Some of the more interesting bitcoin and fintech articles from the past few days. Life is really not boring.
— x —
Central banks deposits for you and me – by JP Koning
Revisiting the “central bank digital currency” line of thought, JP Koning points out that it wouldn’t be as disruptive as many of us have been claiming. The Bank of England used to take retail deposits, and still did as recently as 1963. In fact, technically it still does, in that employees can have a private account there (although the Bank has just announced that it will stop this practice),
— x —
Preparing for a World Without Cash – by Max Raskin and David Yermack for the Wall Street Journal
Still revisiting the “central bank digital currency” line of thought, expanding it and expressing it particularly well, this article in the WSJ looks at the advantages…
“There are plenty of advantages. The government would save nearly $1 billion annually by not having to print, store, transport and safeguard physical currency. Tax collection would become much simpler, and tax evasion and money laundering could become prohibitively difficult. Depositors would no longer have to rely on commercial banks to hold their checking accounts, and the government could get out of the risky deposit-insurance business. Commercial banks that wished to keep making loans would raise long-term capital in the debt and equity markets, ending the mismatch between demand deposits and long-term loans that can cause liquidity problems.”
…and the disadvantages:
“Yet the centralization of banking under this system would also create a Leviathan with the power to monitor and control the personal finances of every citizen in the country.”
The authors recognize that implementation would create the toughest problems. And the cost of the implementation could end up being prohibitive, not just from the technology investment, but from the loss of seigniorage.
Additional potential advantages mentioned include the enhanced control of the money supply and its economic impact, and something that I confess I hadn’t thought of: targeted monetary policy.
“The central bank could more easily adjust its monetary policy, because it would have the ability to target specific accounts. For example, the Fed could loosen monetary policy only in economically depressed regions of the country, or for certain depositors, such as senior citizens.”
The idea itself is fascinating, as I’ve said before. But especially intriguing is the frequency with which articles on this theme are appearing in respectable publications and blogs. And get this: bitcoin rarely features in the title these days. It gets mentioned, but not as the main attention grab. Could this be a sign of the idea perhaps growing up a little?
— x —
Why did the mushroom get invited to all the parties?
Because he was a fungi.
(Geddit? Fun guy? Ok.)
— x —
Against tokens (and token crowdsales) – by Preston J. Byrne
The murky legal waters of crypto crowdsales and appcoins in general. Personally, I love how Preston doesn’t hold his punches. (Or maybe he does?)
“The arguments in favour of appcoin crowdsales are dangerously close to a teen-ager’s gripe that their allowance isn’t high enough (make it easy to get investment capital! IPOs are too expensive!) These complaints reflect the fact that many of the people who are advocating for appcoin-friendly law reform have little to no experience of what it’s like to do business in the real world.”
— x —
The Postage Stamp Economy – by Elaine Ou
This article by Elaine Ou manages to be both entertaining and thought-provoking. It’s nice to see that the US Postal Service is keeping up with the times by researching blockchain applications. But Elaine’s right, they should be researching drones instead.
“The report covers many ideas but misses an obvious one: Blockchain postage! Let’s call it PostageCoin. Make it a colored Bitcoin, or issue a digital token. The benefit of a blockchain-based postage stamp is that it can be verifiably exchanged.”
Except, how would we stick a PostageCoin on the envelope? C’mon, that was always the best part of sending something by snail mail, the sticking on of the stamp… 😉
— x —
Russian Government to Abandon Penalties for Bitcoin Use – by Pete Rizzo, for CoinDesk
Oh, really? I wonder why… Anything to do with the Russian Tax Authorities recommending that bitcoin sales be taxed as currency transactions?
Although, according to an EY report, foreign currency transactions are prohibited between residents – so bitcoin wouldn’t be a “foreign” currency? Also, currency transactions can only take place via specially registered entities. Could a Russian BitLicense be in the works?