Showing posts with label central banks. Show all posts
Showing posts with label central banks. Show all posts

December 20, 2017

How Ripple (XRP) stacks up against other digital assets

By Team Ripple - December 11, 2017 (ripple.com)


Everyone is talking about the digital asset space. Wild price fluctuations, new XRP capital funds and Bitcoin (BTC) forks have made it virtually impossible for consumers or the financial industry to ignore the popularity and proliferation of these assets.

In fact, the digital asset landscape has grown so much that there are more than 1,300 types of assets on the market with a collective market cap of $450 billion as of this posting.

We examined the top digital assets for payments while comparing their speed, cost and scalability. Here’s what we found.


Which digital asset is the best for payments?

XRP is the only digital asset with a clear institutional use case designed to solve a multi-trillion dollar problem – the global payment and liquidity challenges that banks, payment providers and corporates face. In order to effectively solve this problem, speed, cost and scalability are of extreme importance. When you line up the top digital assets for these attributes, it’s clear that XRP is the winner.

XRP is part of a bigger vision


XRP is a key enabler of the Internet of Value — Ripple’s vision for making money move at the speed of digital information. XRP’s speed, transparency, and scalability help financial institutions move money like information moves today — in real time.

It’s no wonder that real institutional customers are using and finding value in XRP and governments, regulators and central banks are increasingly recognizing the role it could play in the global system.

For more information about XRP, visit our XRP Charts or learn how to buy XRP.

December 01, 2017

Bitcoin: The End of Money As We Know It (Trailer)

By Torsten Hoffmann - April 30, 2015 (www.youtube.com)

Bitcoin: The End Of Money As We Know It traces the history of money from the ancient world to the trading floors of Wall St. The documentary exposes the practices of central banks and the dubious financial actors who brought the world to its knees in the last crisis. 

It highlights the Government influence on the money creation process and how it causes inflation. Moreover, this film explains how most money we use today is created out of thin air by banks when they create debt. 

Epic in scope, this film examines the patterns of technological innovation and questions everything you thought you knew about money. 

Is Bitcoin an alternative to national currencies backed by debt? 

Will Bitcoin and cryptocurrency spark a revolution in how we use money peer to peer?  

Is it a gift to criminals? 

Or is it the next bubble waiting to burst?

If you trust in your money just as it is... this film has news for you.

https://www.youtube.com/watch?v=lUF6klWuB38

November 29, 2017

Investors ‘risk’ buying Bitcoin at high prices: ECB Vice President

By Rebecca Campbell - November 29, 2017 (www.cryptocoinsnews.com)


The vice president of the European Central Bank (ECB) has said that investors are taking a ‘risk’ by buying bitcoin at its high price.

Speaking to CNBC on Wednesday, Vitor Constancio, said:

"It’s a very particular asset, it’s a speculative asset by definition looking to the developments in its price. Investors are taking that risk of buying at such high prices".

Constancio’s comments come at a time when the digital currency is experiencing a surge in value. Earlier today, it was reported that bitcoin had risen to over $11,000 along with a rise in various alt-coin prices. To date, the cryptocurrency has increased by over 1,000 percent, a colossal undertaking considering it was trading at $1,000 at the beginning of the year, and has overcome numerous obstacles.

Some, though, are still expecting great things from bitcoin. Mike Novogratz, a billionaire investor and hedge fund manager, believes that it could ‘easily’ rise to $40,000 by the end of 2018. However, at a recent conference in New York, he stated that it wouldn’t be easy getting there, adding:

"There will be wild crashes in it because you’re going to get to levels so far ahead of where the technology’s at".

Central banks, though, have continually been reluctant to embrace the market. The ECB vice president said earlier this month that digital currencies will never replace the fiat system, adding that they were a ‘misnomer‘ merely used as a speculative asset.

At the time, he stated:

"The so-called private ‘cryptocurrencies’ can never prevail as general money substitutes".

Mario Draghi, the ECB President, has also spoken about the digital currency market, claiming that they aren’t ‘mature‘ enough for the central bank to consider regulating them. More recently, Draghi stated that they pose little threat to the central bank-dependent financial system, despite the rise in the cryptocurrency market.

Not only that, but Constancio believes that central banks don’t need to take the digital currency market seriously. During the interview, he said:

"… in the sense that we don’t have responsibility or even instruments that point to particular prices of particular assets, that is certainly not the role of central banks".

Yet, regardless of the fact that the crypto market, in particular bitcoin, have been criticised by various financial CEOs, it looks as though it has its foot firmly in the door and isn’t going away anytime soon. Not only that, but we may soon be reading headlines that the combined crypto market has become more valuable than JPMorgans.

Featured image from Shutterstock.

November 28, 2017

Bitcoin is a perfect currency, Beyond the reach of any nation-state or cooperative effort to defeat it - Max Keiser

By Ashour Iesho - November 27, 2017 (bitcoinist.com)


Although many experts still believe that Bitcoin, and the cryptocurrency market as a whole, may be in a bubble state, Max Keiser believes that Bitcoin still has room to grow. 

CAN BITCOIN REACH $25,000?


Bitcoin is making headlines – again – as it continues to shatter milestone after milestone. Most recently, the popular digital currency passed the $9000 mark and is quickly edging toward $10,000. According to a recent article by RT, well-known American TV broadcaster Max Keiser believes that Bitcoin still has the potential to climb as high as $25,000 before having a correction.

Keiser stated:

"Up until that price is achieved it looks like we’ll see a pretty strong upward move".

He also believes that the huge inflation rate of major fiat currencies like the US dollar is causing Bitcoin to rapidly rise.

"I think we are seeing fiat currencies in a hyperinflationary collapse against bitcoin".

Keiser posits that one of the reasons behind Bitcoin’s price surge is because it is the perfect alternative to traditional financial systems that are used by banks and other financial institutions:

"Bitcoin is a perfect currency, something that is utterly changing the global finance and market and is putting banksters and the central banks out of business".

Many banks have expressed their desire to work with blockchain technology, but most of them are not yet open to Bitcoin and other cryptocurrencies. The reason behind their reluctance is the fact that banks cannot regulate – and therefore cannot control – the popular decentralized cryptocurrency.

GOVERNMENTS CAN’T STOP IT


Another interesting use case for Bitcoin is bypassing government controls and sanctions. Since many countries around the world are currently under financial sanctions, Bitcoin is an easy and efficient way for them to surpass these restrictions. Max Keiser thinks that the fact that governments can’t stop Bitcoin, is giving it immensely value and trust.

"That’s something that no central bank or country will be able to stop, and it’s becoming a real scenario, a real threat".

An interesting remark that Keiser made in the article, is that Bitcoin might become a “financial black hole” where people are rushing to sell stocks and bonds and transfer that money into the decentralized cryptocurrency. If that happens, there is the very real possibility of a stock market or bond market crash, perhaps even both.


November 27, 2017

Regulation Round-up - Kenya, Ghana and Algeria Fudding and Fighting Bitcoin

By Samuel Haig - November 27, 2017 (news.bitcoin.com)


Governments across Africa are striking a firm tone regarding bitcoin and cryptocurrencies, with Algeria’s congress expected to ban all cryptocurrencies, and Kenya’s central bank warning against the risks of cryptocurrency, and an advisor to Ghana’s ministry of communications describing “fear of the unknown” as the principal barrier to greater adoption of virtual currencies. In other news, a Kenyan man has negotiated to pay the ‘goat portion’ of his dowry using bitcoin.

Kenyan Central Bank Fears Bitcoin May Comprise “Ponzi Scheme”


The Governor of the Central Bank of Kenya (CBK), Dr. Patrick Njoroge has warned Kenyans against the risks and lack of protections afforded to cryptocurrency traders. Referring to a previous warning issued in 2015, Dr. Njoroge stated that the CBK “warned everybody that this was a risky venture and the consumer is not protected. It could very well be a Ponzi scheme of a kind, I think you have seen how the prices have gone up and down in various places. Our point is that there is risk and it is important that everybody knows that those risks can come back to haunt us and could have financial stability concerns.”

Despite the warning, Dr. Njoroge recently expressed his hesitance to rush to regulate cryptocurrencies, describing the CBK as being “open” to innovations in financial technology. Speaking at the recent Global Financial Forum in Dubai, Dr. Njoroge stated: “If you’re the regulator, you have to be careful that all risks are taken care of, including in cryptocurrencies, but we’re very open to innovation.”

Kenyan Citizen Arranges to Partially Pay Dowry Using Bitcoin Rather Than Goats


The topic of bitcoin has been in Kenya’s news cycle recently, following Kenyan citizen, Anthony Mburu’s decision to pay a portion of his dowry using bitcoin. The young bitcoin miner negotiated to pay the ‘goats portion’ of his dowry using bitcoins – and has so far paid the equivalent of 25 of the 100 required goats.

The 26-year-old Mr. Mburu quit university in 2010 only one semester into an engineering course. Mr. Mburu recently discussed his decision with Kenyan media, stating “Formal education is good. It will give you an average life. You’ll eat, have your mortgage, car loan and all that — live an average life; struggle through life to the end.” Since discovering the cryptocurrency, Mr. Mburu states that his entire life has come to revolve around bitcoin. “Everything is bitcoin. Where I live, bitcoin; what I drive, bitcoin; investment, bitcoin. It will be a bitcoin wedding,” he said.

“Fear of the Unknown” Hinders Ghanan Bitcoin Adoption


Ghana’s cybersecurity advisor to the ministry of communications, Albert Antwi Boasiako, has described “fear of the unknown” as the principal barrier to greater cryptocurrency adoption throughout the African nation. Speaking at the recent Ghana Blockchain Conference, Mr. Boasiako stated “We have our fears about cryptocurrency but discussions are still going on. Our country is still hesitant to adopt Bitcoin as a legal tender is the fear of the unknown.”

Mr. Boasiako emphasized the need for Ghana’s tech community to mobilize in order to demystify cryptocurrencies, stating “We are battling fear, the state doesn’t want to move forward because it doesn’t know what’s there. To demystify cryptocurrency, we need a community-driven agenda. We need to strategically demystify the misconceptions around cryptocurrency and get it integrated into the government digitization agenda.” Mr. Boasiako suggested the establishment of a “working group on cryptocurrency that has members from stakeholders like the Bank of Ghana,” recommending that such a body should closely monitor developments in the sphere of cryptocurrency regulation in other jurisdictions.

Algeria Expected to Ban All Cryptocurrencies


Last month, it was reported that Algeria’s congress had begun to consider new financial legislation that would see all cryptocurrencies banned throughout the country. The ‘2018 Finance Bill’ states that “The purchase, sale, use, and holding of the so-called virtual currency is prohibited. The virtual currency is the one used by Internet users through the web. It is characterized by the absence of physical support such as coins, banknotes, payments by check or bank cards,” specifying that “Any violation of this provision is punished in accordance with the laws and regulations in force.”

An accompanying memorandum emphasizes the concerns that bitcoin’s potential anonymity sparks among Algerian lawmakers, stating “Algeria hopes to establish a stricter control over this kind of digital transaction, which can be used for drug trafficking, tax evasion, and money laundering thanks to the guaranteed anonymity of its users.” The document asserts that despite cryptocurrencies having “long been the prerogative of illegal transaction,” they are able to “get rid of their bad reputation in democratizing and attracting a wider audience.”

Images courtesy of Shutterstock, Wikipedia

Samuel Haig

Samuel Haig is a cryptocurrency and economics journalist who has been passionately involved in the bitcoin space since 2012. Samuel has written about the disruptive potential of cryptocurrency with regards to the dialectical relations within contemporary neoliberal capitalism.

November 24, 2017

Regulatory Round-up - South Korea says Laissez Faire, Zimbabwe dislikes and Singapore to regulate

By Samuel Haig - November 25, 2017 (news.bitcoin.com)


South Korea’s Financial Supervisory Service has stated that it won’t regulate the digital token markets due to cryptocurrencies not comprising a legally recognized financial instrument. In central bank news, Zimbabwe’s central bank has stated that bitcoin is not legal, and Singapore’s central bank has launched the second public consultation for its newly proposed payments legislation. Here’s a regulator round-up.

South Korea’s Financial Regulator Does Not Plan on Regulating Cryptocurrencies


The Governor of South Korea’s Financial Supervisory Service (FSS), Mr. Choe Hueng-sik, has indicated that the FSS does not consider bitcoin and other digital tokens to comprise legitimate currency, and as such, will not regulate the cryptocurrency markets.

The governor likened the FSS’s stance to its regulatory position regarding casinos, stating “It is the same with the fact that we don’t regulate or supervise casinos. Though there could be concerns on excessive gambling, that does not provide grounds for the FSS to control casino practices.”

The governor indicated that the FSS’s position would change only if cryptocurrencies were to become a legitimately recognized currency, stating “Though we are monitoring the practice of cryptocurrency trading, we don’t have plans right now to directly supervise exchanges. Supervision will come only after the legal recognition of digital tokens as a legitimate currency.”

Reserve Bank of Zimbabwe States Bitcoin “Is Not Actually Legal”


Norman Mataruka, the Reserve Bank of Zimbabwe’s (RBZ) director and registrar of banking institutions, has told reporters that bitcoin is not legal. Mr. Mataruka stated:

“In terms of the bitcoin, as far as we are concerned, it is not actually legal. In Southern Africa, what we have done as regulators, we have said that we will not allow this in our markets… Research is currently being undertaken to ascertain the challenges and risks associated with these particular products and until we have actually established and come up with a legal and regulatory framework for them, it will not be allowed.”

The announcement comes shortly after the resignation of Robert Mugabe, following a coup that ousted Zimbabwe’s former leader of 37 years. In recent months, increasing coverage has been given to the inflated price of bitcoin in the African nation, with high demand for the cryptocurrency being driven by Zimbabwe’s prevailing currency crisis.

Although Mr. Mataruka failed to clarify if he meant that the possession and use of bitcoin was illegal, or simply that bitcoin does not comprise a legally recognized currency in the state of Zimbabwe, it is unlikely that the RBZ can spare the resources required to attempt to uphold prohibitive cryptocurrency regulations given Zimbabwe’s current political turmoil.

Singapore’s Central Bank Seeks To “Streamline” Payment Regulations to Include Cryptocurrencies



The Monetary Authority of Singapore (MAS), has launched its second public consultation regarding a newly proposed regulatory framework, the “Payment Services Bill”. The bill seeks to “streamline the regulation of payment services under a single legislation,” and “expand the scope of regulated payment activities to include virtual currency services and other innovations, and calibrate regulation according to the risks posed by these activities.” The MAS stated:

“When the new Bill is enacted, payment firms will only need to hold one license under a single regulatory framework to conduct any or all of the specified payment activities. Only payment activities that face customers or merchants, process funds or acquire transactions, and pose relevant regulatory concerns will need to be licensed. The new framework will expand the scope of regulation to include domestic money transfers… merchant acquisition… and the purchase and sale of virtual currencies… To help ensure that the expanded scope of regulation is not onerous, the Bill will differentiate regulatory requirements according to the risks that specific payment activities pose rather than apply a uniform set of regulations on all payment service providers… The Bill will empower MAS to regulate payment services for money-laundering and terrorism financing risks.”

Mr. Ravi Menon, the managing director of the MAS, stated: “We want to put in place a forward-looking regulatory regime to encourage wider adoption of secure e-payment solutions.” The public consultation will run from 21 November 2017 to 8 January 2018.

Images courtesy of Shutterstock, Wikipedia



Samuel Haig

Samuel Haig is a cryptocurrency and economics journalist who has been passionately involved in the bitcoin space since 2012. Samuel has written about the disruptive potential of cryptocurrency with regards to the dialectical relations within contemporary neoliberal capitalism.

November 23, 2017

Malaysia to place Bitcoiners under existing Anti-Money Laundering Laws

By C. Edward Kelso - November 23, 2017 (news.bitcoin.com)


In order “to prevent the abuse of the system for criminal and unlawful activities and ensuring the stability and integrity of the financial system,” Bank Negara Malaysia Governor Tan Sri Muhammad Ibrahim stated 22 November 2017 that those trading in cryptocurrencies will be placed under the country’s existing anti-money laundering laws. 

Malaysia Cites Terrorism Fear


Joseph Chin of The Star Online reports, “Bank Negara Malaysia is developing the regulatory structure for digital currencies, and from 2018 persons converting crypto currencies into fiat money currencies will come under anti-money laundering law,” he notes. Such persons “would be designated as reporting institutions under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001.”

The central bank’s Governor made his remarks at the Third Counter-Terrorism Financing Summit. It’s a four day conference organized by the bank, partnering with “Australia’s financial intelligence agency, AUSTRAC, and Indonesia’s Pusat Pelaporan dan Analisis Transaksi Keuangan (PPATK),” the website press release read.


The gathering brings “together more than 350 specialists and professionals from 35 countries and international organisations to share their insights on the latest terrorism financing (TF) issues and developments,” they emphasize.

Mr. Ibrahim’s talk was titled, Readying the Financial Sector Amid the Evolving War on Terrorism Financing, saying in part, “regulators must prepare themselves as digital currencies will become the new norm,” The Star Online paraphrased.

“We must harness the vast potential in technological innovations,” the central banker warned, “to reinvent and reinforce our lines of defence.”


New Tools


Terrorism in Malaysia has a storied and long history, and is beyond the scope of the present article. But it is safe to write terrorism is something the Malaysian government can claim as a concern, regardless of it as pretext in the case of bitcoin.

“We need new tools,” Mr. Ibrahim said. “The adoption of artificial intelligence, machine learning, and big data technology are tools that would likely be imperative, as suspicious transactions become more complex and harder to detect,” he listed.

The Star Online notes further how the central bank head “said the advent of digital currencies, as some have forecast, will mark the beginning of a new era in the financial sector.”

Remittances Come Under Scrutiny


One undeniable area of bitcoin’s power resides in its ability to essentially be borderless, allowing those who wish to send money back to their home countries a frictionless experience for the most part.

Mr. Ibrahim is reported to have said “Bank Negara was in the midst of finalising the details of a new requirement for the Banking and Money Services Business sector to report remittances in high risk areas.”

“The high risk areas will be determined based on the law enforcement agency’s intelligence on areas that they view may pose higher risks for funding of terrorism activities,” The Star Online summarized.


The central bank hopes to incorporate more shared international intelligence on suspicious transactions.

As always, what exactly constitutes “high risk areas” and “suspicious transactions” is often left vague by government regulators. It appears to be the same in Malaysia.

A resident of Malaysia told news.bitcoin.com, “Laws are more like guidelines in Malaysia, the people just make their own decisions on what they want to follow. Even if crypto was banned people wouldn’t care. Technically [the song] ‘Despacito’ is banned in Malaysia,” he laughed.

Images courtesy of: Pixabay, BNM. Marcel Chuo contributed sourcing for this article.

Bitcoinocracy is a free and decentralized way to measure the Bitcoin community’s stance on a given proposition. Check vote.Bitcoin.com.

November 16, 2017

World Gold Council Head: “Nothing to suggest gold is suffering from the popularity of crypto”

By C. Edward Kelso - November 16, 2017 (news.bitcoin.com)


Neil Hume, Mining and Commodities Editor for Financial Times, was quick to have World Gold Council Head of Market Intelligence, Alistair Hewitt, dismiss bitcoin’s ascendancy as a reason for gold’s third quarter (Q3) performance woes. He paraphrases Mr. Hewitt as having said, “there was nothing to suggest gold was suffering from the popularity of cryptocurrencies such as bitcoin, which have experienced explosive gains this year.” There is reason to be skeptical of that claim.

Gold Currents Might Turn Trends


Fortune’s David Meyer writes, “More people are now searching online for how to buy bitcoin than they are searching for how to buy hold,” according to Google Trends. Gold is the classic hedge against stock market volatility, especially during downturns.

That might be changing if Q3 figures are to be extrapolated into a full-fledged movement or current.

It certainly doesn’t help to have a booming stock market at the moment along with a new commodity asset in cryptocurrencies. Leaving out the entirety of the legacy markets, bitcoin alone has appreciated many hundreds of percentages in just 2017.

“Demand for gold slumped to an eight-year low in the third quarter,” Mr. Hume reports, attributing the record fall to “the prospect of higher US interest rates and tighter monetary policy” which  “resulted in less [gold] buying from institutional investors.”


Gold demand falls 9% to 915t in Q3 as ETF inflows slow from unprecedented highs in 2016, the latest World Gold Council report of 8 November 2017. It “showed demand for bullion fell to 915 tonnes in three months to September, down 9 per cent from the same period a year ago.”

“The latest figures were hit by ‘significantly’ lower inflows into gold exchange traded funds, which fell to 19 tonnes from 144.3 tonnes, and a softer jewellery market in India,” Mr. Hume detailed. (India is second only to China in gold consumption).

The “world’s biggest consumer of gold after China — dropped 25 per cent year-on-year in the quarter to 114.9 tonnes,” Financial Times notes.  

Quoting Mr. Hewitt, “It was a tough quarter for gold demand,” and, paraphrasing again, “Mr. Hewitt said net inflows had remained weak during October with just three tonnes added to ETFs as investors chased higher returns from assets such as equities and bonds.”

Central Banks are the Health of the State


And here is the a-ha! moment: Mr. Hewitt anticipates gold’s rebound due to “buying from central banks. Led by Russia and Turkey, central banks added 111 tonnes to their gold reserves in third quarter, 25 per cent more than in the same period in 2016,” Mr. Hume claims. Quoting Mr. Hewitt approvingly, “We now have another central bank that is buying 10 tonnes a month,” in reference to Turkey. “That’s a significant development that hasn’t been picked up by people looking at the gold market.”

Things have become so desperate in the gold market, the metal’s heroic past of taming governments, of spiting them, has given way to alms: hands out, begging for central bank acceptance.


Central banking is contrary to peace. Once such power was consolidated around the world by the early 20th century, even gold standardization of currency fell out of favor, and the rush toward inflation became all the rage. The power for governments to control money supplies is too tempting to trust with gold, but it is a way to stay relevant beyond circuit boards and jewelry. And central bank inflation is often overlooked for its keen martiality, its propensity for war and state expansion generally.

Governments in the inflation age can promise all sorts of goodies to subjects, march them off to war without a financial care (much less lives loss), and generally consolidate while also expanding power. If there is one takeaway from the entire 20th century and our present time, an inverse relationship exists between human freedom and government growth.

Gold no longer offers hope in this regard.

Bitcoin as Hope for Peace


The swirling debate at present is what bitcoin constitutes as a currency and network. It’s clearer to me bitcoin of the BTC variety, segwit bitcoin or whatever you’d like, is going to remain, if it does at all, a store of value and ultimate unit of settlement. Bitcoin cash (or a variant) might very well become the fungible, everyday currency of Satoshi’s digital cash ideal. With well-known transaction fees ever-rising and processing times thudding it along, BTC doesn’t in the near-term figure to be a currency in the easiest sense of that word.

This means there’s a chance bitcoin could replace gold as the future hedge, a way for people to fight inflationary warmongers and chiefdoms.


With CME’s entrance into the bitcoin foray, and if institutional investors bring whales, along with blockchain dreams, BTC could very well reach price highs pegged by Fundstrat’s Tom Lee of 25,000 USD and beyond.

Images courtesy of: Pixabay, ET online magazine.

C. Edward Kelso

C. Edward Kelso is a long-time fintech journalist, passionately covering the cryptocurrency space since 2014.

November 14, 2017

Can Cryptocurrencies drive out Money?

By Farzana Begum - November 14, 2017 (btcmanager.com)


According to Reuters, Victor Constancio, the Vice President of the European Central Bank, said on November 9 cryptocurrencies will not serve to be an alternative substitute for money, and central banks are unlikely to create digital currencies independently without placing limitations.

Central banks worldwide have been forced to monitor the price of bitcoin which has soared, with some predicting a crash. Thus precautions are necessary to avoid the likely potential threat to stability.

Constanico said in Rome:

“Their designation is a misnomer as they are not a currency but just a commodity used as a speculative asset and as a restricted medium of exchange in very special circumstances, comprising criminal activities or failed states with collapsed institutions.”

The ECB does not view cryptocurrencies as a monetary threat since there are consumer protection concerns and the scalability and adoption digital currencies are rather small at present.

Constancio expressed his concerns about the disorder that supporting cryptocurrencies may create for the banking industry as a whole, which drives the argument for why cryptocurrencies are very unlikely to become mainstream.

“The use of the blockchain by central banks to create digital currency open to all citizens without limits would be really disruptive,” he said. “This would be a radical political choice that could end banking as we know it and is therefore unlikely to happen.”

Since the idea behind the blockchain is a decentralized platform to create independence without the need for intermediaries such as banks, they would be driven out of the market if such technological advances were to lead to widespread adoption.

According to the Bank of England’s Quarterly bulletin from 2014, the widespread usage and adoption of Bitcoin involves potential risks to monetary instability and the world’s oldest central bank recognizes that they can potentially become obsolete.
The central bank recognizes their lack of control over the current users of cryptocurrencies and their ability to influence the interest rate and the money supply of the ‘crypto economy,’ therefore, weakening the monetary transmission mechanism. The central bank has no power and is unable impact demand for this particular group of people, and is more exaggerated the bigger this group becomes. For example, since the Bank of England or any other central bank cannot control the supply or interest rate of cryptocurrencies, they have no tools to influence demand traditionally to stabilize short-term economic fluctuations:

“Potential risks to monetary stability would only be likely to emerge once digital currencies had achieved substantial usage across the economy. If a subset of people transacted exclusively in a digital currency, then the Bank’s ability to influence demand for this group may potentially be impaired.”

It could also be possible that widespread adoption of bitcoin would prompt the central banks to engage in open market purchases, similar to how they influence the prices of stocks and other financial assets, in an attempt to affect demand via the wealth effect.

October 31, 2017

A Vietnamese university plans to accept Bitcoin despite Central Bank ban

Vietnamese University plans to accept Bitcoin despite Central Bank ban


By Samburaj Das - October 31, 2017

FPT, a private Vietnamese university is planning to accept tuition fees in bitcoin with a workaround of the central bank’s ban on using cryptocurrencies as payment instruments.

FPT University is a private academic institution with campuses in Ho Chi Minh City, Hanoi and Da Nang, Vietnam’s three major cities. The university will soon begin accepting bitcoin for tuition payments from foreign students, according to FPT University President Dr. Le Truong Tung who shared the announcement on his Facebook page. With bitcoin, Tung believes foreign students can circumvent strict currency controls in their respective countries.

Dr. Tung stated:

"Therefore, FPT decided to test by officially and concretely announcing the enrollment of foreign students to study in Vietnam made possible by using bitcoin as a means to pay tuition fees, [which would also] attract foreign students".

According to the school official, the university is looking to research cryptocurrencies like bitcoin within its curriculum, specifically in finance, business management, and banking. The intended acceptance of bitcoin and usage of cryptocurrency for research among its courses is a pioneering move for FPT, making it the first Vietnamese university to do so. As such, there are 100 foreign students enrolled at the university, a meager 1% of the total student body. Tung expects bitcoin to help bolster those numbers as the university finds a way to accept the cryptocurrency despite recent legal frameworks by the central bank that prohibits bitcoin as a legal method of payment.

To do so, foreign students would be required to exchange bitcoin into Vietnamese dong, the country’s fiat currency, before paying the tuition fees. Alternatively, students will also be allowed to ‘donate’ their bitcoin to a bitcoin address or wallet owned by the university, where the cryptocurrency will be changed into legal currencies to fund their ‘scholarships.’

Dr. Tung added:

"In principle, FPT can open a bitcoin account for students to transfer the bitcoin to the school online…Later on, when specific regulations are implemented officially, both foreign and Vietnamese students can use [pay with] bitcoin".

Yesterday, the State Bank of Vietnam (SBV), the country’s central bank, clarified its position to confirm “Bitcoin and other virtual currencies are not lawful means of payment in Vietnam,” before effectively prohibiting the “issuance, supply [and] use of bitcoin.” The authority also said that using bitcoin as a means of payment will incur fines between VND 150 million – 200 million [approx. $9,000] and could also extend to criminal prosecution.

Disclaimer: Some statements are unofficially translated from Vietnamese.

Featured image from Wikimedia/ThuyNTP.

October 27, 2017

Singapore will not regulate cryptocurrencies - an official of Monetary Authority of Singapore (MAS)

By Alex Gao - October 27, 2017 (cointelegraph.com)


Recently during an interview with Bloomberg, an official of Monetary Authority of Singapore (MAS), which serves as the central bank and financial regulator of Singapore, said that MAS has no plans of regulating cryptocurrencies. The central bank will keep “an open mind,” though the official also stated the necessity of establishing anti-money laundering control in the future.

Money laundering is not Bitcoin’s fault


During the interview, MAS Managing Director, Ravi Menon said that:

“We’ve taken the approach that the currency itself does not pose the risk that warrants regulation. Our approach is to look at the activity around the cryptocurrency and then make an assessment of what regulation would be suitable.”

“It is a known fact that cryptocurrencies are quite often abused for illicit financing purposes, so we do want to have AML/CFT controls in place. So those requirements apply to the activity around cryptocurrency, rather than the cryptocurrency itself.”

Cryptocurrencies have more functions


What’s more, Menon, unlike most of other authorities, didn't undermine or criticize the cryptocurrencies. He said that if cross-border remittance through cryptocurrencies like Bitcoin is more convenient and efficient, the central bank and scholars should focus more on how to use Blockchain and cryptocurrencies to benefit more people. The scholars and professionals should consider whether cryptocurrencies could make cross-border inter-banking payments cheaper, faster and more efficient instead of merely thinking about the economic value of cryptocurrencies as investing products.

Big future of Blockchain in Singapore


Singapore has always been the advocate of Blockchain technology and cryptocurrencies. The MAS is one of the early adopters of Blockchain technology. On Oct. 25, Singapore and Hong Kong announced a cooperation on a cross-border trade project based on Blockchain technology by linking their trade finance platforms.

With “an open mind,” Singapore could be one of the most important countries for the development of Blockchain technology. It also has the potential of being the hub of Blockchain technology in the future.

October 26, 2017

Dollar vs. Bitcoin - Cryptocurrencies offer a path forward to a new and better monetary system

By Adam Sharp (earlyinvesting.com)

The U.S. government will pay $474 billion in interest on its debt this year. And that’s with rates around 1%.

Total debt is now $19.845 trillion, and it just exceeded annual GDP.


Our unfunded liabilities top $100 trillion.

I believe that eventually we’re headed for a financial reset. I don’t know exactly when or how. That will depend on the whims of bankers and politicians.

But I can’t picture any long-term (20-year) scenario where the dollar does well. There appears to be zero chance of cutting federal spending anytime soon. It should have happened long ago, yet the spending seems destined to keep rising until the whole thing implodes.

Eventually the interest on the debt will become unsustainable, and we’ll have to start monetizing our debt on a massive scale. I’m not saying we’ll default on our bonds. I’m simply questioning whether the dollars they’re paid back with will have much value.

When this happens, we’ll have an opportunity to choose a new system. I would vote for a cattle-based monetary system over the current one, personally.

But luckily we have bitcoin. The rise of cryptocurrencies like bitcoin may prove to be a catalyst that speeds the transition.

Reboot


Cryptocurrencies offer a path forward to a new and better monetary system.

A system where the money supply can be hard-coded. One that doesn’t require middlemen… and that vastly increases efficiency.

It’s no coincidence that bitcoin is rising now.

Bitcoin was launched amid bank bailouts in 2009 by a guy who thought the financial system was broken. Fortunately, Satoshi Nakamoto was a genius, and he created a brilliant piece of software.

It’s growing exponentially now because people are looking at the current system, shaking their heads and then looking for something else.

And bitcoin is transforming the financial world with blockchain because the technology is superior.

People want this. They want a way to store value and trusted transactions that doesn’t suck.

If this crazy monetary revolution does happen, don’t you want to own at least a piece of it?

Cryptocurrency ownership rates are still well under 1%. If you do buy, you’ll still be doing so extremely early.

Good investing,

Adam Sharp
Co-Founder, Early Investing

P.S. We’re still in the early days of blockchain and cryptocurrency. So if you haven’t invested yet, don’t worry. Time is on your side.

October 25, 2017

Indonesia’s Central Bank bans Bitcoin as method of payment

By Daniel Dob - October 25, 2017 (themerkle.com)
Recent reports indicate that Indonesia’s central bank has decided to crack down once again on Bitcoin, stating that it represents neither a legal nor recognized medium of exchange and payment in the country.

Indonesis resumes past position on digital currencies


Back in February 2014, Reuters reported that Indonesia had decided to ban the use of digital currencies. A press statement issued by the country’s central bank at the time read: “Bitcoin and other virtual currencies are neither currency nor legal payment tools in Indonesia. People are advised to be careful about Bitcoin and other virtual currencies”.

Shortly thereafter, the country decided to reconsider its position on digital currencies, and hence turned a blind eye to individual users, bitcoin exchanges, and business services involving digital currency use.

It seems the latest announcement has already led to the closure of Toko Bitcoin and Bitbayer, two Bitcoin payment platforms operating in Indonesia. Bitbayer, an alternative to services like BitPay, has announced it will cease its services as of November 1st. Users are encouraged to withdraw all of their funds before the end of this month. Additionally, Toko Bitcoin, which was popular for allowing customers to purchase electricity vouchers along with phone credits, has decided to stop accepting the digital currency as a means of payment.

While reports indicate that there was no official request made by the central bank towards these two companies, it is important to point out that its governor, Agus Martowardojo, stated that Bitcoin was not a legal method of payment and that if used as such, action would be taken. Not long beforehand, the digital currency could be used as a method of payment as long as prices were denominated in Indonesia’s national currency, the rupiah.

This decision is likely to have a negative impact on numerous fintech businesses and start-ups operating within Indonesia, as most will now have to reconsider their niche or move their operations somewhere else. However, Bitcoin exchanges will continue to operate freely in the region.

Based on these reports, what do you think about the central bank’s latest crackdown on digital currencies in Indonesia? Let us know your thoughts in the comment section.

Daniel Dob

Daniel is a bitcoin investor and journalist for numerous news outlets in the financial sector. When he's not writing, trading, or interviewing people, you can find him swimming, reading or taking one of his hobbies to the next level.

October 21, 2017

Clueless central bankers regard Bitcoin with envy & hatred

By Daniel Duarte - October 21, 2017 (cointelegraph.com)


In my first article for the Cointelegraph I tried to explain the value of Bitcoin to citizens of countries that practice capital controls, which are usually countries with less economic development.

A day later, I read an article where the president of the Central Bank of Brazil exposes his lack of understanding and appreciation about digital currency, which could be such a boon to citizens of my native country, Brazil.

I believe that the best way to explain it is through practical examples, so I will summarize my experience with the legal tender currency of my country.

I was born in 1981, during the decade of hyperinflation in Brazil, I remember that it was normal to see the supermarkets crowded during the first week of the month. This is because on payday, everybody groceries for the entire month since prices were changed every day, sometimes more than once a day.

Our money lost value every minute, while the government's printing machine worked at a frenetic pace.

During more than 10 years of hyperinflation, several leaders sitting in the chair of the Finance Minister or the President of the Central Bank tried to reduce or minimize inflation. They didn’t do it the hard way, and the way that might have worked, by cutting government spending. Instead, these men had pipe dreams, coming up with economic plans they thought were most miraculous.

One of these pie-in-the-sky plans definitively marked the Brazilian people. During the government of President Fernando Collor, the Minister of Finance, Zelia Cardoso de Mello, confiscated all the money that Brazilians kept in banks. The idea was simple: without money there would be no demand for products, so inflation would be controlled.

Obviously this didn’t work to save the economy, but it did devastate many Brazilians. Some, like my grandfather, relied on their life savings to pay for their medical care. These people were badly hurt.

What does history teach us?


First of all, a deflationary currency such as Bitcoin, whose economic model is based on that of thinkers like Frederich Hayek, is valuable to all citizens of countries that fear of inflation.

Second, inhabitants of countries that have already experienced economic chaos know how valuable it is to have assets that cannot be confiscated overnight. Today we have examples such as Venezuela, and a few years ago, Argentina.

There is a popular saying in Brazil that a dog that has been bitten by a snake is afraid of a sausage. In America, you might say “once bitten, twice shy.” Those who have lived through hyperinflation can really understand the value of a deflationary currency.

That's why we love Bitcoin, and why most of the central bankers hate it. Deep down they are envious, even fearful, of Bitcoin’s economic model. Bitcoin has achieved what is impossible for them, the creation of the first truly deflationary currency that’s free from the mismanagement of governments.

October 20, 2017

The next generation of currency wars - Private vs. State-backed Crypto

By Tho Bishop - October 20, 2017 (mises.org)


Recently Russia announced that it will be unleashing a CryptoRuble, just a week after Vladimir Putin strongly criticized Bitcoin and other private cryptocurrencies.  When announcing the move, Minister of Communications Nikolay Nikiforov acknowledged that it was in part inspired by the aim of getting ahead of other governments:

"I confidently declare that we run CryptoRuble for one simple reason: if we do not, then after two months our neighbors in the EurAsEC will".

In doing so, Russia is following the lead of another country that too has become hostile to private crypto, China. Last July the People’s Bank of China became the first central bank to announce it had developed a crypto-prototype that it plans to offer alongside the traditional renminbi.

That the first forays into state-backed cryptocurrency comes from two countries with a history of restricting a free and open internet is not surprising. While Bitcoin originated as a way to opt out of government control of money supply, increasingly governments see the underlying technology as a way to increase their control of the economy.


"For example, if the government plans to subsidize certain farms, say some corn farms, to support this sector of agriculture, they can directly add a certain amount of money to the wallets of some farms, for instance 100 million dollars and program this money to be sent to certain fertilizer merchants at a certain time, and that each can only spend maximum of 10 million dollars per year, and in this way, they can make sure that the farmers won’t squander the windfalls, and that this money won’t flow to other sectors, for instance, the stock market or real estate market.

Even though this kind of monetary policy is bound to fail, from the perspective of government officials, CBDC provides them a better tool. For them, with the help of the CBDC, they can plan and manage the economy better".

Not to be left behind, the IMF – who some analysts, such as Jim Rickards, believe is prepared to step up to replace the US dollar as the next global reserve currency – recently opened the door to issuing their own cryptocurrency in the future. While some crypto-advocates have naively celebrated recent comments by Christine Lagarde on the future potential of digital currency, such praise simply reflects the increasing awareness of technocrats that the finance is changing and they must be prepared for it. Considering central banks around the world have continued to advance their war on cash, it is not surprising to see Lagarde and others come adapt to the concept so quickly.

Exchange Regulation


The usefulness of state-controlled crypto is why we should expect increased scrutiny and regulation on private cryptocurrency exchanges.

It's been reported that the Chinese government, which shutdown private crypto-exchanges in September, is looking into reopening exchanges with increased regulation. Russia, too, is working on exchange regulation, rather than an outright ban.  This apparent change in direction may be the consequence of China’s exchange ban resulting in an increased use of peer-to-peer platforms in the face of the government crackdown. 

For the same reason that government prefers regulated bank accounts to cash and safes, state officials may recognize the benefit to propping up licensed exchanges. Already we have seen numerous cryptoexchanges be willing to collect and hand-over sensitive customer information in exchange for government-issued licenses. Much like banks, these exchanges are increasingly being enlisted as tax collectors for government.

Calm Before the Storm?


While this loss of privacy may outrage Bitcoin’s initial supporters, it’s understandable why many current holders may be perfectly happy with these developments. After all, while much of Bitcoin’s initial appeal was its usefulness in black markets, a major reason for its astronomical rise in value is its increasing appeal among average customers who were never all that concerned with financial services regulation. Not only has it helped its appeal as an investment, but also its daily use. Japan, for example, saw a major surge in retailers accepting Bitcoin once a firm regulatory framework was implemented.

It is worth wondering whether this harmony between government and consumers will continue, however, once state-controlled crypto truly ramps up.

After all, we’ve already seen government rely upon traditional boogeymen of terrorists, drug dealers, and other criminals as justification for their increased control. The increasing use of Bitcoin by hackers and extortionists provides a modern-day twist to these age-old scare tactics. Is it all that difficult to foresee a scenario where governments attempt to freeze all regulated exchanges in the aftermath of some terrorist attack or other scenario? Or go one step further, and legally mandate replacing a privately-held asset for a government-issued currency?

The example of China demonstrates the inherently decentralized nature of Bitcoin will likely always ensure a degree of functionality beyond the reach of government. At the same time however, the increased popular appeal of crypto-currency also means increasing reliance on third-party services, and fewer individuals securing their investments in private wallets.  Since the most popular – and thus most lucrative – exchanges and other services have an inherent incentive to maintain a good relationship with legal authorities, it is easy to see how this easily plays to the benefit of government officials.

Already within the industry debate is raging between those who prioritize “efficiency” and mainstream appeal – even at the expense of crypto's decentralized-origins. Luckily, Bitcoin’s original Austro-libertarian ethos means that we are likely to see major industry influence pushing back on state-control.

A Preemptive Strike for Monetary Freedom 


In the meantime, this is yet another reason why what little political capital libertarians on monetary policy have should not be wasted pursuing moderate reforms such as forcing the Fed to embrace rules-based monetary policy. There is no hope to ever transform the Federal Reserve into a useful – or even non-harmful – institution. That hope does exist, however, in crypto.

As future monetary policy is soon to become a major topic of conversation as President Trump rolls out his Federal Reserve nominations, it would be a major loss for the cause to not see Senator Rand Paul and other Fed-sceptics use the opportunity to push discussion about the need for competition in currencies. Further, the recent surge in states that have legalized the use of gold and silver for the payment of debt means there has never been a stronger political case for the elimination of legal tender laws and the taxes imposed on alternative currencies like Ron Paul proposed when in Congress. Such a move now could help set the stage for America being a true safe haven for private crypto in the future. 

Doing so may give the cryptocurrency industry the freedom to give us a fighting chance to truly end the Fed, and their clones around the world.

Tho directs the Mises Institute's social media marketing (e.g., twitter, facebook, instagram), and can assist with questions from the press.