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Bitcoin Government Privacy The Almighty Buck United Kingdom

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.
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Bank of England Looks Into 'Centralized' Bitcoin Alternative, RSCoin

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  • by Anonymous Coward

    Is the sound that plays perpetually there.

  • Once a state backs up a currency with this 'full faith and credit' then it has value. That is something bitcoin lacks.

    • by Anonymous Coward on Thursday March 10, 2016 @02:24PM (#51672827)

      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.

      • Re: (Score:3, Funny)

        by Anonymous Coward

        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

      • by Anonymous Coward

        "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?

      • by GLMDesigns ( 2044134 ) on Thursday March 10, 2016 @03:07PM (#51673175)
        You don't need to download the full blockchain to buy and spend bitcoin.

        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 ... bitcoin is still around. Now hard forks are not something that should happen often - but they will.

        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.
        • by Anonymous Coward

          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

          • 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

        • 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

          • Re: (Score:3, Informative)

            by St.Creed ( 853824 )

            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,

            • 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

              • 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

    • Partial truth (Score:3, Insightful)

      by s.petry ( 762400 )

      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.

      • What's new is that this should be an eye-openerâ"if KAOS doesn't create and gain reasonably wide acceptance for a fully anonymous cryptocurrency soon enough, then CONTROL will get theirs widely accepted and a competing currency will not gain wide acceptance among merchants. And we'll be stuck with something a lot easier to track than paper.
      • by delt0r ( 999393 )
        Thing about bitcoin is that its shit. It is shit as a currency since far too many speculate with it (it is basically a low volume high risk stock with zero equity behind it). It is shit for transactions because it is sooo slow and getting slower! It is shit because not many people use it. It is shit because even the people in charge of the specification are not in charge and cant sort out their shit. It is shit because it can't handle much volume at all.
        • 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

      • 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

    • 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.

      • 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.

        • 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

          • 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.

          • 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.
      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.

      • by ClickOnThis ( 137803 ) on Thursday March 10, 2016 @02:52PM (#51673057) Journal

        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.

      • Not quite. Those are digital /payment methods/. Not currencies. They are still backed up by actual fiat money.
    • by vvaduva ( 859950 )

      You are not very smart, are you. lol

    • I've also heard a more practical explanation: once a state accepts taxes in a currency, it has value.

    • I see no difference between this and a debit card system. It's a Government issued and maintained currency, complete with police and government spying.
    • 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.

  • 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.

    • Having one central party, who is free to do what they want with a currency is just asking for trouble.

      Probably, but I'd trust the Federal Reserve or Bank of England over a crude algorithm with no ability to react to changing events any day of the week.

      • Crude algorithm? Really.

        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?
    • 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.

  • by BoberFett ( 127537 ) on Thursday March 10, 2016 @02:16PM (#51672753)

    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.

    • by ClickOnThis ( 137803 ) on Thursday March 10, 2016 @02:41PM (#51672959) Journal

      I'll take Missing The Point for 800 Alex!

      800 bitcoin?

      [*ducks*]

    • by mjwx ( 966435 )

      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).

    • 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?

  • by vadim_t ( 324782 ) on Thursday March 10, 2016 @02:17PM (#51672755) Homepage

    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.

    • by Anonymous Coward

      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

      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

    • by Anonymous Coward

      I imagine that it would be fantastic for bank-to-bank transactions.

    • by Anonymous Coward

      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

    • 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.

      • by vadim_t ( 324782 )

        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.

        • by Khyber ( 864651 )

          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.

          • by vadim_t ( 324782 )

            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

      • Bitcoin is one part of an ecosystem. It need not fill every niche. There are other coins out there beside bitcoin - and there are solutions to the transaction time.

        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.
        • by xvan ( 2935999 )
          There are people interested in keeping the transactions speed slow, to create the bitcoin version of the CC tax. Only a serious threat to fork will solve this.
  • Oh, right! That's going to happen! Please, HSBC is just looking for another way to launder money

  • ..every SHA-256 hash will have to be calculated by rows of clerks armed with abacuses and quill pens.

  • by Dunbal ( 464142 ) * on Thursday March 10, 2016 @02:32PM (#51672891)
    So I'm sorry Mr. Smith, but according to the regulation in Chapter 48, paragraph 179 subsection j of volume 12 of last years' "Combined Banking and Virtual Currency Regulations", 3rd revision, we've been forced to suspend your account. No there's no appeal, this is not a judicial process. After all, it's only a virtual currency. Well then I suggest you read up on the regulations next time...
    • by delt0r ( 999393 )
      That is why you want these things run by official regulated banks. Because without that you have no leg to stand on.
  • by Jawnn ( 445279 )
    Who saw this coming?
    /sarcasm
  • 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

  • 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.

  • by Anonymous Coward

    They're going to do this and NOT call it BritCoin? or the BritBit?

  • BRITcoin surely (Score:4, Insightful)

    by McWeenie ( 4497293 ) on Thursday March 10, 2016 @03:05PM (#51673163)
    I'm a long time lurker but had to sign up to point out the Royal Bank has missed the very obvious name: BRITcoin
  • 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

  • I can predit that years in advance. They will allow anonymous transaction. Then they will required paper to withdraw money. They can change the rule since they are the central authority. They can also emit as many as they want! They could probably have build that using mysql and simple public API in json!
  • Bitcoin without the decentralization mechanism is just a very clumsy database of transactions. You may as well just make something from a MySQL database and the development costs would be cheaper.
  • 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.

  • ...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.

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