Excellent read, thanks for posting the link!
As their value increases, so does the expense that the IMF has to incur in order to obtain them. Because having a supply of Bitcoins is necessary to effectively counter a speculative attack, the sooner the IMF can acquire a supply of Bitcoins, the cheaper counteracting such an attack will be.
I agree, the IMF better start buying now when they are still cheap!
B. Direct Control: Granting Digital Currencies Quasi-Membership to the IMF
Alternatively, the IMF could collect Bitcoins directly from Bitcoin users rather than using member-nations as intermediaries...
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Section 3 would allow the IMF to recognize Bitcoin as an “IMF-official” digital currency once the IMF has obtained a certain amount of Bitcoins from Bitcoin users.
The trade-offs would be mutually beneficial. Bitcoin users would sell Bitcoins to the IMF for an equivalent value of other currencies. In exchange, Bitcoin users would benefit from the increased legitimacy that official IMF recognition would bring.
Sounds good to me.
By doing business with an established international institution such as the IMF, Bitcoin users demonstrate that Bitcoin is committed to being a real player in global finance, not just a fringe currency.
It's the opposite actually. It's the IMF that now recognises that Bitcoin can no longer be ignored and decides to
surrender now instead of later when it will be more expensive.
Direct interaction with the IMF would, in turn, bolster confidence in Bitcoin as a globally accessible digital currency and would increase the potential market for Bitcoins.
Agreed.
It is worth noting that participating with the IMF in this manner would not violate Bitcoin’s anti-establishment ethos: selling Bitcoins to the IMF would be a simple transaction with none of the IMF’s regulatory strings attached.
Agreed. The IMF would be just like any other market participant.
The IMF, on the other hand, would benefit from having the Bitcoin reserves it needs to counter a speculative attack without requiring member-nations to take any domestic action.
Ok.
This solution is not, however, without its drawbacks.
I can't see any for me personally yet.
Collecting Bitcoins via a quasi- membership scheme creates a collective action problem. Because Bitcoin operates through a decentralized network of users, aggregating the necessary amount of Bitcoins would be difficult.
Not really, you just have to buy them at the market price or mine them just like everyone else. The sooner you start the cheaper it will be!
There is no centralized institution for the IMF to go to, and no easy way for the IMF to contact Bitcoin users directly. The IMF would have to enter online Bitexchanges like any other prospective Bitcoin user.
Correct.
Welcome to the truly free open market where you don't hold any special privileges over the common man. I know you are not used to that...
Even if the IMF were able to transact with Bitcoin users directly, the recognition-in-exchange-for-trading scheme creates a tragedy of the commons: all Bitcoin users benefit from the increased legitimacy of IMF recognition, but no one individual user has an incentive to transact with the IMF.
It's not really a "tragedy of the commons". It just means that it will be more expensive for the IMF to achieve its goals.
In fact, Bitcoin users might very well have incentive not to transact with the IMF right away.
I am sure you will find people selling, but yeah most intelligent investors will probably prefer to hold.
Recall that Bitcoin’s mining software is programmed to cap the generation of Bitcoins by approximately 2025. Once the availability of Bitcoins becomes finite, we can expect the value of Bitcoins to increase.
You're damn right we can.
Thus, Bitcoin users have a short-term incentive to hold on to their Bitcoins rather than trade them. Since the proposed system relies on the completely voluntary participation of Bitcoin users, the incentive to hold on to Bitcoins creates a serious problem.
No, it's not a "problem". It is the benefit of a non-inflationary currency. Unfortunately for the IMF it just means it will be more expensive to do what they want.
Welcome to the truly free market!
