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TampaAnimusVortex

(785 posts) Fri Apr 4, 2014, 10:41 AM Apr 2014

Federal Bank VP: Bitcoin Threat Means Banks Must ‘Adapt or Die’

On 31st March, the Federal Reserve Bank of St. Louis – one of the 12 Federal Reserve banks – held a talk on bitcoin from a banking and economic viewpoint.

The session, entitled ‘Bitcoin and Beyond: The Possibilities and the Pitfalls of Virtual Currencies’, was presented by economist David Andolfatto, who is Vice President at the bank and a professor at Simon Fraser University.

Andolfatto offered some interesting insight into bitcoin from his perspective. Many aspects of the talk were positive about the digital currency, some were more negative, and overall the session was quite balanced.

Interesting quotes:

“What do we have here? A stroke of genius, I think.”

“Bitcoin is a set of rules written down as a computer program. The object here ultimately is to get the costs of transactions as low as sending an email.”

“Even in well-developed economies, banks don’t always work as well together as we’d like.”

“I think that the Federal Reserve can compete with bitcoin as a currency. But not the payments portion.”

“Well-run central banks should welcome the emerging competition.”

“The threat of entry into the money and payments system [...] forces traditional institutions to adapt or die.”

http://www.coindesk.com/federal-bank-vp-bitcoin-threat-means-banks-must-adapt-die/

But hey... its just all tulips and ponzi right? Weren't we told here on these forums a few months ago that Bitcoin was most certainly dead? Someone should tell that to Germany (leader of the Eurozone) who just legalized it as "Private money".

http://www.cnbc.com/id/100971898

"I think it is interesting that Germany has gone ahead and given legal status to the bitcoin, as it could become an alternative to the euro if the single currency ever ceased to exist," Brooks said. "If the euro does go belly up the German authorities could potentially still collect tax if everyone started using the bitcoin - that's a good example of German forward-thinking!"

4 replies

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Federal Bank VP: Bitcoin Threat Means Banks Must ‘Adapt or Die’ (Original Post) TampaAnimusVortex Apr 2014 OP

My guess is the in the know folks have already upaloopa Apr 2014 #1

It sounds to me like you really dont understand it at all. TampaAnimusVortex Apr 2014 #3

You are right I don't understand it and upaloopa Apr 2014 #4

The funny part is I remember in the 90s when the prospect of a cashless society Blue_Tires Apr 2014 #2

upaloopa

(11,417 posts)

1. My guess is the in the know folks have already

Reply to TampaAnimusVortex (Original post)

Fri Apr 4, 2014, 11:00 AM

Apr 2014

figured out how to make money off the naive bit coin fanciers. They need some fodder to work with.
Two rules of thumb that are always right:
If it seems too good to be true it is and you don't get something for nothing. There are going to be winners and losers here and the majority will be losers IMO.

TampaAnimusVortex

(785 posts)

3. It sounds to me like you really dont understand it at all.

Reply to upaloopa (Reply #1)

Fri Apr 4, 2014, 05:40 PM

Apr 2014

All Bitcoin is, is a distributed ledger - like a distributed piece of paper with transactions written on it, where each person in the network has a copy of this ledger. Every transaction involved gets synced across everyone's copy of this ledger. That's all it is... no magic. It's not a "libertarian" ledger. It's not "liberal" ledger. It's just a database of transactions that gets replicated. A very simple concept at it's root.

That said, many vendors give a discount to Bitcoin users because they don't need to cost shift the 3% built in fees to the credit card companies. (Credit card companies lose!)

It cuts the bankers completely out of the system... you no longer need a bank account to hold your wealth. You hold it yourself, or if you wish, you could outsource this to a 3rd party (slightly riskier - but makes it easier to manage). (Banksters lose!)

Bitcoin pretty much does away with all the fraud cost incurred in the current credit card system, although it does place an additional burden on the end user to secure their Bitcoins. This stimulates some new types of solutions, like multisignature cold storage - like BitGo.com. (Interesting concept over there)

So, I'm not sure who it is... this "folks in the know" you speak of...unless you mean the early adopters that are smart enough to get in on the action first and become market leaders - like:

outsource.com (Overstock CEO Sees Bitcoin Sales Rising More Than Expected)
http://online.wsj.com/news/articles/SB10001424052702304815004579418962232488216

tigerdirect.com (TigerDirect Tops $1 Million in Total Bitcoin Sales)
http://www.coindesk.com/tigerdirect-tops-1-million-total-bitcoin-sales/

Chicago Sun Times (The Chicago Sun-Times Now Accepts Bitcoin)
http://www.businessinsider.com/the-chicago-sun-times-will-now-take-bitcoin-payments-2014-4

The Chicago Sun Times is hardly a "libertarian" outfit... this is just a case of new technology being adopted. Just like in the early days of the internet, it was mostly inhabited by "libertarian" techies - which later became eclipsed by the rest of society.

upaloopa

(11,417 posts)

4. You are right I don't understand it and

Reply to TampaAnimusVortex (Reply #3)

Fri Apr 4, 2014, 05:45 PM

Apr 2014

I will go over what you tell me.
I think little people will get burned maybe not I'll learn

Blue_Tires

(55,445 posts)

2. The funny part is I remember in the 90s when the prospect of a cashless society

Reply to TampaAnimusVortex (Original post)

Fri Apr 4, 2014, 11:10 AM

Apr 2014

was one of the biggest libertarian nightmares imaginable...And now it's being hailed as a libertarian utopia?? Or does this honeymoon end the minute global governments jump in and start throwing their weight around??

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