The Federal Reserve Bank of St. Louis, one of 12 regional Federal Reserves, which form the Central Bank of the United States, has published a study, which deals with how the Bitcoin in the current money system is classified and whether it is for Central banks is the point of a crypto currency.
The Federal Reserve of St. Louis has divided actors involved in the “money” in different dimensions. Bitcoin is in the “dimensions” virtual, decentralized and competitive.
All velvet no Surprises, when it has already dealt with the topic of Bitcoin. Bitcoin is logically, physically, has no Central authority, the Bitcoin spending, and is not monopolized, but can be used by anyone mined.
The Federal Reserve of St. Louis stressed that the System of Bitcoin is a innovative invention that will revolutionize the Potential of the current way of currencies and the financial system will work:
However, we would like to emphasize that decentralized management of ownership of digital assets is a fundamental innovation. It has the potential to disrupt the current payment infrastructure and the financial system. In general, it could affect all businesses and government agencies that are involved in recordkeeping.
As well as the Mining of Gold is also exposed to the Mining of Bitcoin, the competition of the Miner. Everyone has in principle the possibility of the process part of:
Furthermore, as with gold, the creation of new Bitcoin units is competitive. Anyone can engage in the creation of new Bitcoin units by downloading the respective software, and contributing to the system
A Central Bank backed Cryptocurrency
Right at the outset of this section indicates the study that each form of money has its advantages and disadvantages, so several can coexist side by side:
Each form of money has its benefits and drawbacks. This is why many forms of money coexist.
In particular, the study suggests that cash has significant advantages. It is anonymous and is not subject to any permit obligation. There are also no records of the assets flow in cash. As it is physically, it may not be technically attacked (e.g. by hackers).
Nevertheless, the study believes that cash might soon come to an end. The Bank is of the view that crypto-currencies represent a real Alternative to cash, and Cash in the long term, to replace, if problems such as scalability, high fees, and acceptance, are solved. In particular, the Bitcoin Lightning Network, announced it as one of the possible solutions for these problems.
Cash has many advantages, but its end might be near.
To prove this, have followed the researchers to the behavior and circulation of the Swiss franc compared to the Swiss GDP from 1980 to 2017, and three phases were found. In Phase 1 from 1980 to 1995 digital innovations replace the use of cash. The Swiss population has used at this time increasingly on Debit and credit cards for payments.
In Phase 2 from 1995 to 2008, the Online Banking was added to the card payments, with Online Banking the first time, and had to step to develop the confidence and card payments replaced. The use of cash remained constant. The third Phase lasted from 2008 to 2017, and marked a turning point due to the global financial crisis. The population fell back increasingly on cash.
In the further course of time, this will change according to the Central Bank of St. Louis. In particular, new technologies such as Bitcoin will need a certain amount of time, in order to gain acceptance.
With regard to a Central Bank backed Cryptocurrency, the study explains that it will emit a light for Central banks would be a currency.
We believe that there is a strong case for central bank money in electronic form, and it would be easy to implement. Central banks would only need to allow households and firms to open accounts with them, which would allow them to make payments with central bank electronic money instead of commercial bank deposits.
However, the research group, the Bank considers this to be unlikely. The researchers indicate that there is no serious Central Bank crypto-currencies to spend has a high enough incentive, because the logistical effort for KYC (Know your customer) and AML (“Anti money laundering”) and the risks of a crypto-currency are too high.
The study summarizes that while some Central banks consider the issue of a Central Bank crypto-currency. A closer look at these projects shows, however, that these are not crypto-currencies, according to the figure above. Rather, it is “just” digital currencies, which are issued by a Central Bank.
All in all, the study of “world-shattering” findings. However, a clearly positive attitude towards Bitcoin.
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