Why There Should Be A Bitcoin Central Bank

[EndlessStory]

Indeed I agree there should be a central bank for bitcoin for reducing price fluctuations, and keeping inflation in control.

Nice idea.

[QuestionAuthority]

Bitcoin requires a hell of a lot more trust than you think.

Really, how so? (please stick to bitcoin protocol) I think the issue with a 51% attack and trusting the huge mining pools that are in control of Bitcoins security is a protocol issue (but I'm sure you'll correct me whether I'm right or wrong).

Organizations and agencies aren't evil, the people controlling them are evil.

Fail: Organizations and agencies ARE the people controlling them. I'm not even sure what that means. Governments become different things all the time depending on who's elected to office.

There are quite a few evil people in Bitcoinland too.

Evil? well that's a word I would reserve for moral crimes. I wouldn't call Pirate evil, a scoundrel, a scammer, yes.

Full Definition of EVIL

a :  morally reprehensible :  sinful, wicked <an evil impulse>
b :  arising from actual or imputed bad character or conduct <a person of evil reputation>

But yes of course there are many people playing strategically in all areas one might care to investigate. Start with the Bitcoin Foundation: http://www.reuters.com/article/2014/05/16/us-bitcoin-foundation-resignations-idUSBREA4F02B20140516

Your ideas aren't exactly new and have had limited success.

Of course, I never proclaimed my ideas were new.

Success? I am just discussing central authority and how it relates to bitcoin. Bitcoin already has plenty of central authority in mining, leadership, development and business leadership. Why not have centralization that can propel it forward.

I wish you a good journey. Thank you, you too.

[boraf]

Having a bitcoin central bank kind of defeat the whole purpose of bitcoin peer-to-peer protocol.

With that being said, there is no reason why people can't build a centralized banking system using bitcoin for those who prefer it. People who do not want to be part of it can still do whatever they want with their bitcoin.

[meadefreling]

There shouldn't be any central bank for bitcoin because it will just inflate the money supply. The blockchain is the central "bank" in the form of a ledger.

Honestly, i concur with every thing you have stated about the blockchain as the central bank considering its functions.

[Heutenamos]

It is always risky to have just Bitcoin IOU, and even too big to fail argument is off, Mt.Gox showed how much your Bitcoin IOU can become worthless in very short time.

[Hasher99]

I agree there should be a central bank for bitcoins but the there are already some people working as bitcoin bank, hoarding thousands of coins, and probably the makers of BTC>

[Cortex7]

I think the issue with a 51% attack and trusting the huge mining pools that are in control of Bitcoins security is a protocol issue (but I'm sure you'll correct me whether I'm right or wrong). [/color]

I stand corrected, that issue should be addressed at protocol level.

I'm not even sure what that means. Governments become different things all the time depending on who's elected to office.

You said "Organizations and agencies aren't evil, the people controlling them are evil.", which to my mind means nothing as I think an organisations simply can't exist without people.

Importnant thing, money and military plans, remain unchanged. A country who changed long term plans each time a "party" was swapped out would quickly become vunerable in the global arena. The democratic voting system is a layer on top of "real" government.

a :  morally reprehensible :  sinful, wicked <an evil impulse>
b :  arising from actual or imputed bad character or conduct <a person of evil reputation>

In my opinion the word "evil" is about as far as one can go and ought to be saved for those comiting moral crimes (a).

(b) is purely subjective and we all have different thresholds on this.

If I had to choose between who to be locked in a log cabin with between pirate and a mass murderer then I know who I would choose, pirate any day! Sure I may leave the cabin with no loose change in my pockets, but I doubt I would have a scratch on me.

Bitcoin already has plenty of central authority in mining, leadership, development and business leadership. Why not have centralization that can propel it forward.

Yes centralisation is inevitable, and with it can come good, but it will always creep toward corruption, natural selection of behaviour will make it so.

[Cortex7]

Indeed I agree there should be a central bank for bitcoin for reducing price fluctuations, and keeping inflation in control

Nice idea.

Reduced price fluctuation will happen as userbase grows.

Bitcoin already controls its own inflation.

[odolvlobo]

I feel like there are many people in this conversation that don't know what a central bank does.

A central bank:

1. Prints money (manages the money supply).
2. Regulates fractional reserve banking.
3. Loans money to banks and facilitates loans between banks.

A Bitcoin central bank can't do #1, but there is no reason why it couldn't do #2 and #3 (unless you believe FRB is impossible with Bitcoin).

[LeMiner]

I feel like there are many people in this conversation that don't know what a central bank does.

A central bank:

1. Prints money (manages the money supply).: 2. Regulates fractional reserve banking.
2. Regulates fractional reserve banking.
3. Loans money to banks and facilitates loans between banks.

A Bitcoin central bank can't do #1, but there is no reason why it couldn't do #2 and #3 (unless you believe FRB is impossible with Bitcoin).

1. Prints money (manages the money supply).:

correction; creates inflation (devaluation of a currency), loans to otherwise insolvent organizations (governments, banks, etc), creates currency to pay off previous unpaid debt

2. Regulates fractional reserve banking.

How are they going to manage fractional reserve banking if they don't have the "bitcoin-printing" capabilities to absorb any bank-runs by immediate lending to the "bitcoin-banks"? The "bitcoin-banks" wont have enough real bitcoins to answer customer demand.

Loans money to banks and facilitates loans between banks.

No printing capacity = no loans, and no devaluation of send lend currency would make paying back the loan extremely expensive


This could only work if people invest in a "bitcoin-central-bank", which would mean the central bank would have to apply fractional reserve themselves.... I guess you can see where this is going. A bitcoin central-central-bank to catch the bitcoin-central-bank as it falls?

[Cortex7]

I feel like there are many people in this conversation that don't know what a central bank does.

A central bank:

1. Prints money (manages the money supply).
2. Regulates fractional reserve banking.
3. Loans money to banks and facilitates loans between banks.

A Bitcoin central bank can't do #1, but there is no reason why it couldn't do #2 and #3 (unless you believe FRB is impossible with Bitcoin).

Of course, FRB sytem is possible with any trusted token.

But realise that FRB does (in effect) print money, that's how it achieves the fractional ratio.

The fractional ratio can be adjusted and hence some control can be gained over money supply as perceived by users.

For every $X deposited by a user, a FRB is able to (though regulatory oversight) create $Y book entry out of thin air, and is then able to lend that newly created $Y to other users at interest. The fractional ratio detemines Y/X.

Initially FRBs can offer large interest to account holders (giving them a cut of loan repayment profits), I remember getting ~10% in a savings account sometime in the 80s.

Lately these interest rates payed to FRB users have dwindled away to nothing, and were just left with the risk of the bank only able to cover on average 10% of our savings (drop the zero) that's pretty shitty!

[itsAj]

Sometimes watching this forum is like watching kids grow up. That's not a negative thing. In fact, it's kind of cool to watch especially with someone that has taken a hard line view for a long time. Then some major event happens like Pirates Ponzi and they come to the realization that things work the way they do for a reason. You can almost see them saying in their heads, "now I know why fraud controls exist, now I know why the Fed is there, now I understand the reason for banks and lending, now I understand international trade controls, now I know the reason for legislating financial controls, now I know why the barter system was replaced, now I know why you don't trust strangers.........

I think a lot of people understand that bitcoin is "trustless" and somehow think that nothing can go wrong with giving someone else your bitcoin to "invest" or by sending money first to someone they don't know, and don't have a reason to trust. They think that "trustless" means they do not need to exercise their judgment in trusting others.

[titulng]

the forbes author seems to have a great deal of research, but I think just need to have a regulatory body rather than banks

[bitcats]

http://www.n-tv.de/ratgeber/Sendungen/Die-beliebteste-Bank-article11309586.html

[R2D221]

http://www.n-tv.de/ratgeber/Sendungen/Die-beliebteste-Bank-article11309586.html

Could you translate for the people who don't speak German?

[bitcats]

https://translate.google.de/translate?hl=de&sl=de&tl=en&u=http%3A%2F%2Fwww.n-tv.de%2Fratgeber%2FSendungen%2FDie-beliebteste-Bank-article11309586.html

[R2D221]

https://translate.google.de/translate?hl=de&sl=de&tl=en&u=http%3A%2F%2Fwww.n-tv.de%2Fratgeber%2FSendungen%2FDie-beliebteste-Bank-article11309586.html

Automatic translations are bad

[arxwn]

Yes create a bitcoin central bank, a bitcoin tax authority a bitcoin government and bitcoin empire.

[wasserman99]

the forbes author seems to have a great deal of research, but I think just need to have a regulatory body rather than banks

I agree. I don't think a central bank would be such of a good idea. The money supply is already controlled by the bitcoin protocol, which is all that a central bank can do.

[zendantom]

So basically hardly anyone understands what the central bank is for. This is what I call clever scam. Fortunatelly Bitcoin is fully transparent, and Bitcoin basically works as most believe it should work, like only being able to spend existing coin, which can be spend later on by someone else.