Topic: ECB paper on Bitcoin and virtual currencies - page 5. (Read 16899 times)

to clarify: the situation that ocurred was someone asking me: "But couldn't it happen that two people accidentally find the same address?"

^ Don't mind Paul, he's quite famous around these parts for his inflammatory comments and blatant name calling

This.

Plus they are referring to Austrian economics in a desperate attempt to connect the dots with some known territory, that of academia and mass media wehre plenty of bank-sponsored "economists" can explain how dangerous a theory can be if it is not endorsed by them.

Trouble is bitcoin IS an asteroid because none of these geniuses has ever come close to providing a solution to the world's current economic woes.

Hey, c'mon now. My "idiot" at least was rhetorical ("No, you're an idiot") , playful (note the winking emoticon - you can say anything if you follow it with one of those), AND in response to an unprovoked (and apparently sincere) attack. I wasn't actually suggesting that cunicula is an idiot, that he has a mental age of less than three.  And I don't harbor any ill will towards the guy. I'm sure he's a nice-enough dude. I bet his dog loves him.

tl;dr version: he started it!

For a while there I thought this thread was the big boys' board until two started calling each other idiots.  Most of the "ECB paper" threads have sparked a vigorous, enlightened  if not at times contentious debate which I thik is great.  You both have valid points.  I just don't think its necessary to start degrading the conversation with the name calling.

Thanks

No, you're an idiot. Thanks, friend. And yeah, I get what they meant. Still stupid.  "Central banks present no default risk"?  Only because they can conjure more of their increasingly-worthless money out of thin air. (Of course, printing new money is the functional equivalent of a partial default that falls on everyone who holds the currency.) Central banks act as a "lender of last resort to the member of the system in order to stop any possible chain reaction resulting from payment incidents or unforeseeable liquidity shortages"? This "benefit" of a central bank (propping up FRB's systemic insolvency) simply isn't relevant to Bitcoin so presenting it as an advantage over "virtual currencies" is silly.  With fiat the "money supply" is a tiny little pool of "base money" and a whole crap-ton of circulating claims on that money, i.e. debt.  Bitcoin isn't a debt-based instrument. "Virtual currencies cannot therefore be considered to be safe money, since the likelihood of the asset retaining its value for the holder, and hence its acceptability to others as a means of payment cannot be ensured"? Yeah, because central banks have such a great track record of ensuring that their currencies retain value for the holder.  By the way, who's had the job of ensuring that gold (a better analogue for Bitcoin than fiat) retains its value? Because those guys have done a bang-up job over the past century.  Maybe we should put them in charge of the central banks.  "[A virtual currency] simply relies on the creditworthiness of the issuer of the settlement asset"? That may be true of Linden dollars. Of course, it's also true of fiat. But it's NOT true of Bitcoin. That's the genius of it. "The level of safety is clearly below that of commercial bank money, as commercial banks are subject to prudential requirements and are supervised in order to reduce the likelihood of default, thereby improving the safety of claims on these institutions"? Again, the beauty of Bitcoin is that you're not holding a claim on an institution to real money. Bitcoin is "real money." Forget reducing the risk of default. With Bitcoin, you can eliminate it.  

It is probably what the ECB meant, but that is not how it works in real life. The proper sentence would read: "The last thing you need in order to maintain stable prices is central bank intervention."

Hello 'loose monetary policy' bubbles

No. You are an idiot. You failed to comprehend the ECB report. You should revise your estimate of your own intelligence downwards and that of the ECB upwards.

The ECB is referring to risks associated with price volatility. Sell me a shirt for the market price in. btc. There is no promise that this the shirt will be available for a similar btc price tomorrow next week or next year. For Euros, the ECB maintains approximate price stability. You need central bank intervention to maintain stable prices. This is what they mean by finality and irrevocability of payments.

Good point...

Ok, so I finally got the chance to read the whole thing. After doing so, I have to take issue with the folks who called this a "balanced" look at Bitcoin. I suppose it's more even-handed than I would have expected considering the source, the European Central Bank, but that statement sort of falls into the "pretty nice guy for a serial killer" category. I do get the impression, as someone else suggested, that different sections may have been written by different authors because the tone / comprehension level appears to shift at times. But when it's bad, it's pretty bad. And there are some real howlers in there, e.g.:
Here's the tl;dr version for anyone who doesn't want to slog through it. Some of the dinosaurs have seen the asteroid. They don't really understand what they're seeing. The dinosaurs are telling themselves they don't need to be worried about it. After all, they're so big and the something is so little, nothing more than a dot in the sky. And yet... there's a tiny part of their walnut-sized brains that IS worried.

The key point is that Satoshi built the system so if you have that much power at your disposal, it is massively more profitable to be a miner for rewards and fees than try to crack funded addresses to transfer the coins.

That doesnt sound much then because you speak about 1! new address. Nowadays you can create million new addresses in short times isnt it? So even when its randomly hit... what would be the worst effect of having the same address?

One of the most obnoxious aspects of that paper is its use of the "virtual" / "real" terminology to distinguish "virtual" currencies (like Bitcoin) from supposedly "real" currencies (fiat). As discussed here - https://bitcointalksearch.org/topic/m.1281236 - the U.S. dollar is very much a "virtual" currency and it's arguably less "real" than Bitcoin in all the ways that count.  So while there certainly are important distinctions between the two, the ECB's attempted "virtual" / "real" classification is silly.  Couldn't they have chosen more accurate (and less loaded) terms?  How about something like, oh I don't know, "voluntary" vs. "violence-based"?

Only if you pee just 9 times in your life.

Better say something like: "it's nearly the same as winning the lottery 6 times! 6 times!!"

And you just know that the guy(gal(s?)) at the ECB who beavered away doing research for this report then quickly and quietly went about getting themselves a USBful of bitcoins anonymously ...  

(just for research purposes of course!).

It's the powerful ideas that are the most corrosive to the old orders ... even the established actors just give up defending the status quo and move ahead eventually.

Notice that they never discussed the merits of centralised versus decentralised monetary systems based on a systems theoretic analysis ... cause that's where they lose.

There shouldn't be any ambiguity. "Legal tender" means a lawful medium of payment. "Legal tender laws" (or "Legal tender" laws) are statutes that define what is legal tender.

A "regulation" is a legal provision that constrains a right (legal provisions which duplicate natural rights are merely redundant and not worthy of discussion). "Legal tender" laws constrain an individuals right to enter into private contracts with other consenting parties using the currency of their choice. Furthermore they give governments license to shirk the one useful function that they can legitimately be said to have, enforcing private contracts. For example, not recognizing gold clauses in contracts.

And even if you'd be hit by a lightning bolt every time you pee for the rest of your life, the collision would not happen before the last strike and you'd be dead by then ; ) so don't worry about that

edit: !typo

i think half of the posters did not read the full article and are trying to grasp how to legally classify bitcoins compared to digital version of fiat so here goes...


if the value in digital form represents the same numeric value (minus commissions/fee's) as the FIAT payment made to obtain it, and also the digital balance uses the FIAT symbols £ $ Euro etc then this is called 'E-Money' which is regulated by financial institutions. EG paypal, moneygram, online bank account balance
if the digital numeric balance has no obvious comparison to the FIAT amount paid and does not use FIAT symbols this is called virtual currency.  which is not regulated by financial institutions. EG 23Bunny points for $1 or 1BTC  for $11

e-Money regulated. Virtual currency not regulated. they are separate classifications and not the same thing.

the virtual currencies are then divided into sub categories depending on their use and impact to real world markets
type 1 (least impact) where you can purchase points but not redeem them back for FIAT. EG facebook credits, microsoft points.
type 2 where virtual currencies can be traded back and forth for FIAT
type 3 like type 2 but also used as means of trading real life products and wages.

if you skip down to chapter 4 of the PDF :THE RELEVANCE OF VIRTUAL CURRENCY SCHEMES FOR CENTRAL BANKS it has a few things to note about it.

regulations do not affect the bitcoin community by controlling what you do with coins to purchase products. so if you buy gold. you are 100% free of income taxes (but the sellers value stil incorporates sales tax if they are a legitimate business that requires sales tax in that country).

BUT if you want FIAT for your BTC then regulations do come into play once a fiat request happens or when fiat exchanges hands. which is where MTGOX, Bitinstant have to be regulated. but the guy selling alpaka socks for BTC does not have to be regulated.

they cannot find enough evidence that it is a ponzi scheme due to the fact that there is not one single entity in control of it to in human terms. close the doors and run off with all the FIAT equivelent of all the coins.

but they can class it as high risk due to the monopoly where there is a lack of multiple main payment gateways in and out. basically bitinstant mtgox holding the largest value exchange with a few dozon very small in comparison exchanges.

that due to this if a majority stake was to cash out it would easily destabilise the market.

EG the 5 people with other 300k BTC could take a huge portion of the FIAT market capital. as noted by the summer 2011 events that made BTC shrink to only a few cents

That's not a good idea if the person learning about bitcoin just discovered by himself the possibility of an address collision.

I'd like to be able to say something like "it's about as likely as getting struck by lightning every time you take a piss for the rest of your life".

When odds are that unlikely, just say it's impossible.  Seriously.