Tuttle
Madmaxista
Bitcoin as the new offshore banking
Bitcoin as the new offshore banking - FT.com
Sir, The Bitcoin phenomenon seems somewhat misunderstood and your report does not wholly clarify matters (“Virtual currencies run into legal trouble in US”, Markets & Investing, May 31). Bitcoin is not going to succeed in the developing world where “ ... a banking system is practically non-existent ... ”, as the internet may also be less widely available in such countries. Bitcoin users cannot “cut a deal with the devil” to survive. Anonymity is central to the Bitcoin model and such a deal would negate this characteristic. Bitcoin can only succeed as a parallel money that at no point intersects with the regulated financial system. Unfortunately (or fortunately depending upon your point of view), it is ideally suited to developing as such a system
Bitcoin is cybercash and users can build up balances through “mining” (difficult) or though trade. The parallel to the move from barter to a precious metal coin system is exact. Farmers and craftspeople built up precious metal balances through trade and so barter died away. As liquidity builds up and becomes more widespread, the Bitcoin system can facilitate an increasingly large, and anonymous, portion of global trade with little if any interaction with the regulated system. Indeed, it may increasingly come to serve the same function that offshore banking has previously served and is now unsuited to serve because of growing tras*parency. The potential of Bitcoin to undermine regulated financial activity must not be underestimated.
Bitcoin as the new offshore banking - FT.com
Sir, The Bitcoin phenomenon seems somewhat misunderstood and your report does not wholly clarify matters (“Virtual currencies run into legal trouble in US”, Markets & Investing, May 31). Bitcoin is not going to succeed in the developing world where “ ... a banking system is practically non-existent ... ”, as the internet may also be less widely available in such countries. Bitcoin users cannot “cut a deal with the devil” to survive. Anonymity is central to the Bitcoin model and such a deal would negate this characteristic. Bitcoin can only succeed as a parallel money that at no point intersects with the regulated financial system. Unfortunately (or fortunately depending upon your point of view), it is ideally suited to developing as such a system
Bitcoin is cybercash and users can build up balances through “mining” (difficult) or though trade. The parallel to the move from barter to a precious metal coin system is exact. Farmers and craftspeople built up precious metal balances through trade and so barter died away. As liquidity builds up and becomes more widespread, the Bitcoin system can facilitate an increasingly large, and anonymous, portion of global trade with little if any interaction with the regulated system. Indeed, it may increasingly come to serve the same function that offshore banking has previously served and is now unsuited to serve because of growing tras*parency. The potential of Bitcoin to undermine regulated financial activity must not be underestimated.