Bank of England Looks Into 'Centralized' Bitcoin Alternative, RSCoin (thestack.com) 131
An anonymous reader writes: The Bank of England is working with researchers at University College London to design a Bitcoin clone of its own that can be centrally controlled. It was recently found that the UK's central bank had reached out to university researchers to help it create a cryptographically secure digital currency. The resulting system has now been revealed, and is named RSCoin. The system employs cryptography to obviate counterfeiting and tampering. Unlike other mechanisms, the digital ledger used by the new cryptocurrency is handled exclusively by a central body and will only be made accessible to users in possession of a specific encryption key. Its developers explained that an RSCoin ledger could be published publicly by a central bank, and added that the system's design would also allow a central bank to make transactions entirely, or partially, anonymous.
Woosh! (Score:1)
Is the sound that plays perpetually there.
Re: Woosh! (Score:3)
This is the beginning of a real digital currency. (Score:1, Interesting)
Once a state backs up a currency with this 'full faith and credit' then it has value. That is something bitcoin lacks.
Will it be pleasant to use, though? (Score:4, Interesting)
The biggest problem with Bitcoin is that it's fucking awful to actually use it. If you want to run it on your own computer, you need to download a fucking massive amount of historic blockchain data. We're talking GB and GB of data, nearly all of which is absolutely useless for nearly all users. Yeah, you can use some other third party service, but that totally defeats the decentralization of Bitcoin. The reference client is quite shit. Even the network is shitty, since it takes so fucking long to process a transaction, making it unsuitable for most business uses. Then you have its development team which is fighting and bickering all of the time, even now as transactions get slower and slower. Then there are the occasional developer fuckups where the chain ends up at risk of forking and all hell breaks loose. All in all, it's an absolutely awful experience for most users.
It's a lot like desktop Linux or Rust. They sound all sweet and awesome, then you try them and find out that they aren't so useful after all. That's why they see almost no adoption. A small number of loud geeks get all hot and bothered by them, but regular developers and users try them and are very unimpressed. They end up being worse than whatever established alternative is already being used.
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Your lack of blind ideology is disturbing. Bitcoin is one of the most popular atheistic religions for nerds and you will be down-modded for your rational, pragmatic heresy.
tl;dr LA LA LA I'M NOT LISTENING
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"since it takes so fucking long to process a transaction for free"
There you go, I fixed it for you.
Bitcoin transactions are quite fast if you offer a transaction fee. There is then incentive for someone to process your transaction. Why would I bother processing your free transaction when I have millions of others offering me 0.00000001BTC to process theirs?
Re:Will it be pleasant to use, though? (Score:4, Insightful)
If you want to mine bitcoin you do. If you want to have a wallet which references the entire blockchain you do. But there are plenty of light wallets out there which do not download the entire blockchain.
If that was so people couldn't have 60+GB blockchains on theri 16GB phones now could they? And yet there are plenty of mobile wallets out there.
And no using a light-wallet does not defeat the decentralization of bitcoin. You can have both. AND not everyone needs to have both for the blockchain to have value as a distributed resource.
Re forking. Forks happen every day and yet
Re lack of adoption. Umm. I guess you've been missing the news about how many major firms have been putting serious funds into developing blockchain technology.
Re difficulty of use. Yup. You have something there. Until it's as easy to use as a debit card it's too complicated. But it will get simpler in time or will never get mass appeal.
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Using a light wallet or a mobile wallet does defeat the decentralization of Bitcoin. If you don't have the full history, then you aren't a full participant. If you aren't a full participant, then you're dependent on some locally centralized entity to provide you with the information you don't have, but would have if you were a full, proper participant.
This is the same for all those projects that use a service like GitHub. True decentralization is difficult and often very inefficient. So they centralize on a
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Using a light wallet or a mobile wallet does defeat the decentralization of Bitcoin. If you aren't a full participant, then you're dependent on some locally centralized entity to provide you with the information you don't have, but would have if you were a full, proper participant. ... There is no middle ground in this case.
No, Bitcoin was designed that way, on purpose. Mining wasn't supposed to be "free" if you have the hardware. The majority of the computing cost of verifying the blockchain was supposed to be on the miners with the hefty hardware, with remote nodes being a lot more "lightweight".
The whole system and process have been corrupted now by centralized exchanges, which is a corruption of the way Bitcoin was supposed to work.
You can call that a "flaw" in Bitcoin, if you want, since there was no in-built way
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Sure, using the raw blockchain is somewhat difficult. But have you seen http://www.changetip.com [changetip.com]? You deposit bitcoins which they then credit to your virtual account and store offline in a cold wallet. From there you can transfer money to people via social media including tweets, on reddit, through facebook, etc. They link their social media account to changetip, and then can (of course for a small fee) withdraw the funds or transfer them to someone else.
At periodic intervals they bring the cold wallet onli
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Paying someone on the other side of the country $1000 in cash is not easy to do.
Why, Backward Cousin, do and come visit us in Europe sometimes! It takes about 3 seconds to transfer cash to anyone I know straight into their account, and takes at most a day to show up on their account if they have some weird small bank that only processes transactions once a day. Once PTSD2 goes live in the EU, it will all be realtime across the entire EU.
Now, in countries that are a bit backward, like those colonies you live in, I understand that bitcoins are preferable to the alternative. But come on,
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With online banking, anyone with a scanner and photoshop can pull money from any account into theirs, and it takes about 3 seconds to process, and the money usually "shows up on their account" immediately.
You do know that Europe and North America use different fraud liability and transaction reversion models, right? And that those legal differences are the root cause of all of the procedural and technical differences between the systems?
North America is on the pull model, there is very close to zero liabil
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Even acknowledging (some of) your points, the fact remains that the whole bank transfer system in the USA is extremely fragmented, and quite outdated in several areas. With or without a pull system, you should still be able to transfer money pretty fast nowadays. The fact noone is investing in it, means you're going to be looking at substantial banking costs for a long period. This is a private tax on enterprise that most companies can do without, and is lethal to high-volume, micro-transactional types of s
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I was wondering at the end if I wasn't overdoing it, so I decided to add hints. Sorry!
Partial truth (Score:3, Insightful)
States could easily back the Bitcoin digital currency without creating their own. That a central bank wants to re-invent the wheel is more a testament to how much money there is to be made by a central bank controlling currency. That a State plays along and goes with the central bank's version is a testament to the control Bankers have over Governments.
Nothing new here really.
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The reason why it's getting slower is because more people are using it. So "getting slower" and "not many people use it" are kind of contradictory.
Because of the constant bickering between the developers, the protocol cannot keep up with the system's growth. Bitcoin was designed to be adaptable, all it takes is a change in the specs (easy) and general agreement among a majority of miners (which is apparently a lot harder). Once they finally agree on which path to take, the system can speed up again in a mat
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Bitcoin has way too many issues to be acceptable. Apart from that, a central bank already *has* a currency, no need for another one.
No, the issue that causes central banks to research these things is the interesting blockchain technology. Almost every CB has a coin just to play with the blockchain. For instance, the Dutch Central Bank has "dogecoins". The purpose isn't to create new coins, however. The purpose is to examine ways to make transaction processing cheaper, more reliable and more distributed. And
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Once a state backs up a currency with this 'full faith and credit' then it has value. That is something bitcoin lacks.
The value of a currency is determined by what you can buy with it. You can buy stuff with bitcoin. Therefore, it has value. It doesn't need a nation-state to bestow a fiat value on it.
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The value of bitcoin has value because private entities with fiat currency is backing it.
Strictly speaking, every currency is a fiat currency because we decide what it's worth based on how we feel about either it, or what's backing it. Whether it's gold or the combined goods and services the economy it supports.
There's no explicit gold to bread conversion.
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The value of bitcoin has value because private entities with fiat currency is backing it.
No, I say again: bitcoin has value because you can buy stuff with it, and its value is measured in terms of what you can buy (including other currencies.)
Support from any entities (public or private) does not create that value -- it merely helps to stabilize it.
There's more about why bitcoin has value in the bitcoin FAQ. [bitcoin.org]
Strictly speaking, every currency is a fiat currency because we decide what it's worth based on how we feel about either it, or what's backing it.
On this, we agree. But note the "or" in your sentence.
I once heard someone describe bitcoin as a "collective hallucination" that assigns a value to an abstract concept. But in the next sent
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I found the reference. It was Jonathan Zittrain from Harvard University:
Bitcoin is itself a collective hallucination -- as it turns out, most currencies are -- in which, there is agreement that the units of currency will have some form of value.
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The reason why you can buy things with bitcoin is that you can use any number of services and cash out those bitcoins to fiat currency. If there wasn't this escape hatch, bitcoin wouldn't be seeing the traction it does.
Do you think a guy who's selling drugs on a darknet some where gives a shit that you think you're sticking it to some central banker?
Do you think that anyone who's involved with combining bitcoin with fiat currency transactions like BrainTree care about the ideology at all?
The ideology of bit
We already have digital currency like this. (Score:2)
We already have digital currency like this.
It's called "credit card".
And is also known by many, many other names, like "paypal" or "wallet" or any of a huge number of country-specific names.
Re:We already have digital currency like this. (Score:5, Informative)
No, a credit card may facilitate transactions in various currencies, but it is not itself a currency.
When you buy something using a credit card, you get a bill at the end of the month. Which you must pay ... using currency.
Re: We already have digital currency like this. (Score:2)
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The correct digital currency would be a prepaid debit card.
FTFY. Unless the card is prepaid, it's still not a currency. It's just like a credit card, except you pay the bill immediately from your bank account instead of at the end of the month.
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Uhh, there's a difference between credit and debit. Credit means you don't have the money. Debit means you DO.
Thus, Debit is a digital currency.
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No. Debit means you pay immediately. Credit means you pay later. Either way, you still have to pay. And neither is a currency. They're a pass-through to your own currency resources.
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"Credit and Debit are the results of _using_ currency."
The card is *TIED* to *MY* currency (much like fucking software dependencies.)
Thus, my debit card, being the direct link to MY currency, is currency. If it were not currency, NO FUCKING STORE WOULD ACCEPT IT.
I own and run businesses. I understand this stuff far better than you do.
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Bitcoin-like management of and existing currency is a concept which is why analogies of debit cards etc are being rolled out.
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You are not very smart, are you. lol
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I've also heard a more practical explanation: once a state accepts taxes in a currency, it has value.
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It used to be that gold and silver would be useful, despite not being backed by a state. (Early coinage was about having easily verifiable standard weights of precious metals available, not a state-backed currency.) Currency is valuable if enough people think it is valuable.
I can compare this to a number of things... (Score:1)
Letsee, I can compare a centralized, locked down currency to a number of things.
DIVX (no, not the codec) to DVD.
ATRAC3 to MP3.
SDMI-compliant MP3 players to the iPod.
CPRM to regular HDDs.
Having one central party, who is free to do what they want with a currency is just asking for trouble.
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No ability to react to changing events? Does the piece of paper in your pocket react to daily events. No? Then it's worthless right?
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A vast difference exists between the reasons those things have a central authority and the reasons a currency would have one. They are not equitable.
Centralized currency? Don't we already have that? (Score:5, Insightful)
I'll take Missing The Point for 800 Alex!
And the question is "This digital currency is centrally controlled and allows the authorities to monitor every purchase you make."
'What is centralized bitcoin?
You are correct.
Re:Centralized currency? Don't we already have tha (Score:4, Funny)
I'll take Missing The Point for 800 Alex!
800 bitcoin?
[*ducks*]
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I'll take Missing The Point for 800 Alex!
And the question is "This digital currency is centrally controlled and allows the authorities to monitor every purchase you make."
'What is a credit card?
You are correct.
There, fixed that for you.
We've had easily traceable purchases for some time now, in fact many of you are so enamoured with it you'll actually defend the way credit cards rip you off (Read: merchant service fees).
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I'll take Missing The Point for 800 Alex!
And the question is "This digital currency is centrally controlled and allows the authorities to monitor every purchase you make."
'What is centralized bitcoin?
You are correct.
Bonus question: These transactions will be "entirely, or partially, anonymous"...
Answer: What are political contributions and government spending?
Who's going to use it? (Score:5, Interesting)
The main reason to even bother with bitcoin is the attraction to its lack of central control and regulation. The other, closely related one, is that it works anywhere and for any purpose.
There's really no other reason to use it than the above. It has technical and practical limitations that normal electronic transfers don't have. Mistakes are forever, scams are rampant, technical understanding of what you're doing is vital if you like keeping your money.
There's no reason to bother with it over something like paypal or bank transfers if you're not into it for the lack of control or philosophical reasons, and a system controlled by a bank would do away with that.
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Bullshit.
I'm interested in cryptocurrency (I don't care if it's bitcoin or something else) because it has the potential to serve the same function online that cash does offline: I give you some money and you give me a widget, with no need for me to tell anyone my name and address and credit card number. I don't care whether it's centralized or not; cash is
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I imagine that it would be fantastic for bank-to-bank transactions.
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If we have a cryptocurrency that is controlled by one entity, this has been done before in an extremely secure manner, back in 1993-1994. David Chaum made eCash/DigiCash which was decently secure... secure enough to have a few banks actually start using it without any reports of security issues.
As a side bonus, due to blinding factors, the currency is anonymous, but a double-spender would immediately be found out, destroying the anonymity they had. Timothy C. May also had a currency similar, but his was m
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The other, closely related one, is that it works anywhere and for any purpose.
Ehhh...not really.
http://www.pastemagazine.com/articles/2016/03/bitcoins-latest-hurdle-is-another-sign-of-its-demi.html
>Users have been reporting that their transaction times have been slowing down, in some cases from 10 minutes to more than 40 minutes.
No retail merchant is going to accept a payment option that takes 40 minutes to process.
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It's already gone down back to normal:
https://blockchain.info/charts... [blockchain.info]
There are enough people interested in things working that when something does break, the dust eventually settles. Now this isn't ideal, but that's what you have to deal with in exchange of decentralization: when some problem is found you have to convince other people to adopt your fix.
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You fucking spaz, it specifically says at the top of your chart "WITH FEE ONLY"
It has NOT gone down for those not paying fees.
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Fees are going to be required universally anyway, and current clients already suggest that you pay a fee by default.
There is a limit to the amount of bitcoin that can be made ever, and the reward for block mining is halved every 4 years. This means that transaction fees are needed to motivate people to keep on mining and the network operating.
And I think you misunderstand me -- I'm not some crazy bitcoin evangelist. My point is simply that bitcoin is unlikely to die to such temporary hiccups, because there
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I have no idea why you think that's comparable.
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But you do realize, don't you, that this "problem" is a function of bitcoin's success. There is SO much use that not all transactions can be fulfilled quickly enough. I don't see this as a bad problem. A bad problem is lack of use. Too much use can be adapted for.
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They saw the free market currency bitcoin and felt it threatened their precious dollar
That explains why the dollar has plummeted in value over the past two years and BTC has skyrocketed.
Wait....that hasn't happened at all.
entirely, or partially, anonymous (Score:2)
Oh, right! That's going to happen! Please, HSBC is just looking for another way to launder money
Being the Bank of England... (Score:2)
..every SHA-256 hash will have to be calculated by rows of clerks armed with abacuses and quill pens.
Centrally controlled (Score:3)
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I was joking about "virtual" currency. But if you want real world examples banks get "nationalized" all the time, even in "free" countries. You could look at what happened recently in Cyprus, for example, where due to government mismanagement everyone with a bank account in that country was given a "haircut". This idea of stealing people's money was so appealing that even Stephen Harper was considering doing it in Canada:
The Government proposes to implement a bail-in regime for systemically important bank
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I've read a variety of articles and seen a number of documentaries where the IRS has, in the US, frozen assets - all of them. That is not quite the same but there is no appeal and no real due process. Eventually, in the cases that I've read/heard about, they get access to their assets again but that process not only takes years but also incurs no penalties for the IRS. One particularly egregious case was a matter of a guy who owned a couple of restaurants on the East Coast. They pretty much ruined him and t
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Yes it's a fine line between catching bad guys who need to be caught, and being a tyrant. The line is fine because after all, we are ALL guilty of something. As Cardinal Richelieu said: "If you give me six lines written by the hand of the most honest of men, I will find something in them which will hang him.". That was in a time when laws were much fewer and much simpler. I'm guessing we're probably down to one liners by now.
While paper currency has the usual problems, namely the guy with the plates for th
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Hmm... It's tempting... I've an affinity for writing long responses. I don't think I will but you have been duly warned. Let me see...
No, I think it can be short. Your post makes me think of this which is both directly related and tangentially related, all at the same time!
There is, I should think, a finite number of laws that need making. Yet, the job of legislatures is to craft and vote on new legislation. It's tempting to wax philosophically about where that line is best drawn but I think most rational p
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Alright, so it's kind of a novella. 'Snot too long.
The TL;DR LEL millenial crowd can go fuck themselves. They're too busy playing with their phones anyway. Poor them, one day they'll finally look up and the world will have been sold from right under their feet. But I digress...
what the hell are they supposed to do with themselves after they've run out of laws to write?
I think society implodes or explodes under repression long before that point is reached. Then someone shoots all the politicians and burns all the books. Then someone shoots that guy (you should always fear the counter-revolution not the revolution itself). Then after a period of anar
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> The TL;DR LEL millenial crowd can go fuck themselves.
Good.
As an aside: I'd have grown up to be a complete and total idiot (more so than I did) if I'd had those sorts of things as a kid. I'd have been nose to the phone, playing games, and generally inattentive and not bothering to learn anything because the information is already there - why learn how when I can just get the answer? I do wonder if there's going to be a long-term effect on society and if there might even be some physiological changes to
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Oh I go through phases of posting, depending on my mood, on the news, on how busy I am with other stuff, etc. I have a similar amount of posts on this site as you, for better or for worse.
The signal to noise ratio on the internet in general is awful. I think this is the longest most intelligent exchange I've had certainly in years. The last time I think was when I met my second wife, and well, I ended up marrying her. Sorry I'm still married though - you'll just have to wait lol.
Yeah Panama seems ok. Th
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Wow! (Score:2)
/sarcasm
Sounds like a winner to me (Score:1)
It's NOT a replacement for a decentralized "people's currency" which the pre-cartel BitCoin was* and which most other cybercurrencies are.
But it IS a convenient, possibly-stable** form of money which has clear advantages over paper money or traditional electronic transactions in some applications.
Again, if you want the anonymity and confidentiality that a suitcase full of 50-Euro notes gives you, this isn't for you.
* with rumors of a cartel in place, one should assume that the current BitCoin ecosystem is
OT: Negative interest rates may be tolerable (Score:1)
For people who typically deposit large sums of money in bank accounts (as opposed to investing in money markets, bonds, or stocks), even a very small "negative interest rate" is less costly than having the money in suitcases, in a private vault, or in a bank's safe-deposit box.
Keeping and using large amounts of paper currency has costs:
You have to pay storage costs, which can range from zero (in your wallet or mattress, or in a safe you already own) to a modest one-time cost (a fireproof safe in your house)
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Some of your points are well-taken, but I think you are mistaken in a few cases.
* Safe deposit box scales by size. A box that is twice as big can store twice as many pieces of currency.
* the reasons large cash transactions are under scrutiny is that *typically* money-launderers and drug dealers prefer them. Why do they prefer them? Because if they used banks or some other form of easy-to-trace means of conducting business, the odds of them getting caught would go way up. If I buy something as expensive
Centrally controlled != Tracked (Score:2)
Cash is both centrally controlled and protected and very anonymous.
A digital currency - please look up what currency means, if you're pedantic - would be a boon if backed by a proper nation state.
You are fined one credit for a violation... (Score:2)
https://www.youtube.com/watch?... [youtube.com]
Seriously? (Score:1)
They're going to do this and NOT call it BritCoin? or the BritBit?
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It's the Bank of ENGLAND, not Britain.
BRITcoin surely (Score:4, Insightful)
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"making it more difficult for a central authority to interfere with your financial affairs"
Yep, to the point that with a reversible transaction capability, you can fuck people over and pretty much get away with it. Pay, get your stuff, reverse the transaction, keep your money. Gov't can't help the one getting scammed!
Stupid stupid bankers (Score:2)
The whole point of Bitcoin and one of the key innovations behind it is that it is NOT centrally controlled or manipulated by a nation state. Bitcoin started as an experiment in decentralized, crypto-currencies that offer some level of protection against inflation, government tracking and control. A government creating an alt currency that is trackable, monitored and controlled by a central authority is the antithesis of the philosophy behind crypto currencies.
Whatever moron came up with this idea should be
Step 1 anonynous transactions, Step 2 paper please (Score:2)
Do they know what they're doing? (Score:2)
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yes they do. it's all about control and has nothing to do with digital currency.
A centralized blockchain... why? (Score:2)
How long will it take for the IT folk to explain to their bosses why it would be better just to use a regular old database and some PKI?
Blockchains are a massive waste of time and effort, but I guess some techies get to make money while the non-techies figure that out.
Anonymous for who? (Score:2)
...system's design would also allow a central bank to make transactions entirely, or partially, anonymous.
The bank is under the control of the Chancellor of the Exchequer, who will be a Conservative Party MP, for probably more than the next decade after the planned gerrymandering during this spell in government, and they will get to choose what's anonymous and what is not. This does not bode well.