[2014-03-13] CD: Bank of England: Digital Currencies are Similar to Commodities

[LiteCoinGuy]

Bank of England: Digital Currencies are Similar to Commodities

http://www.coindesk.com/bank-england-digital-currencies-similar-commodities/


after the positive goldman report, another important statement from BoE.

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[Carlton Banks]

Digital currencies are quite a bit different, since they can be created out of nothing and their exchange rate is not fixed.

No, that's not the Bank of England, that's the supposed journalist. If they're created out of nothing, then why isn't everyone doing that. He should try creating them out of nothing himself, see how far he gets.

I keep reading stuff by this Nermin Hajdarbegovic guy, and he keeps sounding like he doesn't know what he's talking about. Not for the first time, I've gotta ask: do these people actually get paid to write this nonsense?

[Rotsor]

If you read the actual report, you'll see that's exactly (a part of) what they said:

A further category of innovations is digital currencies, such as
Bitcoin, Litecoin and Ripple. The key difference between these
and local currencies is that the exchange rate between digital
currencies and other currencies is not fixed. Digital currencies
are not at present widely used as a medium of exchange.
Instead, their popularity largely derives from their ability to
serve as an asset class. As such they may have more
conceptual similarities to commodities, such as gold, than
money. Digital currencies also differ from the other
technologies discussed so far in this box because they can be
created out of nothing, albeit at pre-determined rates. In
contrast, local currencies come into circulation only when
exchanged for pounds sterling. While the amount of money
held in e-money accounts or local currencies depends entirely
on demand, the supply of digital currencies is typically limited.

This paragraph is the only mention of digital currencies in the 10-page "introduction to money".

[Carlton Banks]

The journalist wrote it from the 1st person perspective, of course. I'm not sure it makes sense to copy reports word for word, represented as your own statement.

BoE are equally incorrect of course, but they might have been getting confused with the way they create money with a quick database value adjustment. You could argue the 10 seconds worth of keystrokes are performed by a paid worker, so there is some used collateral to produce the "money".

[Lethn]

Oh dear, the central bank realised they fucked up by not telling the peasants what a currency actually is at school so now they're publishing a document to rectify the problem

Also guys, I guess I can talk about it a bit now because they're making public statements about it, but the Bank of England responded to an email I sent and told me that they didn't think the market cap was big enough for them to worry about dealing with Bitcoin at the moment essentially, of course they worded it a lot more politely and eloquently than that

[medUSA]

Bank of England mentions bitcoin in an official bulletin. That in itself is an achievement!
and the tone seems to be neutral, not negative at all