Central bank cryptocurrencies • Hacker News Board

Re: Central bank cryptocurrencies

#41

Post by TACIXAT » Tue, Sep 19, 2017, 2:57 PM UTC

andrewla wrote: post #39

meri_dian wrote: post #5

Very interesting. I'm intrigued by Fedcoin and how it incorporates the possibility of monetary policy into the cryptocurrency framework. The rigidity and hard ceiling on liquidity of Bitcoin is a major weakness of the currency (I know that Bitcoin enthusiasts see it as a strength) but if technology like Fedcoin can overcome that weakness I'm more bullish about cryptocurrency becoming part of the monetary scheme.

I think the idea of Fedcoin is very interesting, and this article does a good job of highlighting what it would mean in taxonomic terms. My biggest unknown, and the problem I've seen with the idea of a centrally managed cryptocurrency (especially one with convertibility) is the creation/redemption mechanism. The proposals I've seen talk about varying the block reward, or having some sort of transaction type that can…

>Bitcoin's monetary policy is deterministic and consensus-based

So far consensus has been to deflate the hell out of the coin so miners and speculators can make a ton of money. That really seems like an awful currency to me.

Re: Central bank cryptocurrencies

#42

Post by grzm » Tue, Sep 19, 2017, 3:01 PM UTC

kybernetikos wrote: post #23

grzm wrote: post #19

Earlier quoted context omitted.

> Hayek shared the 1974 Nobel Memorial Prize in Economic Sciences with Gunnar Myrdal for his "pioneering work in the theory of money and economic fluctuations and ... penetrating analysis of the interdependence of economic, social and institutional phenomena." https://en.wikipedia.org/wiki/Friedrich_Hayek

I suspect that rather than quibbling on the historical facts of the prizes award, the person you're responding to doesn't consider the Swedish National Bank's Prize in Economic Sciences in Memory of Alfred Nobel to be a genuine Nobel Prize.

Thank you for the clarification. It's one I wish 'neilwilson had made as well, as it's easy to understand why one would think otherwise, particularly as they're announced and awarded along with the other Nobel laureates. Upon further reading, the prize's history with respect to Hayek is even more interesting:

> In his speech at the 1974 Nobel Prize banquet, Friedrich Hayek stated that had he been consulted on the establishment of a Nobel Prize in economics, he would "have decidedly advised against it" primarily because, "The Nobel Prize confers on an individual an authority which in economics no man ought to possess.... This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence. But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally."

https://en.wikipedia.org/wiki/Nobel_Memorial_Prize_in_Econom...

Thanks again. I appreciate the insight.

Re: Central bank cryptocurrencies

#43

Post by otakucode » Tue, Sep 19, 2017, 3:28 PM UTC

I have been curious about this idea for a long time. Consider the situation the USA is in right now. What percentage of all transactions which occur in the US economy right now pass through a payment processor? I would imagine the majority, and growing. And payment processors don't just charge for their services. They charge a percentage of the size of the transaction. Their cost to provide the service of moving numbers from one place to another over a wire does not increase for larger numbers, yet they still insist that the parties in the transaction pay more to move larger numbers.

This makes payment processors a de-facto taxing body and gives them at least as much control over the monetary supply in a society as any central bank. If the Federal Reserve decided to take actions that private banks or payment processors disagreed with, it is entirely within their legal power to adjust the rates they charge and counteract the central bank. This is very dangerous. It's terribly unfortunate that modern government is so packed with nibshits and the clinically paranoid that they would never again back a currency which offers the same features as cash (untraceable, unfreezable, etc), but even without those, just escaping from the tyranny of payment processors might be worth it.

Re: Central bank cryptocurrencies

#44

Post by EGreg » Tue, Sep 19, 2017, 3:36 PM UTC

ttoinou wrote: post #35

notahacker wrote: post #25

Earlier quoted context omitted.

Hayek didn't really adequately defend a deflationary currency at all. Hayek was attacking a related, but different underconsumptionist argument that consumption was more important than investment. The argument against [sustained] deflation is that investment will be reduced along with consumption . In order for investment to take place, it is necessary [though not sufficient] for the investor to expect to earn a mone…

If you keep the same deflationary money over the years, you are making a profit. So what's "good" is not a money which supply grows or shrinks, but a money with which people can make good predictions and plans accordingly. Plus, burying your money is withdrawing it from the money supply, maybe it has effects like "giving it to everybody" ? (added the risk that you can dig the money and put it back into circulation)

How do you know an elastic money supply is not better?

What is your criterion : goal for measuring how good a currency is?

Re: Central bank cryptocurrencies

#45

Post by sova » Tue, Sep 19, 2017, 3:58 PM UTC

otakucode wrote: post #43

I have been curious about this idea for a long time. Consider the situation the USA is in right now. What percentage of all transactions which occur in the US economy right now pass through a payment processor? I would imagine the majority, and growing. And payment processors don't just charge for their services. They charge a percentage of the size of the transaction. Their cost to provide the service of moving numb…

If we could somehow move from private banks to a public distributed ledger that worked Government-style, we could probably reduce taxes and streamline a lot of things.

Re: Central bank cryptocurrencies

#46

Post by sova » Tue, Sep 19, 2017, 3:59 PM UTC

cslarson wrote: post #15

trowway21 wrote: post #2

Lol. So back crypto $ with trillions of $ of debt going back to the Louisiana purchase; kept alive by a pyramid scheme dependant on a certain and limitless supply of debt free immigrants, after they continue to prove they don't require anything concrete to generate demand & subsequently value? Aka: how interested are people in a cryptocurrency worth market value minus 20 trillion $?

US GDP is $18.5 trillion so yeah it has some debt but also some decent revenue. Yeah, I'd be interested.

You know, if Tom owes Sally, and Sally owes Jes, and Jes owes Tom, it's really not clean and cut to say "all debt" or "all revenue" because it depends on which node is the focal point.

Re: Central bank cryptocurrencies

#47

Post by sova » Tue, Sep 19, 2017, 4:03 PM UTC

sandGorgon wrote: post #21

does anyone know how will banks and accounts work in such a system ? because funds will be held by individuals and not banks. will banks become the authoritative proof-of-stake entities ?

Would not proof-of-stake be an algorithmic calculation, available to anyone with the dataset (blockchain) and the computational power? Right now certain credit card companies charge a fee for calculation of a credit score (at that instant/ on the fly). Presumably in a cryptocoin economy everyone who has access to the dataset and knows the formula could tell you the proof-of-stake. Banks historically act as a time-throttler on transfer of funds, making sure the economy does not move without the inner cogs of the banks turning first. It is widespread now globally. With a cryptocoin economy, banks would not throttle time any longer and would instead help facilitate additions to the blockchain (via fee) as many exchanges currently do. What all factors does one need for proof-of-stake?

Re: Central bank cryptocurrencies

#48

Post by DennisP » Tue, Sep 19, 2017, 4:31 PM UTC

paulgb wrote: post #37

DennisP wrote: post #30

Earlier quoted context omitted.

Exactly, cryptocurrency isn't digital gold, it's the system of privately-issued competing currencies advocated by Hayek.

Hayek's currencies were backed by the issuer. They're more analogous to frequent flyer miles than cryptocurrencies.

They could be backed in some way, but Hayek only relies on competition between issuers. In his book he writes extensively about unbacked paper money.

Re: Central bank cryptocurrencies

#49

Post by mrb » Tue, Sep 19, 2017, 7:30 PM UTC

danmaz74 wrote: post #14

mrb wrote: post #8

Earlier quoted context omitted.

Research before talking. Bitcoins are being spent more than ever: the transaction rate keeps increasing and is roughly doubling every 18 months https://blockchain.info/charts/n-transactions?timespan=all&d... Preemptive reply to those who think speculators cause the tx rate to increase (often an invalid comment thrown out in HN): no they don't. Speculators typically leave the coins in an exchange wallet (they are not…

Speculators also move coins between exchanges in search of better speculation opportunities, and to convert from and to "fiat" in those exchanges that allow it (but are worse for specularing)

90% of speculators don't do this. The process to sign up and verify is usually so arduous (because of excessive fraud) that once they are verified they trade and stay at only one exchange.

Re: Central bank cryptocurrencies

#50

Post by kybernetikos » Tue, Sep 19, 2017, 11:20 PM UTC

grzm wrote: post #42

kybernetikos wrote: post #23

Earlier quoted context omitted.

I suspect that rather than quibbling on the historical facts of the prizes award, the person you're responding to doesn't consider the Swedish National Bank's Prize in Economic Sciences in Memory of Alfred Nobel to be a genuine Nobel Prize.

Thank you for the clarification. It's one I wish 'neilwilson had made as well, as it's easy to understand why one would think otherwise, particularly as they're announced and awarded along with the other Nobel laureates. Upon further reading, the prize's history with respect to Hayek is even more interesting: > In his speech at the 1974 Nobel Prize banquet, Friedrich Hayek stated that had he been consulted on the est…

That's a very interesting quote by Hayek.