It's interesting to think about how the role of central banks might change in the age of crypto currencies. Governments can print Euros and Dollars. But not Bitcoin and Ethereum. Popular theory is that governments have a good grip on currency usage because they can decide which currencies they accept for tax payments. And because they can force merchants to accept certain currencies. It will be interesting to see if…
Since there is no fractional reserve and the blockchain ensures that you have the equivalent of fully correspondent banking with each node in the network there is no need for a central bank on the other hand the blockchain itself can be viewed as is the central bank with the large mining pools acting as its board of directors. That said since no blockchain currently offers a credit system it’s not really possible to…
Credit is a voluntary thing. Both sides can agree to create credit lines (trustlines) out of thin air without any third party ledger or permission. (Well maybe except Usury laws.)
Now the problem with credit is that you don’t know how solvent the debtor is and many debts they have. Credit agencies have sprung up to try to address this somewhat.
But the whole POINT of value based money is to introduce a third party representation of real assets, and that real world scarcity requires solving the double spend problem.
So the whole thing with every technology is remembering that A paid B, and not forgetting it (eg make collusion really infeasible).
Many blockchains are just append only databases stored on every node. They elect a leader based on PoW or PoS and it’s horribly inefficient. There are far better ways.
But anyway back to credit. Money is a social phenomenon that benefits from a network effect. A casino’s chips are worthless as a medium of exhange outside the context of the casino and the same goes for JPY, EUR etc.
Inside a community currency where everyone began to accept it, you can have the ability to print more money same as a Harvard Facebook has the ability to add features you don’t like but you keep using it. The only difference is that these decisions can be done democratically. So like living in a city whose policies you don’t all agree with.
They can use this money for Basic Income and other things like public infrastructure.
They can peg to an outside currency AND print/dilute it gradually to redistribute wealth in a voluntary way that even anarchco capitalists will accept.
That’s one of the features of Intercoin.