The Royal Canadian Mint just announced a new alternative to BitCoin

[acoindr]

Thread title is inaccurate. It's not an alternative to Bitcoin because MintChip is centralized and requires trust in one entity. It's a competitor, however, because it competes on an electronic functionality level.

[Matthew N. Wright]

Thread title is inaccurate. It's not an alternative to Bitcoin because it's centralized and requires trust in one entity. It's a competitor, however, because it competes on an electronic functionality level.

Exactly. And compete it shall!

[herzmeister]

Ironically, they're getting burned and burned time and time again with decentralization too.

and with official currencies too and still they don't learn 

[jimbobway]

MintChip is DOA: Dead on Arrival

[guruvan]

So you can buy drugs with MintChip and send MintChips across borders.  If the gov't of Canada can do this then U.S. politicians must give into bitcoin.  I see this as a bitcoin win.

+1 for double standards!!

Standards are like testicles: Every dick has 2.

+10

[acoindr]

Thread title is inaccurate. It's not an alternative to Bitcoin because it's centralized and requires trust in one entity. It's a competitor, however, because it competes on an electronic functionality level.

Exactly. And compete it shall!

I'm not so sure.

One thing this, and Bitcoin too, has shown me is that money is changing -- it no longer needs to be local to gain adoption. People are going to look for whatever is most convenient to exchange and is the best store of value, two key functions of "money". In the past, since people and economies were separated physically, and money was/is physical, the local currency would win by default.

With the Internet this is no longer the case. Now it comes down to the nitty gritty. Currency systems will compete globally. And since software can be the same anywhere, the money that wins will be what people agree has the best value.

Inflated paper currencies are on their way out. They are about to self-destruct anyway, but even if not they represent old technology. Globalized e-currency will be what is next.

However, just as the Internet enables better money systems it will allow people to get better at identifying them. Information is no longer encapsulated and unavailable to the uninformed. It won't be easy or perhaps even possible for currencies to be inflated without being severely devalued. I believe the world will identify gold and silver as a benchmark. These metals have been recognized as valuable as money for thousands of years, and are not inflationary. I doubt that will change.

I think people will maintain a physical store of gold/silver as savings, and convert them to the winning e-currency(ies) as needed. Bitcoin, with its transparent, verifiable cap at 21 million coins, and authority-less features, will have obvious value. The governmental/regulatory environment that springs up around it will determine what role it plays in everyday mainstream use.

On the other hand, currency like this MintChip is novel as the first e-currency sponsored by a government. What they do with it remains to be seen, but it appears they are looking to inflate it. The only clue we have is from the CEO who commented it would be "backed by a fund". Not backed by gold or silver (which could be surreptitiously inflated anyway), but backed by a fund. That leads me to believe it won't go very far with acceptance.

EDIT: Here is more reading I found on MintChip. It appears there is more in store from them April 17th.

http://www.agoracosmopolitan.com/news/canadian_news/2012/03/15/3426.html

[unabridged]

This is a good thing for bitcoin. Canada's backing will put MintChip into many stores as a payment option. Exchange between MintChip and Bitcoin will be easier than any other fiat currency with its irrevocable electronic transactions, anyone will be able to start an exchange without having to rely on paypal or other processors. Essentially we could end up with a system like:
MintChip = checking account
Bitcoin = savings account

[jothan]

Hopefully, MintChip will be even better than Interac e-Transfers for buying bitcoins with canadian dollars.

The options for depositing/withdrawing on CaVirtex are quite limited by my bank.

[Dan The Man]

A hard backed Bitcoin alternative would be pretty easy to setup I think. All you need is to remove the coin generation, and start the initial block with a ridiculously large amount of money. So the Canadian Mint holds the private keys to 10 trillion BTC. These could possibly be timelocked as well, so they absolutely cannot go into circulation all at once. Then they have an open contract to sell anyone funds from their huge reserve of BTC in exchange for equivalent CAD which they will remove from circulation, and they also agree to buy back these BTC for the locked away (or freshly minted) CAD.

[MelMan2002]

You know, this really gets me thinking - what if the US gov were to start Bitdollar?  They just have to require all merchants (in the US) to accept it as legal tender.  Seems like Bitcoin would immediately become irrelevant as Bitdollar would quickly be adopted world-wide.

[acoindr]

A hard backed Bitcoin alternative would be pretty easy to setup I think. All you need is to remove the coin generation, and start the initial block with a ridiculously large amount of money. So the Canadian Mint holds the private keys to 10 trillion BTC. These could possibly be timelocked as well, so they absolutely cannot go into circulation all at once. Then they have an open contract to sell anyone funds from their huge reserve of BTC in exchange for equivalent CAD which they will remove from circulation, and they also agree to buy back these BTC for the locked away (or freshly minted) CAD.

Yes, a hard backed Bitcoin alternative could be set up quite easily. But then the government couldn't inflate the currency. What incentive would a government have to do it? The goodness of their heart?

[MelMan2002]

Yes, a hard backed Bitcoin alternative could be set up quite easily. But then the government couldn't inflate the currency. What incentive would a government have to do it? The goodness of their heart?

Of course they could inflate the currency - they can change the software/protocol any time and require everyone to update.

[DeathAndTaxes]

You know, this really gets me thinking - what if the US gov were to start Bitdollar?  They just have to require all merchants (in the US) to accept it as legal tender.  Seems like Bitcoin would immediately become irrelevant as Bitdollar would quickly be adopted world-wide.

No merchant is under any obligation to accept legal tender.
Legal tender requirements only apply to debts.

Still why would US govt want to start Bitdollar when they can just keep printing trillions and trillions of increasingly worthless dollars.

[BubbleBoy]

Since the security is in the hardware device, I'm sure there will be a limit on the value of each transaction. Also, expect every coin to keep a full history of the bank account it was originally created from, the devices it traveled to in the meantime, and the bank account it was later deposited to.

This means that unlike Bitcoin, if you ever funded your MintChip from you bank account, all your operations on that device will become trackable by the central bank. It's not clear as of yet if one will be able to purchase MintChips anonymously, or there would be some kind of forced "activation" where the devices is tied to your bank account, thus obliterating any trace of privacy. I'll put my money on the later.

[Yankee (BitInstant)]

EDIT: Here is more reading I found on MintChip. It appears there is more in store from them April 17th.

http://www.agoracosmopolitan.com/news/canadian_news/2012/03/15/3426.html

I would go, but its $2200!

[jimbobway]

[bitcoinstarter]

Just validates Bitcoin as a technology game changer. Also, validates its legal.

[Dan The Man]

Yes, a hard backed Bitcoin alternative could be set up quite easily. But then the government couldn't inflate the currency. What incentive would a government have to do it? The goodness of their heart?

Sure they could. Remember that the government controls and keeps a huge portion of the digital currency in reserve. The reserve could theoretically be larger than the entire amount of real backing currency in existence. And they still control the backing currency. Inflate that and you inflate the digitally overlaid currency too. Or they could separate the backing whenever they wish and sell off their entire reserve of digital currency while refusing to buy any of it back.

Of course they could inflate the currency - they can change the software/protocol any time and require everyone to update.

No they can't really, at least not the way I described it. The underlying network is still bitcoin and there is no way to force people to update their client short of passing a law.

[acoindr]

Since the security is in the hardware device, I'm sure there will be a limit on the value of each transaction. Also, expect every coin to keep a full history of the bank account it was originally created from, the devices it traveled to in the meantime, and the bank account it was later deposited to.

This means that unlike Bitcoin, if you ever funded your MintChip from you bank account, all your operations on that device will become trackable by the central bank. It's not clear as of yet if one will be able to purchase MintChips anonymously, or there would be some kind of forced "activation" where the devices is tied to your bank account, thus obliterating any trace of privacy. I'll put my money on the later.

I'd put my money on the latter too.

However, their site says "all the benefits of cash ... instant private secure". I'd imagine that means anonymous too, but I guess we have to wait and see.

[acoindr]

Yes, a hard backed Bitcoin alternative could be set up quite easily. But then the government couldn't inflate the currency. What incentive would a government have to do it? The goodness of their heart?

Of course they could inflate the currency - they can change the software/protocol any time and require everyone to update.

As soon as they announced this required update you can bet everyone would be running to exchange the currency for its backing.