Is there room for a State Run Cryptocurrency?

[tee-rex]

As I said before, I don't understand your example of BMW lending cars, so let's keep it simple and proceed now from bitcoins (apart from gold). FRB is irrelevant here, and to make things even simpler, let's assume there are no reserve requirements at all (a good assumption since there is no Central Bank to begin with). Could the banks then create bitcoins out of the thin air just like they are said to do with fiat?

No they can't create bit coins.  But they can still create credit money

But the credit money created by today's banks is the same fiat that is emitted by the Central Bank. And do you know why?

[DeathAndTaxes]

I believe that if Bitcoin becomes mainstream, a fractional reserve banking system will develop and there will probably be one or more central banks. These central banks will be created by banks or their regulators and may or may not be government-controlled. They will pool member deposits and provide deposit insurance in order to reduce the impact of bank runs and they will have to set reserve requirements.

I doubt that.  Not that someone won't try FRB with Bitcoin that is almost an inevitability; bankers are going to banker.  Central banks would not have much interest in a system where they can't "magic up" more money in the monetary base.  Also without the unlimited printing of central banks we would have seen the complete collapse of the banking system worldwide and probably the end of one or more modern currencies.   You can't do that with Bitcoin.   It is more like FRB using gold deposits.  Central banks are a lot less important in a system where they can't pretend that they can shape and control the economy.

[tee-rex]

As I said before, I don't understand your example of BMW lending cars, so let's keep it simple and proceed now from bitcoins (apart from gold). FRB is irrelevant here, and to make things even simpler, let's assume there are no reserve requirements at all (a good assumption since there is no Central Bank to begin with). Could the banks then create bitcoins out of the thin air just like they are said to do with fiat?

I believe that if Bitcoin becomes mainstream, a fractional reserve banking system will develop and there will probably be one or more central banks. These central banks will be created by banks or their regulators and may or may not be government-controlled. They will pool member deposits and provide deposit insurance in order to reduce the impact of bank runs and they will have to set reserve requirements.

I believe that this is the most likely scenario (second most likely being the demise of Bitcoin). We were here before 100 years ago, so I wonder how it will play out.

Why would you want to deposit your bitcoins into a bank? Bitcoin value can grow by itself even with no help from the bank with its interest paid on deposits.

[twiifm]

As I said before, I don't understand your example of BMW lending cars, so let's keep it simple and proceed now from bitcoins (apart from gold). FRB is irrelevant here, and to make things even simpler, let's assume there are no reserve requirements at all (a good assumption since there is no Central Bank to begin with). Could the banks then create bitcoins out of the thin air just like they are said to do with fiat?

No they can't create bit coins.  But they can still create credit money

But the credit money created by today's banks is the same fiat that is emitted by the Central Bank. And do you know why?

Haha we're back to this again?  Thought experiment:   if Central Bank suddenly stopped printing money,  would the money supply still increase? Or would it remained capped?

Thats basically the argument we're having

[BtcGains]

Hi,

I've been asking for opinions about a proposal that's come up here in Scotland.  We're going to the polls in the next month to decide whether we want to split from England and become an independent country - basically the end of the United Kingdom that's lasted 400 years.

There's been plenty of discussion not only on whether we should, but whether we could (practically.)  One of the major stumbling blocks is the use of GBP - the Bank of England has said a post-independent Scotland can't use it.  Bit mean, but there you are.

So the question came up - If Scotland needs a new currency, why not set up a State-Run Cryptocurrency?

Here's my thoughts on the issue. 

http://cryptocurrencymadesimple.com/should-scotland-set-up-a-state-run-cryptocurrency/

Also, it appears that Ecuador got there first:

http://cryptocurrencymadesimple.com/ecuador-nationalise-cryptocurrency/

Would love to here what you guys think.

State-run cryptocurrency would just be another form of fiat. Decentralization is what differentiates, say, bitcoin from dollar and other state-controlled currencies, that is absence of the governing body (central bank) which is given the privilege of emitting currency monopolistically.

Wrong...
Decentralisation is bitcoins specialty not crypto in general.
A state run crypto would not count under what bitcoin is designed for but rather what they make of it

[Full Spectrum]

If anything, this state run and backed crypto would probably look something like the Anthem Vault gold backed coin

[tee-rex]

I believe that if Bitcoin becomes mainstream, a fractional reserve banking system will develop and there will probably be one or more central banks. These central banks will be created by banks or their regulators and may or may not be government-controlled. They will pool member deposits and provide deposit insurance in order to reduce the impact of bank runs and they will have to set reserve requirements.

I doubt that.  Not that someone won't try FRB with Bitcoin that is almost an inevitability; bankers are going to banker.  Central banks would not have much interest in a system where they can't "magic up" more money in the monetary base.  Also without the unlimited printing of central banks we would have seen the complete collapse of the banking system worldwide and probably the end of one or more modern currencies.   You can't do that with Bitcoin.   It is more like FRB using gold deposits.  Central banks are a lot less important in a system where they can't pretend that they can shape and control the economy.

It will be more like the original central banks when there was a gold standard. The banks' motivation for forming central banks will be the desire to get customers to deposit bitcoins with them. Without protections such as deposit insurance and a lender of last resort, it would not be wise to trust a bank with your money. Governments will probably get involved because it is in their natures.

Why would you want to deposit your bitcoins into a bank? Bitcoin value can grow by itself even with no help from the bank with its interest paid on deposits.

Why would you turn down risk-free interest on your bitcoins (if it were available)?

Risk-free interest? In a bank? Are you kidding?

[tee-rex]

As I said before, I don't understand your example of BMW lending cars, so let's keep it simple and proceed now from bitcoins (apart from gold). FRB is irrelevant here, and to make things even simpler, let's assume there are no reserve requirements at all (a good assumption since there is no Central Bank to begin with). Could the banks then create bitcoins out of the thin air just like they are said to do with fiat?

No they can't create bit coins.  But they can still create credit money

But the credit money created by today's banks is the same fiat that is emitted by the Central Bank. And do you know why?

Haha we're back to this again?  Thought experiment:   if Central Bank suddenly stopped printing money,  would the money supply still increase? Or would it remained capped?

Thats basically the argument we're having

Back to what? Now you seem to be trying to avoid cornering at all means. Banks that create money through credit are a Central Bank's proxies. And if the Central Bank would somehow want to stop for some fancy reason its currency from circulation, no bank would be able to create money in the form of this currency "out of the thin air". I think I made it pretty evident. Central Bank money printing is a metaphor, credit money is just another way of emitting money into circulation by a Central Bank through its proxies (though there are other ways as well).

[Kluge]

Your question is sort of backwards. I think you meant to ask, "is there room for a cryptocurrency-run state?" I think that's very easy to answer if you just imagine a government and replace "constitution" with "protocol" in your head.

I've been looking at Cloakcoin's papers recently, and they have some very interesting theories and experiments in the line-up. For instance, if you merge parts of OneJury and OneMarket together, you have the basic assembly of a self-sustaining, democratic government where you could, for instance, require elected officials to put up collateral when they make oaths to uphold laws. Should they violate this oath, citizens could then, together, judge whether or not the official violated his oath by posting a "listing" (which would be an accusation of the offense). With the reward-punishment-reward scheme (or whatever they call it -- I already forget a bit), then, even this decision could be made "economically moral," where a fair ruling, ideally, is rewarded with money, while a false ruling - again, ideally - is punished by taking funds away from those who voted "incorrectly." Voters will want to be very careful to read the accusation and details surrounding it to ensure they make an informed decision, and it will certainly encourage widespread debate, maybe more logic-driven. If voters deem the accusation is correct and the official violated his oath, the collateral (and this is near-limitless when thinking about smart property) could be confiscated, with all assets (possibly including such things as a house or car deed/title) given out as mining rewards automatically.

OTOH, it may also encourage extreme poll bias unlike anything we've seen, where if a candidate or issue has a .7% lead in a poll, people may vote against their beliefs just for the money. It's for the same reason I'm skeptical of their implementation in decentralized listing moderation, but maybe it will be effective... Idunno - we'll see. Maybe it only works when voters are relatively uninterested/detached. It could also pressure people into not voting, since they could literally lose money for it. -But it could lead to a very logic-based, corruption-free society which operates on hard rules rather than whims and back-room deals. -And you can take these ideas to all sorts of other places with little imagination....

[twiifm]

As I said before, I don't understand your example of BMW lending cars, so let's keep it simple and proceed now from bitcoins (apart from gold). FRB is irrelevant here, and to make things even simpler, let's assume there are no reserve requirements at all (a good assumption since there is no Central Bank to begin with). Could the banks then create bitcoins out of the thin air just like they are said to do with fiat?

No they can't create bit coins.  But they can still create credit money

But the credit money created by today's banks is the same fiat that is emitted by the Central Bank. And do you know why?

Haha we're back to this again?  Thought experiment:   if Central Bank suddenly stopped printing money,  would the money supply still increase? Or would it remained capped?

Thats basically the argument we're having

Back to what? Now you seem to be trying to avoid cornering at all means. Banks that create money through credit are a Central Bank's proxies. And if the Central Bank would somehow want to stop for some fancy reason its currency from circulation, no bank would be able to create money in the form of this currency "out of the thin air". I think I made it pretty evident. Central Bank money printing is a metaphor, credit money is just another way of emitting money into circulation by a Central Bank through its proxies (though there are other ways as well).

You are only talking about commercial banking.  Man why don't you read what I posted about shadow banking and see if you still come to the same conclusion.  Otherwise just agree to disagree.  Stick w your neoclassical view

[blumangroup]

Your question is sort of backwards. I think you meant to ask, "is there room for a cryptocurrency-run state?" I think that's very easy to answer if you just imagine a government and replace "constitution" with "protocol" in your head.

There is a lot in the constitution that is open to interpretation. This is especially true and society and technology evolves in ways that the constitutional writers could not have imagined.

Bitcoin protocol on the other hand is very black and white. It is very clear if a TX or an output is valid or not.

[tee-rex]

As I said before, I don't understand your example of BMW lending cars, so let's keep it simple and proceed now from bitcoins (apart from gold). FRB is irrelevant here, and to make things even simpler, let's assume there are no reserve requirements at all (a good assumption since there is no Central Bank to begin with). Could the banks then create bitcoins out of the thin air just like they are said to do with fiat?

No they can't create bit coins.  But they can still create credit money

But the credit money created by today's banks is the same fiat that is emitted by the Central Bank. And do you know why?

Haha we're back to this again?  Thought experiment:   if Central Bank suddenly stopped printing money,  would the money supply still increase? Or would it remained capped?

Thats basically the argument we're having

Back to what? Now you seem to be trying to avoid cornering at all means. Banks that create money through credit are a Central Bank's proxies. And if the Central Bank would somehow want to stop for some fancy reason its currency from circulation, no bank would be able to create money in the form of this currency "out of the thin air". I think I made it pretty evident. Central Bank money printing is a metaphor, credit money is just another way of emitting money into circulation by a Central Bank through its proxies (though there are other ways as well).

You are only talking about commercial banking.  Man why don't you read what I posted about shadow banking and see if you still come to the same conclusion.  Otherwise just agree to disagree.  Stick w your neoclassical view

Why do you send me somewhere to read something? Couldn't you explain your point yourself without outside references? Did I ever ask you in my posts to go read anything besides just my posts? I can explain in layman terms everything that I talk about since I understand what I write. Can you say the same about yourself?

[SunBin]

State run cryptocurrency will solve all the counterfeit problems.

And it makes the currency easier to spend and use. And easier to measure all the economic statistic.

[thecast]

It would regulated and end up like regular fiat.

[ljudotina]

State Run Cryptocurrency would be digital fiat. So, yeah, you can make it, but it would be same as any other fiat in the world. I wouldn't put it in same basket as todays crypto's so i'd say, no there is no room for one, but yes, it can be done and it would work just as any other except it would be centralized and issuer could pump as much as he needs into the system.

[twiifm]

As I said before, I don't understand your example of BMW lending cars, so let's keep it simple and proceed now from bitcoins (apart from gold). FRB is irrelevant here, and to make things even simpler, let's assume there are no reserve requirements at all (a good assumption since there is no Central Bank to begin with). Could the banks then create bitcoins out of the thin air just like they are said to do with fiat?

No they can't create bit coins.  But they can still create credit money

But the credit money created by today's banks is the same fiat that is emitted by the Central Bank. And do you know why?

Haha we're back to this again?  Thought experiment:   if Central Bank suddenly stopped printing money,  would the money supply still increase? Or would it remained capped?

Thats basically the argument we're having

Back to what? Now you seem to be trying to avoid cornering at all means. Banks that create money through credit are a Central Bank's proxies. And if the Central Bank would somehow want to stop for some fancy reason its currency from circulation, no bank would be able to create money in the form of this currency "out of the thin air". I think I made it pretty evident. Central Bank money printing is a metaphor, credit money is just another way of emitting money into circulation by a Central Bank through its proxies (though there are other ways as well).

You are only talking about commercial banking.  Man why don't you read what I posted about shadow banking and see if you still come to the same conclusion.  Otherwise just agree to disagree.  Stick w your neoclassical view

Why do you send me somewhere to read something? Couldn't you explain your point yourself without outside references? Did I ever ask you in my posts to go read anything besides just my posts? I can explain in layman terms everything that I talk about since I understand what I write. Can you say the same about yourself?

Hmmn, I tried to explain it in layman's terms but you kept saying you don't get it.  I thought something common like car finance you would understand but apparently not.  There are non-commercial banks where credit money is being created.  In fact before the 2008 GFC more money was from this shadow bank sector than commercial bank sector.  Like other neoclassicals, you are missing half the picture.  That's why their models don't work

[Kluge]

Your question is sort of backwards. I think you meant to ask, "is there room for a cryptocurrency-run state?" I think that's very easy to answer if you just imagine a government and replace "constitution" with "protocol" in your head.

There is a lot in the constitution that is open to interpretation. This is especially true and society and technology evolves in ways that the constitutional writers could not have imagined.

Bitcoin protocol on the other hand is very black and white. It is very clear if a TX or an output is valid or not.

This is true, and why a change to the constitution would require a real "amendment" (fork). A special "coin" could exist specifically for voting on whether or not the majority approves of a fork, though Proof-of-Whatever providers and users of the actual national coin client could override the decision simply by running the modified solution (or sticking with the old), I suppose, though you could also force auto-updating, turning it from opt-in to opt-out (and there are certainly other ways for a government to force users to use only one version).

Theoretically, too - keep in mind law enforcement could be handled by drones controlled by the protocol with rules "voted on" by people.

This could make revolution fascinating, where it could be a bloodless 100% money/R&D/PR/manufacturing-based war to fork the coin, or a grassroots effort to change the national coin used, which can also result in a total "reset" of the economy for better or worse. Of course, that kind of revolution isn't necessarily bloodless, though a vote to go to war against against rebels would probably require a fork itself to change the rules combat drones operate on, should it be handled by the coin's network, which I can't imagine why isn't possible (combat drones would operate on the instructions pushed in the most recently received block with, say, 50 confirmations).

-Not to say it's a superior solution, but I'll be surprised and disappointed if a country somewhere doesn't implement a similar experimental system before I die. Err - well, I guess I won't be; I'll be dead.

On "government's" side, since this can eliminate the need for dedicated statesmen and even bureaucrats to some degree (replaced largely by developers), this could result in a total intrusion of privacy, but violated by robots with no humans watching (unless a judge requires it), which may be considered acceptable. Assuming tech continues to decrease in cost, it could result in all sorts of absurd situations. For instance, say distilling alcohol in your country is illegal but not considered "actionable against the person" (rather, drones aren't going to ensure you get to a court at gunpoint or issue a fine) -- maybe instead, when the ever-seeing drone network determines you've violated the anti-distilling law, they simply turn your burners/heaters off, or if they're unable to interface with the device, issue a command to your energy provider to cut power if the law isn't complied with, and they could perhaps go from there if the person is still non-compliant (fly the pots away, hover around the offender and issue warnings, etc. There're all sorts of errors which'd be made, so humans would definitely still need to be involved, but the absurd science fiction will basically write itself, maybe with a program called "Bots" ("Cops") which has live feeds of crimes in progress. That could be a punishment... threaten to stream the crime, which could also make up plenty of pornographic content to stream and fund the government... maybe in a theocracy, they'll outlaw sodomy (another "not actionable against the person" crime) but permit streaming of sodomy within and outside the country to subscribers. With eyes everywhere, you could probably fill every porn niche, and the false positives should be equally fascinating. I'm getting off-topic from the thread-jacking, though -- just one of many examples on "creative funding" for our drone overlords....

Getting back off-topic - assuming AI is capable of following basic real-world "procedural generation," it should be possible for the constitution to define variables with ranges on how the AI government is to act and react with regards to both net revenue and culture. Assuming self-replication is feasible, it can build up, maintain, upgrade, and scrap itself and its units as stated. I suppose it could also be future-proofed, changing some laws real-time based on what it perceives. For instance, maybe a populist government would want certain "non-person-actionable" crimes decriminalized if it logs some percentage of the population committing the crimes. -So say marijuana begins outlawed with a flag where the software requires data be logged and analyzed on the crime, and if, say 15% of currently-living citizens have attempted or successfully committed this crime, the AI itself could repeal that law simply by monitoring cultural shifts.

I suppose it'd be stupid not to utilize widespread drone use's ability to maintain an internet with mesh networking (another revenue source!) - so if a law like this were changed, an update and alert (similar to Bitcoin's emergency alert system, I suppose) could be pushed to users in real-time with the changelog notifying everyone that the law was repealed virtually as soon as it happens, and this could happen without a fork. ... I've forgotten what I was rambling about now, though.

[polynesia]

Risk-free interest? In a bank? Are you kidding?

If you pick a large bank, your deposit is within the limit for federal insurance, I guess you could say it is risk-free. 

[Kluge]

Risk-free interest? In a bank? Are you kidding?

If you pick a large bank, your deposit is within the limit for federal insurance, I guess you could say it is risk-free. 

Who insures the insurer?

[Erdogan]

Risk-free interest? In a bank? Are you kidding?

If you pick a large bank, your deposit is within the limit for federal insurance, I guess you could say it is risk-free. 

Who insures the insurer?

The FDIC is a joke, they have about 50 B USD, probably in the form of bank deposits. Anyway, they can be locked for months before the resources are released, and probably longer as the state have to intervene, which is not explicitly guaranteed, but you can probably count on it.

For the system as a whole, the question is are the states are solvent.