Friday, December 30, 2016

Bitcoin users do not write letters to daddy

ZH: The first time the ECB officially warned about the dangers of virtual currencies in general, and in particular, bitcoin - what was then a mostly unknown currency trading in the single digits (in USD terms) - was in November 2012 when in a report called "Virtual Currency Schemes" it warned that "in an extreme case, virtual currencies could have a substitution effect on central bank money if they become widely accepted. The increase in the use of virtual money might lead to a decrease in the use of “real” money, thereby also reducing the cash needed to conduct the transactions generated by nominal income. In this regard, a widespread substitution of central bank money by privately issued virtual currency could significantly reduce the size of central banks’ balance sheets, and thus also their ability to influence the short-term interest rates. Central banks would need to look at their existing tools to deal with this risk (for instance, trying to impose minimum reserve requirements on virtual currency schemes)."
Now it comes out in the open. Central banking does not work, this is a plain admission by the ECB .

Let it be known that Bitcoin maintains its own reserve requirements, the hash rate.  No need for the ECB to worry about bitcoin.  Instead the ECB should worry that Magic Walrus is a deranged delusion. 

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