Bitcoin Will Probably Never Be Embraced by the U.S. Government(forbes.com)
forbes.com
Bitcoin Will Probably Never Be Embraced by the U.S. Government
https://www.forbes.com/sites/omribarzilay/2017/12/21/bitcoin-will-probably-never-be-embraced-by-the-us-government-says-tenx-cofounder-dr-julian-hosp/
46 comments
"Probably Never" is wishful thinking. They will never. Full stop.
Why would the U.S. government tolerate universal currency when it has something far more advantageous? A currency it controls every other currency is pegged to (including Bitcoin).
More practically speaking, the government needs the ability to expand the money supply during financial crises. Bitcoin doesn't lend itself to any of those Keynesian tricks.
And, government is not "afraid" of Bitcoin. Letting the experiment continue is more about laissez-faire capitalism than an inability to regulate crypto.
Why would the U.S. government tolerate universal currency when it has something far more advantageous? A currency it controls every other currency is pegged to (including Bitcoin).
More practically speaking, the government needs the ability to expand the money supply during financial crises. Bitcoin doesn't lend itself to any of those Keynesian tricks.
And, government is not "afraid" of Bitcoin. Letting the experiment continue is more about laissez-faire capitalism than an inability to regulate crypto.
Totally. The resistance to switch to a universal currency would be astronomical just based on that it would overexpose the money supply to foreign manipulation. The South Korean government has already voiced concerns about this with respect to the wealth of their citizens and they aren't even using it as a national currency.
Government does not need this ability, it just wants it.
Its ability to respond to economic crises becomes very diminished if it does not have this ability.
What does this mean? How does a government "need" or "not need" things?
There are things a government needs, like revenue source and public servants, to exist or do its job.
Government does not need to have its own currency for exist or to do its job.
It's debatable that government having the ability to mess with monetary policy is a good thing. It may be working in US at the moment (and it will be hard to measure if it is helping or not), but there have been a lot of countries economically ruined because of that.
Government does not need to have its own currency for exist or to do its job.
It's debatable that government having the ability to mess with monetary policy is a good thing. It may be working in US at the moment (and it will be hard to measure if it is helping or not), but there have been a lot of countries economically ruined because of that.
> Government does not need to have it's own currency for exist or to do it's job.
Please provide evidence for this. It seems like most successful governments disagree.
Please provide evidence for this. It seems like most successful governments disagree.
A lot of successful governments use the euro, a currency which they neither own nor control?
All the members of the Eurozone do have a say in the governance of the ECB and therefore its monetary policy... In a comparable way to the oversight the federal government has in the running of the Fed...
I think you underestimate the amount of control they have.
I do not underestimate the amount of control they have.
Their share in the bank was was determined in 1998 on the basis of the states' population and GDP, and adjusted since.
Please by all means do me a favor and educate me on the amount of control a country like Slovenia exerts on ECB monetary policy with its 0.3% capital allocation?
Their share in the bank was was determined in 1998 on the basis of the states' population and GDP, and adjusted since.
Please by all means do me a favor and educate me on the amount of control a country like Slovenia exerts on ECB monetary policy with its 0.3% capital allocation?
Slovenia can abandon the Euro at any time. This power sit's on top of any other they gain being part of the collective.
Countries use the Euro because it's useful for them to use the Euro, if it's stops being useful they drop it.
Countries use the Euro because it's useful for them to use the Euro, if it's stops being useful they drop it.
The euro is also in crisis.... Just look at Greece and Spain. The euro is an experiment and we still have time to see if it works.
My point is Government doesn't even need to "want it". It has it.
"Government does not need this ability,"
Extremely debatable, given the fact that every nation on planet earth basically uses monetary policy.
A rational policy whereby currency is exchanged for other assets at a rate using benchmarks is preferable to a strict currency.
A better economic policy might even allow almost anyone to exchange assets for currency. Then the market can decide how much is in circulation (though arguably that is already happening, just the levers are in the hands of a body, not a distributed group).
Extremely debatable, given the fact that every nation on planet earth basically uses monetary policy.
A rational policy whereby currency is exchanged for other assets at a rate using benchmarks is preferable to a strict currency.
A better economic policy might even allow almost anyone to exchange assets for currency. Then the market can decide how much is in circulation (though arguably that is already happening, just the levers are in the hands of a body, not a distributed group).
>every nation on planet earth basically uses monetary policy
Not really true, if you consider all the countries that use the currency of an other. (https://en.wikipedia.org/wiki/Currency_substitution)
Not really true, if you consider all the countries that use the currency of an other. (https://en.wikipedia.org/wiki/Currency_substitution)
I don't think it is debatable considering we have had successful governments without it.
Saying every country does it is not a good point, as it could be applied to slavery once upon a time.
But I agree that it's debatable if it is good. Being good and necessary are two different things though.
Saying every country does it is not a good point, as it could be applied to slavery once upon a time.
But I agree that it's debatable if it is good. Being good and necessary are two different things though.
"Bitcoin doesn't lend itself to any of those Keynesian tricks."
A) Monetary policy is not 'Keynesian' - and it's a handy thing, which is why everyone does it, and nobody has a perfectly hard currency.
B) BTC is not a currency, it's perfect rigidity - ironically - is what attracted many speculators in the first place, killing it's usefulness as a currency.
A) Monetary policy is not 'Keynesian' - and it's a handy thing, which is why everyone does it, and nobody has a perfectly hard currency.
B) BTC is not a currency, it's perfect rigidity - ironically - is what attracted many speculators in the first place, killing it's usefulness as a currency.
IMO cryptocurrency is perfectly poised to be the global currency, transcending nation state central banks and leveraging fiat currency foundations via the bank for international settlements.
https://en.wikipedia.org/wiki/Bank_for_International_Settlem...
The interview with the ex kite surfer and trauma surgeon is his opinions based on his ICO
The interview with the ex kite surfer and trauma surgeon is his opinions based on his ICO
"Cryptocurrency" can't be "The" global currency since it's not one thing. It's a collection of currencies, and bitcoin itself won't be the global currency because there aren't enough bitcoin to be viable for that purpose in the long run.
Agreed right now it is a collection of currencies, just like all the different denominations of fiat currency (USD, Euro etc). It's not hard to see how a future universal cryptocurrency could emerge though...
Different people in the U.S. government will embrace bitcoin, because they are the people trading bitcoin now. The wealth will bring the influence and the influence will bring the power.
Some people were flabbergasted when the Fed was buying Mortgage-Backed Securities off the open market, practically giving one group of people money, under the guise of stimulating AN economy.
Different people are going to be flabbergasted when the Fed, under a different group's leadership, starts buying cryptocurrencies by the $ billions every month, practically giving another group of people money, under the guise of stimulating AN economy.
And it will still be unaccountable to anyone that cares.
The European Central Bank buys junk corporate bonds simply because a Goldman Sachs alumni wanted to. The Swiss National Bank buys equity, straight off the New York Stock Exchange, at valuations it can never make a profit from dividends from. The Central Bank of Japan buys equity and bonds.
These institutions are funded by the future productivity of tax payers and can be exposed to heavy losses.
It isn't out of the question that they will buy the spot market in crypto commodities in the future just because someone familiar with that market is heading the bank.
Some people were flabbergasted when the Fed was buying Mortgage-Backed Securities off the open market, practically giving one group of people money, under the guise of stimulating AN economy.
Different people are going to be flabbergasted when the Fed, under a different group's leadership, starts buying cryptocurrencies by the $ billions every month, practically giving another group of people money, under the guise of stimulating AN economy.
And it will still be unaccountable to anyone that cares.
The European Central Bank buys junk corporate bonds simply because a Goldman Sachs alumni wanted to. The Swiss National Bank buys equity, straight off the New York Stock Exchange, at valuations it can never make a profit from dividends from. The Central Bank of Japan buys equity and bonds.
These institutions are funded by the future productivity of tax payers and can be exposed to heavy losses.
It isn't out of the question that they will buy the spot market in crypto commodities in the future just because someone familiar with that market is heading the bank.
"practically giving one group of people money, under the guise of stimulating AN economy."
It wasn't under the guise of anything but saving the US economy from a wicked meltdown of epic proportions.
The dominos were set to all go down, the Fed kept a few of them up by rebalancing wealth.
As you point out - viciously unfair - but better in the long run.
FYI - a 'strict currency' is perhaps worse; crisis will happen. Strict currencies ties our boat to the dock, too much or too little water and we're all smoked. Moreover - outside of crises, the economy is dynamic - growing and shrinking, monetary policy helps manage that.
A strict currency is better than a poorly managed currency, but a well managed currency is better than a strict currency.
It wasn't under the guise of anything but saving the US economy from a wicked meltdown of epic proportions.
The dominos were set to all go down, the Fed kept a few of them up by rebalancing wealth.
As you point out - viciously unfair - but better in the long run.
FYI - a 'strict currency' is perhaps worse; crisis will happen. Strict currencies ties our boat to the dock, too much or too little water and we're all smoked. Moreover - outside of crises, the economy is dynamic - growing and shrinking, monetary policy helps manage that.
A strict currency is better than a poorly managed currency, but a well managed currency is better than a strict currency.
> As you point out - viciously unfair - but better in the long run.
That's your opinion, not fact. Banks are larger than ever. Inequality higher than ever. Housing more expensive than ever. The world is more unstable now than it was in 2008. Your definition of "better in the long run" is quite odd.
That's your opinion, not fact. Banks are larger than ever. Inequality higher than ever. Housing more expensive than ever. The world is more unstable now than it was in 2008. Your definition of "better in the long run" is quite odd.
No, it's a fact, and a very simple one.
The economy is very intertwined, with the banks at the centre.
If they start to go down - everything starts to do down.
It's as factual as saying if you choke and engine of oxygen, that it will stop burning.
It's simple cause and effect.
Yes - we understand very well the long-long term moral dilemma of 'too big to fail' - this is a well known issue.
And as I mentioned it was 'viciously unfair' - by the way - when the Fed absorbed those mortgages, they were saving millions of American homeowners as well.
A 'market correction' would have implied massive foreclosure across the US.
The 'winners' of the bailout were Banks AND those who owned homes. ALL American home values were propped up.
the 'losers' of the action were non-property owners.
'The more debt' people were carrying, specifically, 'mortgage debt' - the 'more free money' got from the Feds actions.
The economy is very intertwined, with the banks at the centre.
If they start to go down - everything starts to do down.
It's as factual as saying if you choke and engine of oxygen, that it will stop burning.
It's simple cause and effect.
Yes - we understand very well the long-long term moral dilemma of 'too big to fail' - this is a well known issue.
And as I mentioned it was 'viciously unfair' - by the way - when the Fed absorbed those mortgages, they were saving millions of American homeowners as well.
A 'market correction' would have implied massive foreclosure across the US.
The 'winners' of the bailout were Banks AND those who owned homes. ALL American home values were propped up.
the 'losers' of the action were non-property owners.
'The more debt' people were carrying, specifically, 'mortgage debt' - the 'more free money' got from the Feds actions.
Still your opinion. In order to accomplish the above, monetary experiments at a level never before seen were needed. The QE experiment is, at best, half over (they still need to get rid of all the assets they purchased). Driving interest rates below the rate of inflation has caused debt to accumulate in all areas of the economy.
The fact that you think the impacts of the financial crisis are behind us is hilarious. Just wait till the municipal debt starts to crumble. Places like Chicago and Puerto Rico have only been able to sustain themselves because of the low interest rates on debt. The actions of the Fed didn't fix anything, they just kicked the can down the road.
The fact that you think the impacts of the financial crisis are behind us is hilarious. Just wait till the municipal debt starts to crumble. Places like Chicago and Puerto Rico have only been able to sustain themselves because of the low interest rates on debt. The actions of the Fed didn't fix anything, they just kicked the can down the road.
I don't think you understand the difference between a theory and a fact.
I need to block Forbes. The number of ads they put up is comparable, and quality of their content is comparable to buzzfeed nowadays
You actually want to block forbes.com/sites/, which contains content from their "contributors " (aka bloggers they lent their name to )
I have adblock installed. Forbes throws up an obnoxious "ADBLOCK DETECTED!" interstitial when I visit, which is a great reminder that their content is rarely worth it anyway.
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I just can't imagine the world governments okaying the transfer of billions or trillions of dollars of wealth to people who largely just sat on a technology from the beginning. Wouldn't the US or some world body, if they were going to come around to blockchain tech, start their own with a more equitable distribution(or at least, distribution more in line with what currently exists).
My thinking is that bitcoin/cryptocurrencies dont have to be 'fully' embraced by govt, it just needs to be recognized as a valid asset class and the markets will do the rest. so long as its not too much of a pain to use/keep it will do just fine. what people dont grasp is that the reason govt or central banks dont like any other fiat is that it takes power to inflate away from them. so long as we have fixed references in form of btc/etc markets will ensure they work as inflation hedge (after an unspecified initial period of price discovery ;). In fact I do foresee BTC becoming a legit currency after few unstable currencies fail.
You could argue this was essentially the role of gold but the main problem with gold is that its the central banks that started with biggest ownership of gold so its very susceptible to price manipulation and really un-auditable without some form of trust setup. both of those are not as much of concern with cryptocurrencies.
TLDR: it will be an asset until it becomes a global currency.
You could argue this was essentially the role of gold but the main problem with gold is that its the central banks that started with biggest ownership of gold so its very susceptible to price manipulation and really un-auditable without some form of trust setup. both of those are not as much of concern with cryptocurrencies.
TLDR: it will be an asset until it becomes a global currency.
Bitcoin has achieved so much already that people considered impossible. If the government is not able to build their own competitor they'll certainly embrace it at some point.
What does this even mean? BTC is a commodity, the government wins via taxes when people make gains. That’s like saying the government will never embrace stocks or real estate.
The limited number of BTC compared with the demand makes it less a commodity but more a collectible.
Sure
Like, duh. Of course the government won’t embrace Bitcoin. It’s an absolute threat to national sovereignty.
Virtual currencies that are not anonymized - no problem. But not Bitcoin.
Virtual currencies that are not anonymized - no problem. But not Bitcoin.
"It’s an absolute threat to national sovereignty"
It's not a threat to anything but speculators bank accounts.
Nobody is using BTC as a currency.
It's not a threat to anything but speculators bank accounts.
Nobody is using BTC as a currency.
I feel like this is akin to saying amazon wasn't a threat to retailers when it first launched because no one was doing all of their shopping on Amazon at the time. There is certainly a ton of speculation going on in this space at the moment, but it seems foolish to write off the entire concept simply because some people are speculating
Have you read Snow Crash?
The government will embrace Bitcoin, but not as a currency (unless we end the Federal Reserve and/or shift back to the gold standard).
as much as i want bitcoin i think it would be premature for the us govt to embrace bitcoin at this point.. the tech around all this stuff needs to seriously bake and be refined before seriously considering it
Why should the US government fear bitcoin??
- bitcoin isn't usable as a transactional currency. it costs $30-40 per transaction. Plus other currencies are gaining steam, and offering other choices for people to transact
- bitcoin isn't rare to be a store of value.....everyday there's a new viable cryptocurrency springing up
- bitcoin isn't safer than dollar.....it can drop 90% in any day; no official entity is going to prop it up and make sure it doesn't crash. it can be banned by countries (and has been by a few)
- bitcoin isn't easy than square cash or wires.....it can take several weeks to send money. plus the transaction fees are high
- bitcoin isn't usable as a transactional currency. it costs $30-40 per transaction. Plus other currencies are gaining steam, and offering other choices for people to transact
- bitcoin isn't rare to be a store of value.....everyday there's a new viable cryptocurrency springing up
- bitcoin isn't safer than dollar.....it can drop 90% in any day; no official entity is going to prop it up and make sure it doesn't crash. it can be banned by countries (and has been by a few)
- bitcoin isn't easy than square cash or wires.....it can take several weeks to send money. plus the transaction fees are high
> Barzilay: Do you believe Bitcoin will ever be embraced by the U.S. government?
> Dr. Hosp: I think that the concept of virtual currencies will definitely be embraced, because they have a very transparent transaction ledger. So, we know exactly what’s been happening. With bank transfers, it’s quite hard, but with fiat money it’s impossible, so I think virtual currencies will see a huge uprise by governments. Whether governments will embrace Bitcoin - let’s see, but there is definitely value for people. Bitcoin is very difficult to hack, it’s almost impossible to steal if you use for example multi-signature bolt. And with TenX you can spend Bitcoin pretty much anywhere. So, this is the future to go. I don’t think that Bitcoin is going to be a currency, but it’s going to have status like gold.