Topic: Bitcoin as a new World Central Bank (Read 1906 times)

During the discussion it was pointed out that nodes and pools association would be like in function of the central bank.

BTC would be a stability asset (like dollar or gold in amounts like banks do (like 1000 USD unit only for transaction among banks)) for atcoins/tokens as derivatives of micro trade (for individual wallets in the function of "small banks').

The volatility that Bitcoin experiences is because there is no fixed demand for it.  There are almost no instances where we are forced to use Bitcoin.  In most cases, the opposite is true in that you couldn't use Bitcoin to make simple purchases even if you wanted to, as it's not widely accepted.  If it was used throughout the world, it would be very stable as people would need it for day to day activities rather than a speculative investment.

Even with that stability however, it would never become a central bank.  It will be an alternative currency at best.

Maybe you meant reserve currency? Bitcoin cannot be and will not be a central bank since there is not monetary policy or anything like that, there is not central authority printing bitcoin, but bitcoin could become a reserve currency, that is what we are seeing with some projects having stored some coins as you describe and governments could begin to do the same.

I don't like the fact that bitcoins is taking the role of a central Altcoin authority "since it should all be about decentralization" but it only makes sense IMO, Altcoins are not well established and with high demand like BTC is "and hence having direct USD/Fiat to BTC channels" therefore Altcoins can only value itself on BTC value.
Some altcoins have broken from this though, from example ETH, that not only exchanged with USD through exchanges, but can also be directly bought with USD and other currencies.

Wait the minute!!! If the Central Bank feels that an increase in consumer spending is needed!!! What?! If they feel it? Do you see this parody? I hope that bitcoin will stay decentralized, cause this is what we will see, if SOMEONE FEELS something he will move bitcoin in that direction.
If they feel good they will print money for them, they will blackmail everyone, other states, other banks, who fuck them all if they feel like that. Bank is evil institution, they print money as they feel like, then they give that money on loans with interest rate. People don't have a clue what is happening, all of a sudden your country owns s lot of money and you need to sell your water, you companies, your everything just to pay your debt to central bank! People wake up!

Text from this site: https://www.oanda.com/forex-trading/learn/intro-to-currency-trading/fundamental-analysis/central-bank

1. 'A primary role for most Central Banks is to supply operational capital to the country's commercial banks. This is done by offering loans to these banks for short time periods – usually on an overnight basis.
    This ensures the banking system has sufficient liquidity for businesses and individual consumers to borrow money, and the availability of credit has a direct impact on business and consumer spending.
    The Central Bank charges interest on the short-term loans it provides. The rate charged by the Central Bank affects the interest rate that the banks charge their customers as the banks must recover their cost (the interest they paid) plus earn a profit.'

Thesis: So this would be mining pools

2.  Central Banks use the relationship between the short-term rates at which it offers loans, and the interest rate the banks charge, as a way to influence the cost for the public to borrow money.
    If the Central Bank feels that an increase in consumer spending is needed to stimulate the economy, it can lower short-term rates when providing loans to the commercial banks. This usually results in the banks lowering the interest they charge, making borrowing less costly for consumers which the Central Bank hopes will lead to an increase in overall spending.
    If a tightening of the economy is needed to slow inflation, the Central Bank can increase interest rates making loans more expensive to acquire, which could lead to an overall reduction in spending.

Thesis: So this would be fees

3. Supply and Demand of Currency

    Just like any commodity, the value of a free-floating currency is based on supply and demand.
    To increase a currency's value, the Central Bank can buy currency and hold it in its reserves. This reduces the supply of the currency available and could lead to an increase in valuation.
    To decrease a currency's value, the Central Bank can sell its reserves back to the market. This increases the supply of the currency and could lead to a decrease in valuation.
    International trade flows can also influence supply and demand for a currency. When a country exports more than it imports (a positive trade balance), foreign buyers must exchange more of their currency for the currency of the exporting country. This increases the demand for the currency.

Thesis: so this would be the role of exchanges that i.e. hold some BTC's for the flow (and FIAT too as a balance)

This is more complicated, though
I'm looking for the common points for more complex analytic..

Well, being a world central Bank is not that easy. As stated the volatility will be a major concern which affects the economic situation, also same as gold here with bitcoin the volatility cannot be kept under control. So it's good to leave bitcoin as it is, somehow through trading it benefits few users all around and generate an inflow of investment to the economy of the particular Country.

Bigger whales has bigger invested billions of their money with bitcoin and I think they're not storing their money anymore in the fiat money world central bank. They are making bitcoin as their new world central bank, because it's more profitable than fiat money banking, due to much higher profit gains compared from traditional money bank which has slow moving interest of your their money. Even though bitcoin currency has an erratic and unstable currency price in the market, but it doesn't removed the trust of bigger whales because when it fluctuates everyone here in the bitcoin system has been benefited well.

Yes. I would risk a thesis that BTC is for 'internal' transactions - like Dollar or Euro, while LTC is for sending (like SEPA) because of faster and low-fee charges. https://en.wikipedia.org/wiki/Single_Euro_Payments_Area
Still, there is a risk of flash crash, while BTC is more stable during the 'period' of transaction. No problem if it takes small amount of time - however, changes may represent even couple of % (that's the basis of arbitrage). This is the difference of banks, that have a stable transaction value of, i.e. dollar, but having so big spreads.

This shows the general rule of BTC - it may represent the IDEA of any king of good or commodity, however, we function in a society that is under some economical assumptions, which influence the main idea of decentralized BTC.

Oh... That's not stupid at all.
There is indeed the idea of stability and strength in BTC. More than in any altcoin.
There is this idea that to get an altcoin you sell BTC
I mean 99% of the time you just can't buy an alt with fiat, you need BTC.

I don't know if it took the role of a central bank though. But it did indeed took the role of main currency rather well. In the same way that for long all trades of currencies has to go through $, now all trades of altcoins have to go through BTC ^^

Thank you for responses, again.

As for the reply that the central bank dictates the monetary policy. Isn't that similar like this scenario: https://cointelegraph.com/news/unrealistic-timeframe-bitcoin-core-developers-criticize-bitcoin-scaling-agreement

Changing block size would have a huge impact, i.e. on fees. More info: https://segwit.org/

Undoubtedly the BTC took the role of 'comparator' to other cryptocurrencies 

Bitcoin cannot be the new world central bank. If bitcoin will be the new central bank many economy will suffer due to the super volatility character of bitcoin. Bitcoin is not stable and a world central bank must offer stability other wise it means big problems on the financial sector and economy. So to make bitcoin a new world central bank we must make its price stable just like gold.

Maybe this idea wont be accomplish but when this idea will be came true some of the staffs in the world will just try to corrupt bitcoins and use their power to manipulate it in order to accomplish their own greed.
Also when bitcoin came as a new world central bank the bitcoins value will slowly to rise up cause many people are depending on it.

Currently there are some banks that respond well about bitcoin, even working together in finance, this makes the value of bitcoin will be more expensive, chances are it could happen if bitcoin into the world bank

Yes I agree, after prices skyrocketed from $1200 to $2500, all people are increasingly optimistic that bitcoin is going to be a global currency and world central bank replace world bank, we will see next day many countries will transactions with bitcoin (not USD, JPY, EURO and more).

It unwittingly took the role of reserve currency because it came first, there aren't many other reasons for Bitcoin being in the position it is right now if not for the fact that Bitcoin has the largest community, and it came first, allowing for it to grow while everything else was being developed. If it came about now in the entire development of cryptos, it would be ignored or passed as a shitcoin due to the lack of features or flaws present.
Not trying to say Bitcoin is bad, it is great, but you have to be realistic about it all.

i think bitcoin can not act like a central bank because every people has its own to manage the bitcoin in their wallet. if its like a central bank then we need some system or some group of people that can controlled or manage all bitcoin that have been exist and still in mining and watch over for not using in the wrong hand. if this is the case, then its really hard to do, because i am sure, the population will be bigger than only watching a member from one bank only and we are talking about a whole bitcoiners in every country.

I can say so because all this is a development, which is positive in this era, because bitcoin is slowly becoming the benchmark of a virtual currency

 believe that bitcoin is working as a central bank or we can also say that bitcoin is a central crypto currency for any project. That is why everyone like to get BTC for their project. That also show that more people even the founders of altcoins believe on bitcoin.

A central bank dictates the monetary policy of a currency, so Bitcoin would not be a central bank.

It's an alternative currency for the world to use if they wish, but it is decentralized.  In terms of Bitcoin being a stable investment...not sure about stable with the volatility we're seeing, but I think it will be something to add to someone's diversified investment portfolio.  I think it becomes even more attractive for countries that have particularly weak currencies and problems with inflation to begin with.

Yes but until then it holds true so let's just wait and see since we don't know the future. Altcoins keep coming but we haven't seen any capable of outdoing Bitcoin so for me I think it become the global central bank in disguise until the right time.

thesis no.6

if not central bank, maybe then the network undergoes consolidation - with the higher meaning of 'corporation' nodes?

Hi, thank you all once again for responses.

Conclusions as theses from several answers:

1. BTC took the role of USD in relation to the 'real' world
2. I would risk a thesis that if pt 1 is true - then the network is a central bank, while BTC is it's payment instrument
3. Yes, central banks operate basing on interests and money production, as well as lending. In such relation, while there is no 'single mining' took the role nodes.
I would risk a thesis that if the 'interest' rate is established due to the inflation mechanism, fees for transactions are like loan interests of the central bank
4. Stabilization role of BTC in relation to alts and tokens - there was a good comparison to commodities. BTC is a common good, while the rest is derivatives. It all depends on market cap, maybe this role will be changed by the other currency?
5. Yes, BTC i decentralized, however I would risk a thesis that the whole network is a centralization process thinking about nodes only (nothing can be done without blockchain notification), so it is not so independent

Theses are contradictory, as I would like to compare the stabilizing role of BTC to the classical market, which also changes due to internet banking (money becomes more and more a virtual thing). This is really a hard discussion, as it seems there a lot of common and coherent characteristics, while the original decentralization assumption predominates.

Edit: look at the number of nodes: https://bitnodes.21.co/dashboard/?days=365 vs. the thesis where 'transaction fees' state a 'loan' of the 'banks' <=> nodes.

I wouldn't go so far as call it a central bank. I mean, I have bits but still use my credit card. There's also no bitcoin body that would provide usual bank services like loans.

I think of bitcoin as more of a personal bank. I keep my money where I want it and there's no way you are taking it from me, LOL. Also beats keeping my money in a bank's savings account with their pretty much non-existent interest rate.

Bitcoin is a decentralized entity but it has taken the role of the US DOLLAR in relation to all other altcoins and tokens on the market. So it's like a parallel universe and a new economic area for investment and also business related activities. Banks and other institutions are now getting very interested in blockchain technology so Bitcoin is becoming a hub for tech and problem solving too.

I think that you've got the whole idea of bitcoin wrong.

Bitcoin in ICOs are simply a way for ICOs to gain their initial funding - nothing else. Bitcoin itself cannot print more money to cover for these ICOs nor can ICOs take out loans from the bitcoin infrustructure. bitcoin is the currency here, not a bank.

The fact that ICOs are using bitcoin means that they are acknowledging bitcoin as the first and most trustworthy cryptocurrency to hold - even though they have their own competing projects going on.

Bitcoin has not played the role of a central bank but rather as the universal legal tender for all cryptocurrency all around the world. Just like the US dollars which is the center of foreign exchange bitcoin is the center for Cryptocurrency exchange. In short bitcoin is the US dollar in the digital form. This is the reason why bitcoin is very stable since the more altcoins that will appear the more the price of bitcoin will become.

Central bank has it's own definition and most definitely bitcoin will not suit on that definition.
It is just a good for me that can be used for online transaction while central bank manages the banks itself.

Central bank. Hmm kinda looks like that only. Bitcoin is manager of all currencies which are produced virtually. As we can see the prices of all alts and ICO are solely dependent on BTC only. It is rider in the world of these tokens. This is why most of us choose to invest in BTC directly as we know the returns are high from BTC only. No other alts, ICO can compete it in the market and never will as BTC is one of its kind and rare.

Definitely not a central bank because in my understanding central bank is centralized and bitcoin is not. Though there are altcoins that is considered a good investment but bitcoin is still the most dominant of them all, I do believe they will both progress in the future and investors makes more money.

Bitcoin is a currency, not a bank. Crypto currency can lead the world to a new monetary system based more in a decentralized or almost decentralized system than the full centralization we have today.
Giving better opportunities to all and equal chances of competion, finishing the lobbies and mafious schemes there are today in the world.

The very nature of bitcoin is its decentralization and the main characteristic is its pseudonymity, which it might have to lose once it becomes a central bank. And just because it has been increasing rapidly in price doesn't mean it is stable enough because it is still very much prone to volatility and the market cap is nowhere near that of gold.

Bitcoin and altcoins can be an alternative to government regulated banks so it is a way to store money independent of any nations control. This is one of the major advantages of cryptocurrencies.

In a way, yes, it is like a central bank because majority of exchanges are paired into it with other altcoins.However this will not hold true for a long time because other altcoins have better programs in the future.

Central banks centralize portions of the economy to make it easier to control and regulate. This has a double edged effect. On one hand: it simplifies matters. On the other hand: the centralization can reduce innovation & industry advancement as we've seen many banking industries stagnate and fail to progress or evolve over a span of decades.

Bitcoin being decentralized in theory lends it towards being the opposite of a central bank. However it being self regulated by cryptographic function could eliminate and even outperform "regulation" to a degree which could recommend it as being an international reserve currency with the potential to be more stable and reliable than currencies regulated by people who are prone to bias.

Gregory51gost I wish many bitcoin enthusiast and developers will get to know about this powerful and carefully thought you have posted here. Bitcoin is actually performing the role of regulatory to others coins.

It can also in some sense. You can invest your money and wait for time. Blockchain can on the other can also function as a bank. It can hold many currencies but this is more secured unlike in some banks, so i guess this has high grounds on security more than regular banks.

No, because a central bank lends money to other banks in exchange for an interest, sometimes very low. In ICO, bitcoin is used as the means to buy tokens or altcoins, instead of buying them with fiat money people buy with bitcoin because it´s much simpler and is the main currency in the world of cryptos and that everyone uses. To give an example, it´s as if the tokens were shoes and bitcoin the money with which you buy the shoes.

It would not function as a central bank though. A central bank sets rates and sets how much money or loans as issued. Btc is always an average of 10 minutes to generate a set number of blocks and have a corresponding increase of difficulty.

The only thing that is centralized about bitcoin really is the mining. It is quite possible for the chinese government to taker over the miners in china for their own purposes. In that case we would be subject more of a central bank, but the good news is that hardforks can correct the action and we dont need to capitulate to a centralized mining operation.

I believed that when they are going to build a bank only on a country that fully accepted bitcoin as there one currency a good example there is a country based wallet that they don't need to use any other only wallet also those wallet that no fee on every transaction are being made.

I'll try to answer to all , thank you for all responses.

1. ICO was an example - many gather in ETH (due to smart contracts), I was talking about the process later, when money gathered are often exchanged into XYZ coins to reduce the impact of fluctuation. Only because a huge difference in % of BTC vs. other (statistically, not a rule), I was thinking about BTC as the stability coin. Pjt for the comparison to gold. But still I'll keep the theory of bank in minds, its like a cross-over of both?
2. Why analogy to central bank - because every owner of the wallet is a 'single bank', also grows the production of BTC (mining) like central banks do with money
3. Very good analogy to gold, but BTC is a derivative. It is more like a security then typical gold. Because one may cover its value in different values. ETH has an advantage of smart contracts - you can cover the value of anything, but its a 'prim' derivative, thinking of the old way.
4. Transactions - yes, the network is not ready for micro transactions. But central banks in relation to other banks also do not use small transaction.

So the schema was in analogy: BTC - central bank to other coins (small banks). ETH - like stock or forex for derivatives (smart contracts). I think there will be a range of 10-20 main coins, every for the designed model. What you think?

Totally mate, just a problem with that vision, 3 or 7 or 15 or even 500 transactions per second is not a central bank worthy of a network.

Don't mention ICOs please because there is no such a thing as a legitimate ICO out there, also I can't imagine Wu as the director.

But I know one thing, what ever Bitcoin is if you don't have at least 21 Bitcoins you'll be standing on the loser side of the future.

Your question has two parts.
Part one is from cryptocurrencies point of view. You said most of the coins crowdfund through Bitcoin and its true! So Bitcoin is already the 'Central Authority' for cryptocurrencies. Almost all the exchanges are dominated by altcoin/BTC trades.
Secondly from point of view of financial economy. Its still a big game for Bitcoin. It needs to grab market of 7 billion population and considering scaling issue, lets wait for the magic. Till then enjoy big rallies which in my prediction continue for several years. 

Bitcoin is not a central bank but a central digital currency for all the alts. What does it mean that all the alts are traded again bitcoins and you see very few other markets. Few other markets i remember are Doge/ LTC coin etc but trades are very less in them. But dont think Bitcoin to become a bank or something like that. We already are  fed up of Banks and now need a bank free society.

I hope Bitcoin destroys central banking. I sincerely hope it doesn't become co-opted to just take it's place.

Bitcoin doesn't have the function of the central bank. Wallets are the place you store your coins but I disagree that these are the same things as bank accounts and bitcoin can't have the same role as in physical world central banks have to fiat currencies.

Indeed, our wallet works well as our bank and ot does more great job than real banks,so possibility may happen since its bitcoin doing a great job now.

Well i think it is. Technically we store our money there and banks now has no use if we do that. Most transactions dont need banks, investments dont go in banks and you can wait in time for until price increases. It may not be directly that it can be recognized as a bank but the fact that we can have big transaction without using a bank marks the purpose or concept on how a bank workds in the physical world. Btc can be the bank of the internet.

not really!
the fact that a lot of ICOs are using bitcoin as the payment only shows that bitcoin is the currency they are looking for.
and don't forget that these ICOs are being created to scam people. and that means they need a lot of newbies for that, and these newbies won't have anything other than bitcoin in their pocket to invest in the ICO so they take the most popular way!

Bitcoin isn't a Central Bank. You are right generally but you are mixing up things.

Bitcoin is digital gold of the cypto world.

When there are bad news (an exchange gets hacked, a country bans bitcoin etc), bitcoin takes a loss but altcoins gets fucked. (literally) Bitcoin has the most resistance against bad news because it is the strongest of all.

When there are good news (bitcoin is accepted as an official currency etc.), bitcoin rises but altcoins explode. Because bitcoin is the most traded currency and that makes it less volatile.

As you can see, bitcoin is the base crypto currency of all. It is the most stable one. Altcoins are volatile but you should mind that volatility works both ways.

The people's Bank can not exist. The Bank is a very complex mechanism which can only very good professionals. I doubt that bitcoin can handle the job. There is currently no conventional bitcoin Bank, and on a global scale this is not real.

What do you mean about the central bank? Bitcoin as an intermediate value for altcoin which means if that gives a value for the altcoin.

It's not a central bank or anything like that.
Bitcoin as a root for another crypto.

It just like a rule for another crypto. That's so simple.

I think it will be the people's bank, but i dont think it will be the world's central bank.. The powers that be dont want BTC to survive

While people invest in alts and tokens, many treats BTC as 'stable' investment. For example, many ICOs make ESCROW in 40% BTC and then other coins.

Do you think BTC unwittingly took the role of the central bank in relation to other coins (detail, consumer 'banks')?