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European Central Bank Casts Wary Eye Toward Bitcoin 301

An anonymous reader writes "Erik Voorhees blogs for 'On Oct 29, 2012, the European Central Bank (ECB) released an official (and very nicely prepared) report called "Virtual Currency Schemes (PDF)." The 55-page report looks at several facets of what virtual currencies are, how they're being used, and what they can do. As it happens, the term "Bitcoin" appears 183 times. In fact, roughly a quarter of the whole report is specifically dedicated to Bitcoin and it's probably a safe assumption that Bitcoin's growth over the past year was the catalyst for producing this study in the first place. The report from the ECB concludes, in part: Virtual currencies fall within central banks' responsibility due to their characteristics, and Virtual currencies could have a "negative impact on the reputation of central banks."' Could this be the first step toward regulation of the digital currency?"
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European Central Bank Casts Wary Eye Toward Bitcoin

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  • Einen moment, bitte. (Score:5, Interesting)

    by istvaan ( 66491 ) on Saturday November 03, 2012 @01:39PM (#41865623) Homepage

    Correct me if I'm wrong, but isn't the whole premise of bitcoin to be a currency that has no central authority?
    That is, it's a currency designed from the ground up to exist without and outside of central regulation and interference.
    I suspect that, if regulators attempt to get their hands on it somehow it will consider those attempts to be damage and, like the Internet, route around them.

  • by Twinbee ( 767046 ) on Saturday November 03, 2012 @01:40PM (#41865635) Homepage
    I see banks, and their multiple saving schemes, and different types of credit/debit card, and cheque books, and different types of notes, and tedious forms to fill in, and different currencies with all the complicated mess that entails when converting, and I think how nice it would be to scrap it all and start again from scratch, done properly, with almost total automation, and no UWS (Unnecessary Work Syndrome).

    That would save billions or trillions of dollars per year probably.
  • 19th Century (Score:5, Interesting)

    by TubeSteak ( 669689 ) on Saturday November 03, 2012 @02:00PM (#41865821) Journal

    But beyond any market-level incidents caused by a new currency, itâ(TM)s important to understand that virtual currencies can actually damage the faith people put into central banksâ"and fiat currenciesâ"as institutions themselves. People are taught that central banks are necessary to manage money supplies (even though the US boomed through the entire 19th century, most of which didnâ(TM)t have a central bank). But, if it is demonstrated that money can work without central planning, and maybe even work better, then indeed the faith in central banks will be undermined, and with good reason.

    Why do we have centralized banking (aka the Federal Reserve System) in the USA? []

    And you know what the solution to that panic was?
    A bunch of rich guys injected liquidity into the system because there was no central bank to do so.
    100 years later, when confronted with the same market situation, our central bank injected liquidity into the system and kept things from getting worse.
    Imagine that! Unelected ivory tower banking eggheads made the exact same move as laissez-faire capitalist J.P. Morgan and friends.

    The issues surrounding non-centralized banking isn't whether money works better or worse,
    it's about what happens during the edge cases, when shit hits the fan.

  • by Znork ( 31774 ) on Saturday November 03, 2012 @02:38PM (#41866257)

    Indeed, as the ultimate goal of humans is to work as much as possible. Almost everyone on their death bed regrets not having worked more. Or maybe not.

    We're rapidly leaving the age of scarcity. Within years whole swaths of current human fields of labour will be rendered obsolete, even now Chinese labour is getting replaced by robots, 3d printing will probably do a lot more in and we're on the cusp of losing vehicle piloting to automation which will wipe out large parts of the transportation industry. Increased demand is simply fulfilled by more automated processes, it doesn't create more need for labour to anywhere near the extent it used to.

    Ultimately we will have a choice. Either keep the few employed in productive necessary labour, while directly and indirectly taxing them like hell to support the rest of the population in meaningless make-work or outright welfare. Or we can cut working hours/days until equilibrium is restored and more equitable distribution of labour is achieved.

    Personally I prefer the latter. I can live with having more free time, but both working my ass off to keep everyone else fed or, to paraphrase Keynes, doing make-work by burying money and digging it up again just to keep 'money' flowing aren't among the more palatable ways of living life.

  • by westlake ( 615356 ) on Saturday November 03, 2012 @11:14PM (#41869809)

    People are taught that central banks are necessary to manage money supplies (even though the US boomed through the entire 19th century, most of which didn't have a central bank.

    The US went bust in 1819, 1837, 1857, 1873 and 1893.

    The Great Depression of the 1930s was called "great" for a reason. It followed a long series of depressions which afflicted the American economy throughout the 19th century.

    Crop failures, drops in cotton prices, reckless railroad speculation, and sudden plunges in the stock market all came together at various times to send the growing American economy into chaos. The effects were often brutal, with millions of Americans losing jobs, farmers being forced off their land, and railroads, banks, and other businesses going under for good.

    In early May 1893 the New York stock market dropped sharply, and in late June panic selling caused the stock market to crash.
    A severe credit crisis resulted, and more than 16,000 businesses had failed by the end of 1893. Included in the failed businesses were 156 railroads and nearly 500 banks.
    Unemployment spread until one in six American men lost their jobs.

    Financial Panics of the 19th Century: Severe Economic Depressions Occurred Periodically []

The other line moves faster.