Central banks attempt to beat Bitcoin at own game with rival cryptocurrency
The Unhived Mind
March 14, 2016theunhivedmind One comment
Central banks beat Bitcoin at own game with rival supercurrency
Ambrose Evans-Pritchard
13 MARCH 2016 • 12:29PM
http://www.telegraph.co.uk/business/2016/03/13/central-banks-beat-bitcoin-at-own-game-with-rival-supercurrency/
Computer scientists have devised a digital crypto-currency in league with the Bank of England that could pose a devastating threat to large tranches of the financial industry, and profoundly change the management of monetary policy.
The proto-currency known as RSCoin has vastly greater scope than Bitcoin, used for peer-to-peer transactions by libertarians across the world, and beyond the control of any political authority.
The purpose would be turned upside down. RSCoin would be a tool of state control, allowing the central bank to keep a tight grip on the money supply and respond to crises. It would erode the exorbitant privilege of commercial banks of creating money out of thin air under a fractional reserve financial system.
“Whoever reacts too slowly to these developments is going to take it on the chin. They will lose their businesses,” said Dr George Danezis, who is working on the design at University College London.
“My advice is that companies should play very close attention to what is happening, because this will not go away,” he said. Layers of middlemen in payments systems face a creeping threat across the nexus of commerce, stockbroking, currency trading or derivatives. Many risk extinction over time.
“Deep in the markets there are dark pools buying and selling shares, and entities that facilitate that foreign exchange. There are Visa, Master, and PayPal. These are the sorts of guys that we are going to disrupt,” he said.
University College drafted the plan after being encouraged by the Bank of England last year to come up with a radical design for a secure digital currency. The Bank itself has an elite four-man unit grappling with the implications of crypto-currencies and blockchain technology.
Central banks at first saw Bitcoin as a rogue currency and a threat to monetary order, but they are starting to glimpse ways of turning the new technology to their advantage.
The findings of the University College team were delivered to the Network and Distributed System Security Symposium (NDSS) in San Diego, revealing for the first time what may be in store. Dr Danezis said a national pilot project could be up and running within eighteen months if a decision were made to launch such a scheme.
The RSCoin is deemed more likely to gain to mass acceptance than Bitcoin since the ledger would remain exclusively in the hands of the central bank, with the ‘trust’ factor of state authority. It would have the incumbency benefits of an established currency behind it.
“It seems very unlikely that, to any significant extent, we’ll ever be paying for things in Bitcoins, rather than pounds, dollars, or euros,” said Ben Broadbent, the Bank of England’s Deputy Governor. There were an estimated $5bn of Bitcoin transactions in the US last year, a remarkable phenomenon but a trivial sum in the greater scheme of things.
Mr Broadbent said the attraction is the settlement mechanism used by Bitcoin, the so-called ‘distributed ledger’. “The function goes right to the heart of what central banks do,” he said in a speech earlier this month.
Bitcoin is inherently limited, a niche for aficionados and the ideological heir’s of the 19th Century ‘free banking’ movement. Its code restricts it to a limit of 21 million Bitcoins, and it can handle only seven transactions per second. “It is a Peter Pan system, and it doesn’t really grow up,” said Dr Danezis.
Critics say it is also vulnerable to “double spending attacks”, a form of manipulation where the same money is paid to two different people. One of them is tricked and receives nothing. The victim has no legal recourse.
University College’s RSCoin is safer, faster, and far less less volatile. It can scale up indefinitely. Its beauty is that it cuts out the middleman, and reduces costs to a wafer thin level.
Mr Broadbent said such a currency could greatly widen the balance sheet of a central bank, hinting that the system could be designed in such a way that ordinary people could by-pass the commercial banks and hold balances directly with the Bank of England – a staggering concept. “It’s likely you’d see money moving out of existing deposits,” he said.
Mr Broadbent said the system could in principle be used to cover government services, tax collection, and benefit payments. It is more likely to start with the settlement of bonds and equities, and for exchanges and clearing houses.
The settlement systems used by central banks – CHAPS, TARGET2, and Fedwire – are expensive and rely on stagnant technology. The UK-based CHAPS system handled £68 trillion of transactions last year.
RSCoin may be irresistible for central banks. Dr Danezis said it is allows them to turn the money tap on and off with calibrated precision, and lets them track the sort of counterparty liabilities that nearly blew up the financial system during the Lehman crisis. “There would be instant visibility. They could react very quickly in an emergency, ” he said.
Ultimately it could achieve some of the objectives of ‘narrowing banking’ proposed by Adam Smith, or the Chicago Plan put forward by US economists in the 1930s – but never enacted – to transfer control of money creation from private banks to the state. Arguably, this would make the financial system safer and less prone to boom-bust cycles.
Dr Danezis said there are three big centres of research and innovation into the fast-moving area of ‘Fintech’ and crypto-currencies. The City is at the cutting edge. “The game is between London, New York, and Silicon Valley in California,” he said.
theunhivedmind
First of all let me remind you that the author (Evans-Pritchard) of this article is in fact a British Intelligence agent and the very agent who helped lead the downfall of Bill Clinton. What this Empire still doesn’t understand is that the people no longer have trust in any of the system and thus we want to have decentralized systems that are run by the people for the people. Bitcoin is a decentralized saving and payment system and it has proven itself over time. Don’t be followed by banking houses who’re trying to pretend they’re superior to Bitcoin when they’re no such thing. What we have right now is The Worshipful Company of Mercers and their banking minions realizing their ancient slave model is now redundant. The money-changers of the Synagogue of Satan are desperate to continue to rape and control the goyim so now they want to coup d’etat the blockchain technology which Bitcoin is based upon and attempt to claim themselves as the blockchain gods. Bitcoin will only get better as it goes along and continues to iron out minor hindrances. We don’t need every store in the world using Bitcoin, all we need is a good selection and then it’s up to the people to dump the rest that don’t use Bitcoin. We must remember that it’s we the people who hold the power and if we don’t want to use the slave masters irons then they lose and we are free. The Bank of England is a Venetian war bank that serves the New Venice Empire and never its slaves so no trust should be given to it. Now my advice is continue utilizing physical precious metals and Bitcoin whilst calling for your nation to join the BRICS New Development Bank as a stepping stone towards true greater freedom and progression for mankind. New Venice is dead and so is it’s vile Empire so lets push forward and destroy it. Stop daily consuming and close down your bank accounts, buy the least of what you need thus living a minimalist lifestyle and don’t buy brands or use Zionist stores. If you have a farm nearby then use them for your food needs and stay clear of Asda/Walmart and even Lidl/Aldi as they’re all connected to this Maltese Templar network of slavery and dependence. Close down your bank account today, throw away your cellphone and electronic payment cards for good. You don’t need any of it! Watch the video of the slaughter of Finicum in the States and then make a stand in your own nation, we’ve all had enough of this tyranny. Keep away from war bank versions of the blockchain which are designed to steal bits of your savings in a given time frame to force you into consuming in a negative interest rate kind of way but programmed into the currency where it will just vanish rather than have any worth at all towards something.
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