Alderney looks to cash in on virtual Bitcoins with Royal Mint reality

[Wilikon]

http://www.ft.com/intl/cms/s/0/4903fc9a-591f-11e3-a7cb-00144feabdc0.html


The tiny Channel Island of Alderney is launching an audacious bid to become the first jurisdiction to mint physical Bitcoins, amid a global race to capitalise on the booming virtual currency.
The three-mile long British crown dependency has been working on plans to issue physical Bitcoins in partnership with the UK’s Royal Mint since the summer, according to documents seen by the Financial Times.

It wants to launch itself as the first international centre for Bitcoin transactions by setting up a cluster of services that are compliant with anti-money laundering rules, including exchanges, payment services and a Bitcoin storage vault.
The special Bitcoin would be part of the Royal Mint’s commemorative collection, which includes limited edition coins and stamps that are normally bought by collectors. It would have a gold content – a figure of £500-worth has been proposed – so that holders could conceivably melt and sell the metal if the exchange value of the currency were to collapse.
The hype surrounding Bitcoin has escalated in recent months and its market value has rocketed; the price of a single Bitcoin hit a new peak of $1,242 on Friday on the Mt Gox exchange, established in Tokyo in 2009 as a trading card exchange.
Critics warn of a speculative bubble although its proponents believe that the currency could be widely adopted as a method of making payments outside the traditional banking system. Ben Bernanke, chairman of the Federal Reserve, and other government officials around the world have said virtual currencies could have benefits if they can be regulated to prevent money laundering.
In depth

Bitcoin
Bitcoin
Increased trading in the decentralised virtual currency has begun to attract the attention of regulators
Holders of the Alderney Bitcoin would not be able to spend it in stores but would be able to exchange it for a virtual Bitcoin by travelling to the island.
Alderney hopes that by minting the first physical Bitcoin it will raise its profile as the “go-to” destination for the virtual currency, as it seeks to expand its offshore credentials beyond the online gambling sector.
David Janczewski, head of new business at the Royal Mint confirmed it had been approached by the finance minister of Alderney to “explore the possibility of manufacturing a physical commemorative coin with a Bitcoin theme”.
“Discussions have not progressed further and at this stage it remains nothing more than a concept,” he added.
But the controversy around Bitcoin has made the Alderney plan a sensitive subject. The Treasury, which owns the Royal Mint, declined to comment on the plans. George Osborne, the British chancellor, also holds the title of Master of the Mint.
The plans have been steered by chairman of the island’s finance committee, and are understood to have the support of Alderney’s president, although they still need to be approved by the island’s 10-member parliament.
A number of private companies have produced physical Bitcoins, although they are not backed by an official mint. Instead they feature a holographic strip, which is peeled off to reveal the private key then redeemed online.
How would Alderney’s plan work?
An independent company will provide the Bitcoins. If the price plunged, neither Alderney nor the Royal Mint would lose anything.
The company would put the Bitcoins in an escrow account at an agreed price.
Meanwhile, the Royal Mint would take customers’ orders for its minted Bitcoins and receive money from those coin sales.
The virtual Bitcoins backing the physical coins would be held in digital storage facilities by Alderney.
The Mint would issue the commemorative Bitcoin, paying for the value of the gold content itself. Alderney would receive royalties from sales of the coins.
Coins could be redeemed for sterling at any point in Alderney for the price of a Bitcoin on that day.

[1714185785]

1714185785

[Minecache]

I posted this yesterday. It was all but scoffed at as insignificant news, nothing to see here.

So there you know.

[crazy_rabbit]

I posted this yesterday. It was all but scoffed at as insignificant news, nothing to see here.

So there you know.

Wow, a bit hurt huh? Anyway, I think it's cool news. A strange idea to say the least, but cool news.

[Minecache]

Oh no, like you I think it's fantastic news.

But some people on here clearly expect everything on a plate over-night. 

[Wilikon]

I posted this yesterday. It was all but scoffed at as insignificant news, nothing to see here.

So there you know.

I feel your pain 

[lolstate]

There is also an interesting Editorial discussing Bitcoin:

Banking on Bitcoin - Virtual currencies could rival banknotes, but not bankers

If a small city state had adopted Bitcoin as its national currency, it would now be in the grip of deflation as foreign speculators siphoned away its supply of the virtual currency. Money would be scarce, and prices would fall dramatically. Authorities might try to lift prices but they would lack one of their most powerful tools. Central bankers can create money at will, by printing notes or creating deposits. Bitcoin is based on digital tokens, which are generated at an unalterable rate by cryptographic algorithms running on the computers of volunteers, making it impossible to match supply to demand. This is an improbable fantasy. But Bitcoin’s undulating value makes it unsuitable for all but the most limited purposes. Speculators are the keenest acquirers of the currency. For some, it is a way of stashing wealth where authorities cannot find it. Others want to make purchases without leaving an obvious trace. Silk Road, the online contraband emporium that was closed by authorities last month, was one of the few businesses to insist on payment in Bitcoin. But many prices were pegged to the dollar; the virtual money served merely as a way of disguising the flow of hard currency.

Still, if Bitcoin’s applications are limited, its emergence as a workable means of exchange nonetheless reveals something surprising. Friedrich Hayek argued that the government should cede its monopoly over the money supply, leaving consumers free to choose between competing currencies. It turns out that they were already freer than they thought. Authorities have so far tolerated the virtual currency. Yet the product of the state-owned incumbent has proved more attractive than Hayek expected.

The experiment is an indication of how monetary systems might change in future. Many believed it impossible to create a form of electronic cash that did not rely on a bank to keep tabs on account balances. Bitcoin proved them wrong. But many are uneasy about reversing the technological accident that has made financial transactions more traceable in the era of electronic banking.

Some see tamper-proof virtual currencies as preferable to physical ones that central bankers can easily debase. The island of Alderney is in talks with Royal Mint to make physical coins backed by Bitcoins in its electronic vault. But enthusiasts should be careful what they wish for. An unstable price level is dangerous. Removing the steering-wheel is the wrong way to prevent central bankers from driving the economy off the road.

[Luckybit]

There is also an interesting Editorial discussing Bitcoin:

Banking on Bitcoin - Virtual currencies could rival banknotes, but not bankers

If a small city state had adopted Bitcoin as its national currency, it would now be in the grip of deflation as foreign speculators siphoned away its supply of the virtual currency. Money would be scarce, and prices would fall dramatically. Authorities might try to lift prices but they would lack one of their most powerful tools. Central bankers can create money at will, by printing notes or creating deposits. Bitcoin is based on digital tokens, which are generated at an unalterable rate by cryptographic algorithms running on the computers of volunteers, making it impossible to match supply to demand. This is an improbable fantasy. But Bitcoin’s undulating value makes it unsuitable for all but the most limited purposes. Speculators are the keenest acquirers of the currency. For some, it is a way of stashing wealth where authorities cannot find it. Others want to make purchases without leaving an obvious trace. Silk Road, the online contraband emporium that was closed by authorities last month, was one of the few businesses to insist on payment in Bitcoin. But many prices were pegged to the dollar; the virtual money served merely as a way of disguising the flow of hard currency.

Still, if Bitcoin’s applications are limited, its emergence as a workable means of exchange nonetheless reveals something surprising. Friedrich Hayek argued that the government should cede its monopoly over the money supply, leaving consumers free to choose between competing currencies. It turns out that they were already freer than they thought. Authorities have so far tolerated the virtual currency. Yet the product of the state-owned incumbent has proved more attractive than Hayek expected.

The experiment is an indication of how monetary systems might change in future. Many believed it impossible to create a form of electronic cash that did not rely on a bank to keep tabs on account balances. Bitcoin proved them wrong. But many are uneasy about reversing the technological accident that has made financial transactions more traceable in the era of electronic banking.

Some see tamper-proof virtual currencies as preferable to physical ones that central bankers can easily debase. The island of Alderney is in talks with Royal Mint to make physical coins backed by Bitcoins in its electronic vault. But enthusiasts should be careful what they wish for. An unstable price level is dangerous. Removing the steering-wheel is the wrong way to prevent central bankers from driving the economy off the road.

How would it run out when it's divisible? People who don't know shit shouldn't be talking about Bitcoins.

[lolstate]

People who don't know shit shouldn't be talking about Bitcoins.

Unfortunately, people who don't know shit are both writing and reading pieces just like this in the FT. In large numbers. People with a great deal of influence in finance, whose actions have real life consequences. Still, the joke will probably be on them, but that doesn't mean we should relax nor discount the possibility they launch an attack on Bitcoin, probably via reputation. But I suspect they have left it too late.

[BitDreams]

The decision making process regarding rules and regulations of currency has just been handed over to those who use currency. This is flipping their lids!