[2018/07/05]BIS Chief to Crypto Coders: 'Stop Trying to Create Money'

[janvic31]

BIS Chief to Crypto Coders: 'Stop Trying to Create Money'


Source: https://www.coindesk.com/bis-chief-says-stop-trying-to-create-money-in-new-crypto-critique/


The head of the Bank of International Settlements has predicted a bad ending for cryptocurrencies, calling for an end to their production in a recent interview.

In an interview with a Basel-based media outlet on June 30, Agustín Carstens took aim at cryptocurrencies and reiterated his belief that they represent "a bubble, a Ponzi scheme and an environmental disaster," according to a transcript published by the BIS on Wednesday.

Asked whether he agrees that cryptocurrency has had a positive impact by making young people think about money, Carstens asserted that cryptocurrencies don't have the core features to be a currency. As such, the BIS head contended that the activities associated with cryptocurrency represents an effort to create money out of nothing.

"Young people should use their many talents and skills for innovation, not reinventing money. It's a fallacy to think money can be created from nothing," Carstens said, adding:

"Glance back into the past and you will see that creating gold or money from nothing has been a regular obsession. It never worked. ... So my message to young people would be: Stop trying to create money!"

After being appointed as the general manager in December 2017 to lead the BIS, an international institution known for its role as a kind of bank for central banks, Carstens has not shied away from making strong comments on cryptocurrency.

As previously reported by CoinDesk, the BIS chief issued sharply critical statements about cryptocurrency in February of this year.

Agustín Carstens image via Banco de México/Flickr

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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[odolvlobo]

It's a fallacy to think money can be created from nothing

What are euros created from, then?

[hatshepsut93]

Isn't this the same guy who recently told that Bitcoin will kill the Internet? Nothing shocking here, some bankers are really scared and frustrated seeing people creating their own money, and they were also taught that money is the creation of banks, totally ignoring thousands of years of history. Ironically, their public display of fear and anger might only make cryptocurrency stronger, because it means that cryptocurrencies are working as intended - disrupting the banks.

[bbc.reporter]

Glance back into the past and you will see that creating gold or money from nothing has been a regular obsession. It never worked. ... So my message to young people would be: Stop trying to create money

Trying? hehehe

But Satoshi already did create a new type of money. I reckon the central bankers are slowly becoming fully aware that their banking scams now have serious competiton in bitcoin and the cryptospace.

[1Referee]

Bitcoin is more money than legacy money has ever been, especially when LN starts taking over.

Second layers are the perfect way to avoid blockchain cluttering and greedy miners only out to feed themselves, and directly close the gap between Bitcoin and legacy payment infrastructure like it never even existed.

I strongly hope that with LN merchants will slowly start to move away from CC payments that are eating up like 3% of each purchase, which is ridiculous. Accepting LN will allow merchants to get rid of the fees, and even reward people using LN with a 2% discount on every purchase due to CC fees being eliminated. Everyone likes a discount, and everyone likes to use something that doesn't require third party input.

If I was Visa or MasterCard I would start worrying already. That's what you get when extortion is your core business.

[BitHodler]

One word, fear.

It's extremely bullish seeing banks and everything around them continue to talk crap about Bitcoin. The harder they are trying to convince you that Bitcoin and crypto is a scam and whatnot, the more you should buy of it.

The only time they will ever start appreciate crypto, is when they are heavily involved in it and make tons and tons of money, and it will happen. It's just a matter of time before they enter.

Banks in the end care about one thing only, and that's generating income, and crypto is perfect for that considering that we are still in the first stage of everything. Fasten your seatbelts and enjoy the ride up.

[darkangel11]

It's a fallacy to think money can be created from nothing

What are euros created from, then?

Haha good question. First of all, since the creation of fiat money, currencies all over the world are being constantly printed, and the only thing that gives them value is the government. They are basically printing papers saying "we owe you", but who is "we"? If a crysis comes they will be blaming one another saying: it was their idea! when the crisis started they were in power, they should fix it!

He doesn't understand Bitcoin, fine, but he also doesn't understand fiat money.

Fiat money, like any check or note of debt, is without use value as a physical commodity. It derives its value by being declared by a government to be legal tender; that is, it must be accepted as a form of payment within the boundaries of the country, for "all debts, public and private"

In other words, fiat money has no real value and people are using it because they are forced to. Bitcoin is a currency used by choice that has value even though nobody is imposing it by force. Somebody should write a schematic for the "chief", because plain words don't seem to cut it.

[ghermghuda]

Lol..The big men always want to undermine the power of blockchain and cryptocurrencies. Well, the fact is that cryptocurrencies have made huge impacts in some people's life and it continues to and so I don't agree with him saying this has no impact. I also think he should consider the innovation behind cryptocurrencies and not just the monetization aspect.

[richardsNY]

To some extent I agree that this shitty 'money' creation needs to stop, because it takes away liquidity from the coins with an actual purpose. How shitty is this industry? Plenty of shitty. Now ICO's are being cracked down on by authorities, air drops are the next big thing that is flooring Ethereum's network badly. This pathetic behavior is inflicting more damage than good on this market, and what we are left with are retarded get rich quick fools that are the lowest of the lowest scum. Just browse through YouTube and see for yourself how everything is only focused on gains. I hope for more governmental intervention, but they are too soft....

[squatter]

At the end of the day, it comes back to what Satoshi said years ago:

But if there were nothing in the world with intrinsic value that could be used as money, only scarce but no intrinsic value, I think people would still take up something.

And he was right. For something to be money, it doesn't need to be useful or have an actual purpose. It just needs to be scarce and transferable. Markets have never supported this idea that money must be "backed." That's easily disproven propaganda.

To some extent I agree that this shitty 'money' creation needs to stop, because it takes away liquidity from the coins with an actual purpose. How shitty is this industry? Plenty of shitty.

But that's the beauty (and hassle) of replacing central authorities: anyone can create their own money/token and there's no one to stop them. It just takes time (and fear/greed) for the market to figure out what's really valuable.

It reminds me of the dot-com boom. When money is being thrown around left and right, you've got to expect that greed.

[gentlemand]

To some extent I agree that this shitty 'money' creation needs to stop, because it takes away liquidity from the coins with an actual purpose. How shitty is this industry? Plenty of shitty. Now ICO's are being cracked down on by authorities, air drops are the next big thing that is flooring Ethereum's network badly. This pathetic behavior is inflicting more damage than good on this market, and what we are left with are retarded get rich quick fools that are the lowest of the lowest scum. Just browse through YouTube and see for yourself how everything is only focused on gains. I hope for more governmental intervention, but they are too soft....

Things will straighten themselves out through natural attrition and it'll be far more rapid. The fringes will never go away now no matter what but they'll also matter less and less.

And if Ethereum can't handle whatever is thrown at it then we'll be supplied with something that can. That's how it should work.

[hatshepsut93]

To some extent I agree that this shitty 'money' creation needs to stop, because it takes away liquidity from the coins with an actual purpose. How shitty is this industry? Plenty of shitty. Now ICO's are being cracked down on by authorities, air drops are the next big thing that is flooring Ethereum's network badly. This pathetic behavior is inflicting more damage than good on this market, and what we are left with are retarded get rich quick fools that are the lowest of the lowest scum. Just browse through YouTube and see for yourself how everything is only focused on gains. I hope for more governmental intervention, but they are too soft....

The market will sort everything out eventually, the hype and speculation can't last forever, cryptocurrencies need to have some fundamental properties that will back their value, otherwise they are just cheap copypaste of earlier coins. And government can't solve this irrational behavior of investors - they can crack down on some obvious scams, but they can't do much against the projects that start with somewhat legit ideas. After all, regulators didn't prevent the dotcom bubble.

[bbc.reporter]

One word, fear.

It's extremely bullish seeing banks and everything around them continue to talk crap about Bitcoin. The harder they are trying to convince you that Bitcoin and crypto is a scam and whatnot, the more you should buy of it.

The only time they will ever start appreciate crypto, is when they are heavily involved in it and make tons and tons of money, and it will happen. It's just a matter of time before they enter.

Banks in the end care about one thing only, and that's generating income, and crypto is perfect for that considering that we are still in the first stage of everything. Fasten your seatbelts and enjoy the ride up.

Yes, fear that their monopoly for controlling the financial system is going away. They do not want the young generation to really have the realization that a form of currency that is independent from their centralized system can exist and can have value.

[Carlton Banks]

At the end of the day, it comes back to what Satoshi said years ago:

But if there were nothing in the world with intrinsic value that could be used as money, only scarce but no intrinsic value, I think people would still take up something.

And he was right. For something to be money, it doesn't need to be useful or have an actual purpose. It just needs to be scarce and transferable. Markets have never supported this idea that money must be "backed." That's easily disproven propaganda.

Yep.

This is a good reason why gold and silver are somewhat losing their currency: they finally have a practical/material use in the modern industrial world. Before this era, gold and silver did have small scale use in things like teeth fillings or cutlery sets, but the bullion value was always well recognised (hence the "maid stole the silverware" meme).

Objects used as money without alternative purposes are the best money, it makes the money supply more stable (and hence predictions about the size of the money supply will be more accurate). You never have to worry about someone using Bitcoin to catalyse a chemical reaction, or to wipe their ass with.


And despite any of this, there's a good argument that Bitcoin is backed by the cumulative energy used to mine it (hence why talk of mining being wasteful or an environmental disaster is so wrong). The military force that essentially underlines the value of fiat currencies is also really just an energy backing of a sort. That puts Bitcoin in a very strong position, as fiat currency cannot rely on it's defence in the past to defend it in the present, whereas Bitcoin can (with cumulative proof of work), and it does so entirely intangibly

[Aikidoka]

It's a fallacy to think money can be created from nothing

What are euros created from, then?

Some people say dumb statem7ents. If he does not want people to create money, then why does he not give them money in the first place? I mean, jobless people who could not find any job but they find a good opportunity to make some money on the internet. If he does not like it, then ignore it or help those people financially. He is only promoting fiat money and trying to persuade people that the cryptocurrency is bad. And of course the media is with him.

[sindikat]

Let it better call on all governments to stop issuing new money and not to provoke inflation. But he does not do this because no one will listen to him and he himself is involved in the scheme of earning on inflation. Then why should we listen to him? Another denigrator of cryptocurrencies who is afraid of losing the monopoly on the control of money turnover.

[aso118]

Let it better call on all governments to stop issuing new money and not to provoke inflation. But he does not do this because no one will listen to him and he himself is involved in the scheme of earning on inflation. Then why should we listen to him? Another denigrator of cryptocurrencies who is afraid of losing the monopoly on the control of money turnover.

If governments across the world had followed discipline in issuing fiat money, the need for alternative forms of money wouldn't have arisen. Even the supposedly sensible governments of the west have indulged in quantitative easing, with the financial crisis as an excuse. Bitcoin has now taken off and nothing can stop it.

[milewilda]

Isn't this the same guy who recently told that Bitcoin will kill the Internet? Nothing shocking here, some bankers are really scared and frustrated seeing people creating their own money, and they were also taught that money is the creation of banks, totally ignoring thousands of years of history. Ironically, their public display of fear and anger might only make cryptocurrency stronger, because it means that cryptocurrencies are working as intended - disrupting the banks.

I observed the same thing too and same thoughts there no shocking thing on here government and banking sector do already felt out cryptos existence and their effects and now they are telling something to those who are been part of the factor on cryptocurrencies development. Saying up things just like this one wont really be effective and wont really give any hindrance on what we are taking as of now.
They do know they are opposing on traditional fiats and they are affected on that one.

[buwaytress]

Isn't this the same guy who recently told that Bitcoin will kill the Internet? Nothing shocking here, some bankers are really scared and frustrated seeing people creating their own money, and they were also taught that money is the creation of banks, totally ignoring thousands of years of history. Ironically, their public display of fear and anger might only make cryptocurrency stronger, because it means that cryptocurrencies are working as intended - disrupting the banks.

Lols. Now that you mentioned it, I think you're right, this is the same guy. He probably comes from the same cut of cloth of people that said the Internet would be the one to kill the entire world, because it was the home of thieves, paedophiles, pornography and kidnappers two generations ago. And then that generation realized that the internet had arrived, and then said it was going to break from email attachments, then by videos, and now yes, by Bitcoin.

Like you said though, all this FUD makes Bitcoin stronger. So bring it on.

[richardsNY]

But that's the beauty (and hassle) of replacing central authorities: anyone can create their own money/token and there's no one to stop them. It just takes time (and fear/greed) for the market to figure out what's really valuable.

It reminds me of the dot-com boom. When money is being thrown around left and right, you've got to expect that greed.

Well, the greed here takes different shapes the further we progress, and that's exactly the reason this can take years and years before we see a noticeable adjustment in the crypto space. The most recent shift is from ICO's to airdrops and they are literally crippling Ethereum's network with sky high fees as result. But yeah, maybe it's better to just let it happen and have time solve this matter. It can't last endlessly -- the sooner people exit that shitshow the less damage they inflict on themselves....