Topic: [2018-04-30] US Central Bank Explains How Bitcoin is Like ‘Regular Currency’ (Read 192 times)

f it is being called as "less exotic " and " boring" , then i guess other currencies are also boring .
But i totally disagree with this , bitcoin is rather different and does not go like fiat . People might use it in order to attain some fiat at the end but that would also go if complete acknowledgement about bitcoin is given to people .
It is decentralized , which makes it more attractive to the investors , since there will be no way they are identifiable and there is lso no limit of investing that makes it tax free if its not "regulated".     

Christine Smith of US Central bank highlighted some basic facts about the legality of bitcoin and US being a major adopter of bitcoin should be emulated by other bitcoin unfriendly countries, she had also highlighted some distinctive features between bitcoin and US dollars  and she also reaffirmed the fact that bitcoin has both store of value as well as a digital currency.

Good that people especially government understands better bitcoin.

I keep wondering what made Satoshi stay away from a project that was nothing more than an idea initially, but was thrown in the public space of the internet to then disappear completely. It may very well be that he knew it would take off and he eventually would become a wanted individual for authorities. Great thing is that even when the authorities find him, he has no influence over Bitcoin anymore aside from his massive Bitcoin holdings, so there is no damage to be inflicted here. The more you think about it, and start digging through certain theories about Satoshi, the more you respect what he did and left for us. Interesting for sure.

I agree with this point completely, most of the big currencies over the world are backed by very little '' real value'' as some precious metals.
FIATS are supported only because there is demand over the globe thats why big countries are wiling to do almost anything to maintain their currency abroad - to maintain demand for their currency.

The best trait of Bitcoin is that we don't fu**ing know who Satoshi is. Not having a leader is a good thing because not having a leader in this field tends the best minds to compete and cooperate to make bitcoin the best crypto project.
This is going to be a long war against the state which will never give up on the fact that something like bitcoin can exist

After soon the states finish the process of legalization of the crypto currency and, at the same time, its taxation will be introduced, most exchanges and exchangers will have to apply the conditions for identifying their customers and then the anonymity of bitcoin for law enforcement agencies will cease to exist. Even taking into account the planned improvements in bitcoin, including increasing the level of its confidentiality, it still does not work.

This image reminds me everytime why holding fiat is poor decission:



So much for “scarcity” as core of the Fed’s strategy to maintain fiat value.

To summarized, bitcoin address doesn't have a name associated with it. But I have to disagree as well with the statement. Fiat and Bitcoin doesn't share similar traits. Main difference, we don't know how much money are there in circulating, government can print more money (subject to deflation) while bitcoin is pegged at 21 million. I'm also looking if Christine will mentioned that both of them are being used to scam people. Lol.

Many are saying that Bitcoin wallet and its transaction is not traceable,  but I think for some establishment who will soon accept BTC as payment on the counter I think they will require a wallet that the name of the owner is in the account with verifies ID under the government, we have this kind of local wallet in our country wherein facebook is also connected so you have at least 75% assurance that you can look for that person if you don't receive your item after sending your BTC or ETH.

Yes you can say all Bitcoin transactions stored in the ledger are traceable but as to who owns such, there is hardly any way you can figure such fact. This is what draws the line between fiat and Bitcoin- while there is a need to reveal your identity whenever you transact using fiat especially when going through banks, there is no such requirement in Bitcoin because people who transacts with it use codes that does not at all require KYC. In fact, Bitcoin users deal with one another without knowing the real identity of the other. And guess what, this mechanism did not make Bitcoin falter. It perhaps strengthened the stand of Bitcoin in terms of security of transactions. Hence, you saying that both fiat and Bitcoin are similar is totally absurd. 

Christine Smith, a content strategist with the Federal Reserve Bank of St. Louis, suggests bitcoin is less “exotic” and more boring than people may think. Bitcoin’s two use cases are as a store of value and a currency, the latter of which Smith uses to argue a trio of reasons why the leading digital currency is no different than “regular currency.”

Backed by Nothing

Bitcoin, like the US dollar, isn’t backed by any physical asset like gold. Its value is a consequence of the demand that people place on it, which has currently catapulted the price to about the $9,300 level.

Smith cites Fed economists who previously argued that “bitcoin units have no intrinsic value,” adding that neither does the US dollar, euro or Swiss franc. For instance, paper money is comprised of cotton and linen, which makes it cheap to make.

The US government abandoned the gold standard during the Depression and removed its international ties to the system in the seventies. Since that time, fiat money issued by the Federal Reserve isn’t backed by gold, but your money is still valuable.

While bitcoin is debated to be characterized as a currency, asset or investment, Smith says regardless of how you slice it, “bitcoin units have no intrinsic value.”

Finite Supply

Her next argument is tied to the finite amount of bitcoin that will ever be created. As CCN’s recent reminder said, there’s only 21 million bitcoin in total supply. The supply/demand dynamics of bitcoin and other cryptocurrencies and “shocks” in the demand is what leads to the volatility that this market experiences.

Meanwhile, contrary to popular belief, the Fed doesn’t print money, Smith notes, but instead “increases or decreases the monetary base” (banks’ reserve balances + money in circulation). There’s $1.63 trillion in US currency in circulation, as of the Q1 2018, most of which is comprised of Federal Reserve notes. Smith says that while it may be hard to believe, “scarcity” is at the core of the Fed’s strategy for stability in the monetary system, as “to maintain its value, money must be in limited supply.”

Decentralized

Lastly, she evoked Satoshi Nakamoto’s vision –

“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.” — Satoshi Nakamoto’s white paper

While the decentralized nature of bitcoin is what differentiates it from fiat currencies, Smith observes a similarity in the way that cash is spent, “requiring no intermediary to process a transaction.” She concludes with the anonymity feature that is associated with cash.

As for bitcoin, while its founder remains anonymous, its transactions are recorded on a public ledger that’s traceable.

https://www.ccn.com/bitcoin-and-fiat-currency-arent-that-far-apart-fed-strategist/