There is some shocking news out of London for Bitcoin fanboys..
Ambrose Evans-Pritchard reports that computer scientists have devised a digital crypto-currency in league with the Bank of England and that the Bank itself has an elite four-man unit grappling with the implications of crypto-currencies and blockchain technology.
It appears they have created an e-currency that solves some of the weaknesses of Bitcoin.
Pritchard states (my bold):
Bitcoin is inherently limited, a niche for aficionados and the ideological heir's of the 19th Century 'free banking' movement. Its code restricts it to a limit of 21 million Bitcoins, and it can handle only seven transactions per second. "It is a Peter Pan system, and it doesn't really grow up," said [Dr George Danezis, who is working on the design at University College London]...RSCoin, [the Bank of England connected e-currency] is safer, faster, and far less less volatile. It can scale up indefinitely. Its beauty is that it cuts out the middleman, and reduces costs to a wafer thin level.The reduction in the cost of RSCoin transactions to "wafer thin" levels will make it much more attractive to merchants. And with central banks and banksters behind it, merchants will not hesitate to adopt the technology if they find it otherwise beneficial to do so.
Of course, there is plenty of evil attached to RSCoin. Like Bitcoin, it would be highly trackable, probably even easier to track than Bitcoin.
Unlike the distributed ledger of Bitcoin, the ledger for the RSCoin would remain exclusively in the hands of the central bank.
Pritchard reports that Ben Broadbent, the Bank of England's Deputy Governo (my bold)r:
"said such a currency could greatly widen the balance sheet of a central bank, hinting that the system could be designed in such a way that ordinary people could by-pass the commercial banks and hold balances directly with the Bank of England - a staggering concept. "It's likely you'd see money moving out of existing deposits," he said.
Mr Broadbent said the system could in principle be used to cover government services, tax collection, and benefit payments...
RSCoin may be irresistible for central banks, said Dr. Danezis, it allows them to turn the money tap on and off with calibrated precision..."
Dr Danezis said there are three big centres of research and innovation into the fast-moving area of 'Fintech' and crypto-currencies. The City is at the cutting edge. "The game is between London, New York, and Silicon Valley in California," he saidAnd there you have it, e-currency a concept embraced, in the form of Bitcoin, by many anarchists and libertarians is being swallowed up and re-directed in a positively evil fashion by the very institutions that Bitcoin-fanboys believed e-currency adoption would move transactions away from.
Paper money controlled by government is bad enough, e-currency run by a government bank would be horrific, putting us further down the road to serfdom that F.A. Hayek warned us about.
(ht Andrew Kunian)