  • 1st statement: The counterparty risks mentioned refers to risks banks would have to take should they create their own cryptocurrency. It has nothing to do with users and adoption.
  • 2nd statement: I would use the word "issue" over "infuse" because banks issuing cryptocurrencies is what this section is about.
  • 3rd statement: It basically highlights central banks' need for centralization. If they were to make one, they would have to remove the decentralized aspect. If that happens, then it really wouldn't be cryptocurrency anymore. It's not saying every crypto should be centralized, it's saying bank-controlled ones should be.

In the end, they concluded that anonymous cryptocurrencies protect citizens from bad governments, and they welcome it for that. I would personally cheer for that.

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April 26, 2018, 08:30:54 AM
 #7

although it says anonymous bitcoin will still be accepted by many world communities

I am optimistic that bitcoin will become a means of payment all over the world

in my own opinion to make bitcoin as a means of payment that needs to be done is to control the bitcoin user's data like indodax.com example he is one of the largest diache exchager they manage their users by validating their users' self data.

regardless of US Federal Reserve Breaks Down Bitcoin
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