ECB's Christine Lagarde Blasts Bitcoin's Role In Facilitating Money Laundering (bloomberg.com) 126
An anonymous reader quotes a report from Bloomberg: European Central Bank President Christine Lagarde took aim at Bitcoin's role in facilitating criminal activity, saying the cryptocurrency has been enabling "funny business." "For those who had assumed that it might turn into a currency -- terribly sorry, but this is an asset and it's a highly speculative asset which has conducted some funny business and some interesting and totally reprehensible money-laundering activity," Lagarde said in an online event organized by Reuters.
The remarks, made in a conversation largely focused on the euro-area's economic outlook, show top policymakers are taking notice as a speculative fever sweeps cryptocurrency markets. Bitcoin prices have more than doubled since November and topped a record $41,000 earlier this month. Concerns over money laundering and the ability of financial firms to know the identities of their clients have been at the forefront of the cryptocurrency debate. While critics say that instruments like Bitcoin make the illicit transfer of funds easier, crypto advocates say the network of digital ledgers known as the blockchain allows money to be traced more easily than cash and can actually help law enforcement.
The remarks, made in a conversation largely focused on the euro-area's economic outlook, show top policymakers are taking notice as a speculative fever sweeps cryptocurrency markets. Bitcoin prices have more than doubled since November and topped a record $41,000 earlier this month. Concerns over money laundering and the ability of financial firms to know the identities of their clients have been at the forefront of the cryptocurrency debate. While critics say that instruments like Bitcoin make the illicit transfer of funds easier, crypto advocates say the network of digital ledgers known as the blockchain allows money to be traced more easily than cash and can actually help law enforcement.
Of course! (Score:5, Informative)
Of course she's going to decry anything that takes business away from the incredibly profitable money laundries at Credit Suisse/First Boston, CitiCorp, Goldman Sachs, Deutschebank, etc. I really don't think she has much to worry about, there's only a trillion or so dollars in e-currencies, and the big banks launder at least twice that every year.
Re:Of course! (Score:5, Insightful)
But no ransomware maven is going to have his victims send money to an institution that can trace it. Kidnapping died out as a crime because in modern times there is no way of organizing a money drop that can't be surveilled. But just in time, cryptocurrency came along and ransoms became feasible again.
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Eh, ransomware is peanuts in the larger scheme of the flow of illegal funds. Over a **Trillion** dollars is laundered just through the US (we're the world's largest money laundry), half of that for drug operations. Much of the rest is from weapons sales, frauds, embezzlement, and the like. Ransomware and kidnapping is peanuts in comparison.
Re: Of course! (Score:1)
Yea but they can't have anyone threatening their monopoly on "funny business".
people hate what hurts them (Score:1)
Basic smearing of the competition. He's going to find reasons to hate any pie he doesn't get a slice of.
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It's true really. With the elimination of cash control over financial flow has increased enormously. And then they get incensed over what is not yet under their control?
Clean out your own closet first (Score:5, Insightful)
How about her and her financial regulator cronies stop handing out deferred prosecution agreements to the likes of HSBC, who were caught laundering industrial quantities of Mexican drug money, and instead ban the bank from operating in western countries and stuff some of the directors in jail?
And while they're at it how about ceasing to print industrial quantities of money to fund asset speculation while forcing austerity on the real economy?
Like most central bankers, Lagarde is an idiot stooge, and criticising bitcoin is an easy way to pretend she is fighting for the little facilitating her wealthy mate's hoovering up of all the actual useful assets in the world.
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...fighting for the little guy, while facilitating...
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Shut down international money laundering and you'll lose every large bank on the planet. Just in the US it brings in $100-$150 billion in profit every year.
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Shut down international money laundering and you'll lose every large bank on the planet. Just in the US it brings in $100-$150 billion in profit every year.
Not really. Money laundering has costs. Some of it is for perfectly innocuous activities like providing cannabis to willing adult users, but some of it is for human trafficking, and there's a whole spectrum in between. Laundering those funds makes those activities profitable, and they would be much reduced without easy means of doing that.
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Of course money laundering has costs, that's why banks charge 10-15 percent of the amount being processed in their 'private banking' departments. It's almost al profit though, as the transactions are generally programmed actions that take place in seconds without human intervention.
Re: Clean out your own closet first (Score:2)
I meant human costs, and costs to society. The banks don't have to pay those.
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and instead ban the bank from operating
Just what do you think would happen to the likes of *you* when this happens? It's all good and fine to expect a bank to be treated like every other business, but remember they aren't "too big to fail" because of underhanded deals with people in power, they are "too big to fail" because of the knock on effects on western economies, businesses and ordinary people. Heck you just proposed banning the company which holds 25% of the value of the largest financial economy of the Europe continent both corporate and
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Heck you just proposed banning the company which holds 25% of the value of the largest financial economy of the Europe
See I think we need to recognize the problem is what you just said there. The same can be said for JPM, BoA, Wells Fargo and Citi in the US. We have an identical problem in the insurance industry with the likes of AIG.
This is really a cross roads. There are three possible solutions.
1) Do Nothing accept these institutions are just going to exist beyond the law to the degree they do now and that their leadership will have an out-sized amount of influence in society. (Its really always kind been this way)
2) N
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She's definitely someone who should be in jail or at least in court instead of in a public office.
That doesn't mean what she says is false, though.
Smoke Screen (Score:2)
This is about control. The financial industry, politicians and bureaucrats thought they had it fixed with cash going by the wayside. No more anonymity plus negative interest rates. And along comes cryptocurrency to crash the party.
Re:Smoke Screen (Score:4, Insightful)
No, its about taxes. You know, the stuff they build roads, schools and fund the government with.
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By definition the money the government prints is not counterfeit
Demand... (Score:2)
There wouldn't be a trillion dollars in crypto-currency if a whole lot of people didn't feel the need to usurp the big banking system.
Any time there is a system that locks humans out, a secondary market will appear.
--
And yet the true creator is necessity, which is the mother of invention. - Aristotle
I think the guy is wrong about it being currency (Score:2)
For legal and tax purposes, yeah, bitcoin is generally treated as an asset by governments.
But any damn thing is a currency if enough people collectively agree that it is one.
END COMMUNICATION
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But any damn thing is a currency
Got change for a 20 (ton) [ggpht.com]?
Re: I think the guy is wrong about it being curren (Score:3)
Sure! Here's a sixteen ton weight!
Do you want a tiger or a crocodile to go along with it?
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I paid for groceries with crypto the other day. Felt a lot like currency to me.
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And if you had bought your groceries a day earlier or later you could have paid 25% more (or less) for them. What a great currency!
Having money ... (Score:2)
Re: Having money ... (Score:2)
When YOU have MY money, it is.
And that is what money laundering is. Disguising that it came from criminal activity. Aka from stealing or generally just taking things form people.
At least that is the implication here.
Certainly not all the Bitcoins.
But, let's say, a high enough statistical likeliness.
I'd suggest thinking about how to differentiate the two.
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Disguising that it came from criminal activity.
Maybe I just don't want my client list perused by government officials.
But, let's say, a high enough statistical likeliness.
Lets ask black people how they like to be harassed for the "statistical likeliness" of committing a crime.
Sorry. But unless you have evidence of a crime, take it to court and get a decision from the judge, the money I have is mine. Innocent until proven guilty and all that other nonsense.
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A lot of criminal activity is not stealing. Drug selling for instance is like any other manufacturing business in that you are producing and selling a product to willing purchasers, it just happens to be illegal.
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You just neatly summarized the concept of taxation. And that is what "money laundering" is largely about: avoiding being robbed by the state (and your friendly bank, which is pretty much the same thing).
I thought that was a feature of BTC (Score:2)
Was to be able to move cash around without government oversight. Which you can do, but not at the exchanges as much anymore.
but an shop owner does not want be holding bag (Score:2)
but an shop owner does not want be holding the bag when the price jumps and they really want to price in units with an sign saying today an unit is X btc? that can in some cases make them lose an lot if there is an big drop or they did not exchange before the drop. And servers may have law suits over tips.
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Interest usually moves in the low percentages per year even worst case maybe 10%, bitcoin can do that in minutes. You would be insane to uses BTC as a hedge against inflation.
Can't handle the competition Christine. (Score:1)
Don't forget. (Score:5, Insightful)
Stolen server time to 'mine'.
Contributing to global warming (climate change) by wasting electricity.
Wasting news headlines.
Such a waste of resources in general.
-Bitwaste.
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Oh no, you can't play video games at an ideal FPS for cheap... what a waste.
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So that's what you focus on from the GP's list? Were you born an idiot or did you learn that in idiot school?
But Tulips... (Score:2)
But slashdot keeps telling me bitcoins are worthless tulips!
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Tulip Panic is largely a myth.
Bitcoin: for criminals, by criminals? (Score:5, Insightful)
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I doubt bitcoin was created by criminals with criminal use in mind. To me, it seems far too likely that bitcoin is just another one of tech's odd pet projects that somehow got suddenly popular and fell off the originally intended rails. It happens a lot more than we might recognize; just look at Facebook: a website built by nerds to rate women on college campus, sortable by sexual availability.
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Of course! How many other world-changing technologies have been invented by an anonymous pseudonym?
Surprisingly levelheaded, for a Goldman Sachs empl (Score:2)
Come on, when has such a position (ECB, Federal Reserve, etc) not been filled by a Goldman Sachs mole?
Easy way to kill BC (Score:3, Informative)
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Make it illegal to transfer funds between banks and BC stores.
Sounds like a plan.
So, are YOU going to tell Greed N. Corruption about giving up their $35,000 coins, or are you going to make someone else do it?
Its never the technology (Score:2)
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Any new technology is going to be used for nefarious means first.
Any technology that is new will attract less attention, methods of monitoring it take time to develop.
Existing mature technologies already have monitoring and regulation in place, so nefarious users will always be on the look out for alternatives. Non nefarious users are less likely to embrace a new technology as they don't suffer from the existing ones as much as the nefarious users do.
All Civil Rights Obstruct Law Enforcement (Score:5, Insightful)
I am not a fan of bitcoin and I certainly am not in love with its use in ghetto communities to launderer drug money, but so BE IT. The purpose of civil rights is to make government less easy. That is the core principle. There is no right for the Government to solve every crime as easy as possible. For better or worst, our lives are controlled by citizens. and should not be controlled by government, because government has proven to be the most dangerous criminal organization of them all. It is not impossible to fight crime when bitcoins are involved. It just means the cops and the FBI has to get off there chairs and actually do work. It would help if the FBI would not break any laws, themselves, and stop being a political power broken in the US government. Then they can find time to do their jobs.
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https://en.wikipedia.org/wiki/... [wikipedia.org]
Should be illegal (Score:2)
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No, billionaires are not going to keep their wealth in a crypto currency that a single hacker can permanently take away from them. Not to mention the high chance of losing much of that wealth due to crypto's extreme fluctuations in value.
Which, by the way, is part of the reason banning bitcoin is easy. All that's necessary is for some prominent politicians to *talk* about banning it (due to money laundering, excess carbon generation, or whatever other reason) and there will be a panic as some people sell be
Re:Should be illegal (Score:4, Informative)
There's no need to make it illegal. That would be like making possessing flour illegal because some criminals are converting their monies to flour in order to sent it internationally and then convert it back to cash.
What you do is exactly what they've done - implementing money laundering rules which means that banks etc. do not deal with things that they don't know the origin/destination of.
Paypal say they're going to take Bitcoin. But only between registered Paypal users. There's a reason for that - they're an EU bank and they're required to know who their customers are so that money trails can be followed.
Bitcoin is just a way to - quite literally - launder that information away so that source/destination are unknown. Which is the prime indicator/vector of money laundering.
And the anti-money-laundering laws are all there. Some banks won't even let you fund an account with an online Bitcoin wallet, or accept money back from Bitcoin exchanges - they block the transaction because the entity at the other end doesn't co-operate in money-laundering investigations so they get blacklisted. I had a pittance of Bitcoin in an old wallet and the only way to get it out - after weeks of trying - and into something I could spend was to trust a random, unknown third-party off-shore website to convert it to an Amazon voucher for me. Quite literally a risk, because I'm reliant on them to take my money and return a legitimate voucher and I have no idea who they are! The only other options for me were dealing with untraceable private individuals on the basis of a 5-star rating on an untraceable website, where - again - I send them the Bitcoin and hope that they then recompense me into my bank somehow. And even then - the banks warn that things like that are dodgy and they may refuse the transaction.
And what people miss - money laundering isn't about drug-dealers and smugglers. Those people could pay in stolen jewellery or melted down gold or weapons. Currency is probably the antithesis of their operation.
It's tax evasion that they're worried about. And if there's one thing you don't want to be investigated for, hounded for, subject to audit for, etc. then it's tax evasion. That's how they got Capone, remember.
Bitcoin will just roll on, alternatives will come and go, people will trade and barter in anything that's available - including Bitcoin - but at the end of the day you either have to find someone willing to put their name to transactions and provide services which are visible to banking, tax authorities, etc. and subject to money-laundering, or you have to deal on what is effectively a black market and trust.
Global Warming. (Score:1)
I think bitcoin isn't blasted enough for facilitating global warming. It's ability to indefinitely disguise money laundering is dubious at best, as all transactions are logged permanently, in a way that makes them implicitly identifiable (even if expensive to do so).
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> I think bitcoin isn't blasted enough for facilitating global warming.
Legacy financial systems use at least two orders of magnitude more energy than Bitcoin. Way more than aluminum even. And that's not counting all the wasted man-hours.
If you care about the planet you want Bitcoin to replace legacy finance.
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> I think bitcoin isn't blasted enough for facilitating global warming.
Legacy financial systems use at least two orders of magnitude more energy than Bitcoin. Way more than aluminum even.
Given the size of the average bank in the US, I'd certainly say so.
And that's not counting all the wasted man-hours.
If you care about the planet you want Bitcoin to replace legacy finance.
Unfortunately what you call "wasted" man-hours, millions around the world call that employment. MOAR humans, means MOAR jobs.
Re: Global Warming. (Score:2)
Legacy currencies facilitate far far more than two orders of magnitude more transactions than Bitcoin.
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Wait... how much does it cost the fed to bring billions of dollars into existance vs bitcoin mining billions of dollars. I think bitcoin wastes way more juice.
Doesn't like the competition (Score:2)
Well, what else is good for? (Score:2)
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Yea, right. (Score:1)
I'm highly skeptical of this claim. I don't think you have any idea how many bitcoin mining farms are out there.
Money Laundering is CB Paedophilia (Score:2)
Any time central banks want to limit people's use of cash they roll out money laundering in the same way that QAnon and others roll out paedophilia when they want to smear opponents.
Lagarde (the destroyer of Argentina's economy) is unhappy about cash because it prevents her and other banks from levying negative interest rates on normal savings. Basically, they worry that if they start charging people for saving then they will simply take their money out and stuff it under the mattress because 0% interest is
Does malware use bank transfers or bitcoin? (Score:2)
Malware uses obviously, due to rogue nations it allows almost trivial criminal money transfers.
Anyone who pretends cryptocurrency does not massively facilitate crime is a liar or an idiot.
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Re: Does malware use bank transfers or bitcoin? (Score:2)
Malware revenues are growing exponentially, yes.
AML is not the problem for Lagarde (Score:1)
Criminals love sports cars (Score:2)
Obviously it's an attempt to make dumb people believe Bitcoin was bad because bad people use it. But it doesn't need a lot of thinking for anyone to realise that criminals use the Euro, too, and it doesn't make the Euro bad. Criminals then love sports cars and when criminals love Bitcoin might Bitcoin be in fact as great as sports cars! ...
Either is she trying to bank on the stupidity of people or she doesn't understand crypto currencies and doesn't know their disadvantages. It creates a weak picture of som
Hedge against inflation (Score:2)
I'm hearing these days that BTC is a hedge against inflation, similar to gold. Let's look at this, inflation rates can devalue money by 2-3% in the last decade: https://www.usinflationcalcula... [usinflatio...ulator.com] And worst case ~15% in the last 50 years. BTC can lose that in a day.
Re:So, does that mean that bitcoin is the new cash (Score:5, Informative)
Except Bitcoin isn't untraceable at all. Following the bread crumbs in the blockchain isn't particularly difficult. The only benefit to using it over pallets of cash is that you don't need to physically move strips of paper around. But government entities who want to follow the money can easily do so with Bitcoin.
Best,
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Except Bitcoin isn't untraceable at all.
If Bitcoin were traceable, there wouldn't be ransomware and the entire dark Web would be political billingsgate that was kicked off social media.
Re:So, does that mean that bitcoin is the new cash (Score:5, Insightful)
Really? There are a lot of financial transactions that can be sufficiently obfuscated as to make them impossible to follow for the most trivial of effort. How do you think the ransom to the Somali pirates is paid? Or someone pays for a cargo container of cocaine? A deposit at CitiCorp cascades through a dozen transfers in the next 10 minutes through half a dozen countries on three continents and VIOLA! Clean money comes out at the other end at a bank in Saudi Arabia, minus 10% for fees. It's so lucrative for banks that former US Treasury Secretaries retire from "public service" to run international money laundry operations (aka 'private banking') for the mega-banks.
Bitcoin will never amount to more than a drop in the bucket in the international money laundry trade.
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Really? There are a lot of financial transactions that can be sufficiently obfuscated as to make them impossible to follow for the most trivial of effort.
You have no idea what you're speaking about. If the ransom is being paid in US dollars then the money ultimately go through correspondent banks in the US that are controlled by the Fed. And the Fed is VERY strict about money laundering. You can try to obfuscate the money trail by using multiple transfers. And it can work once or twice for a particular bank overseas, but eventually this bank WILL get banned from using the US banking system.
So most of the laundering happens through completely boring channel
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You have no idea what you're speaking about. If the ransom is being paid in US dollars then the money ultimately go through correspondent banks in the US that are controlled by the Fed.
Why a bank without any office in the US transferring dollars to a different bank without any office in the US must do it through a correspondent bank in the US?
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Why a bank without any office in the US transferring dollars to a different bank without any office in the US must do it through a correspondent bank in the US?
I've heard that it's a Fed requirement. I've looked at thousands SWIFT statements through my career and I don't think I've ever seen a USD payment that didn't go through a bank in the US.
But even if you ignore it, you will be limited between transfers inside one country between several collaborating banks. At this point it would be easier to just use the local currency and probably bribe the local officials.
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Not by your overly complicated, actually-easy-to-trace movie scenario.
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Note that Somali piracy was on the decline by 2010 and had been nearly wiped out by 2017
Due to lead poisoning. Not due to a lack of ways to launder their funds.
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Let's say that you're Guo Wengui and your buddy and occasional business partner Steve Bannon just got arrested while on your yacht. Now you feel sorry for poor Steve, whose funds just got frozen because of his 'Build The Wall' non-profit fraud, but your cash is currently wrapped up in the 20 tons of cocaine being offloaded in Philadelphia and a bunch of Trump Tower real estate. You need to sell it as soon as it's on shore so you can loan Stevie $5 million in pocket change for bail, but a $1.3 billion in B
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You forgot the important difference:
That game is for the big fish. Bitcoin is for the small-time criminal. That's why certain people are predictably up in arms against it - they don't like the competition.
Re:So, does that mean that bitcoin is the new cash (Score:5, Insightful)
It's not used because it isn't traceable, it's used because it isn't reversible and can be transferred over distances.
Most perpetrators of such crimes will be located thousands of miles away from their victims, outside of the jurisdiction of any law enforcement agency the victims might be able to go to and outside the physical reach of any vigilante justice an angry victim might try to deliver.
The perpetrator doesn't really care that he can be traced, as there's nothing you can do with that information. What he's more concerned with is that you could stop/reverse the transfer and deny him his spoils.
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If bitcoin were not tracable it wouldn't exist. A public ledger of all transactions is what fundamentally underpins the technology.
Don't confuse tracability with identifying the account holder. Even a cursory look at the ledger showed the world every transaction and the total value of bitcoin used by the Silk Road drug kingpin, and linked directly to Silk Road years before he was identified as Ross Ulbricht.
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Why, then, can we not identify ransomware perps? Several of these attacks, such as the British NHS, have been at a higher national security level than anything Ross Ulbricht has been involved in?
Benefit is the limit on the number of pallets. (Score:2)
The only benefit to using it over pallets of cash is that you don't need to physically move strips of paper around.
Actually the benefit is that governments can't print an unlimited number of additional palletsfull, diluting those already circulating and transferring part of their value to themselves and their cronies.
The operators of bitcoin can "mine" an ever diminishing number of remaining "coins" with an ever increasing amount of effort per coin, until they run out and the operation runs only on the fees
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Following the bread crumbs in the blockchain isn't particularly difficult.
Do you know what a mixer is?
But government entities who want to follow the money can easily do so with Bitcoin.
Christine Lagarde says otherwise, and she has a lot more credibility than you.
Can you explain how ransomware and dark-web markets exist in a world where transactions are "easy" to trace?
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vending / arcades games need to take cash now (Score:2)
vending / arcades games need to take cash now and some have CC readers (that are way faster then bitcoin)
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so at the toll both they will want to people to have to wait up to 10 min for there bit coin to clear (then you better have like 30 toll lanes)
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Noticeable degrees of inflation will drive people out of your currency, but no asset with a fixed money supply can be a currency at all. It deflates over time compared to goods it trades for, which causes people to hoard it (In Bitcoin lingo, would that be "hroad" it?)
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"HODL" as in 'Hold', a standardized typo, like 'pwn' is for 'own'
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Nah.. "HODL" means "Hold on for dear life"
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Gold was long used as a currency, and it has the same properties. There is a finite amount of gold in the world, and most of the easily extracted gold has already been extracted requiring increasing extraction effort for reduced quantities of gold.
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Re:Fuck you, Christine. (Score:4, Informative)
Gold was useful as currency in pre-technological times when the stock of goods for trade in the world grew only at the same glacially slow rate that new gold was mined. In the 19th century, when exploding technology began to make the whole economic pie larger, there was a series of financial crises in industrial countries caused by there not being enough gold. They tried adding silver to gold ("bimetallism") as a monetary basis, and eventually had to go to fiat currencies whose supply was determined by a central bank of issue in each country. Gold then became a storehouse commodity.
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Yes, gold strikes have occasionallly caused the price of gold to deflate for a time. By now we have explored enough of the world that we have pretty much eliminated any new finds of large amounts of gold. There is always the asteroids, I suppose.
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There are some large "buts" with this.
First the amount of available gold historically was not known. We have pretty good guesses today and there is actually a lot left that is recoverable. Gold isnt all that rare.
Technology has enabled more recovery as well which aligns nicely with over all economic expansion. Bitcoin was designed to work the same way but with Bitcoin we might be as little as a decade away from having recovered every last coin, while i suspect gold mining will continue for another century a
Re: Fuck you, Christine. (Score:2)
Rob everyone?
You mean they are for-profit corporations? Cause I thought that was their whole point of existence, named "profit". ;)