Global Bankers Fear Bitcoins
gAtO bEeN -reading the European Central Bank report October 2012 “Virtual Currency Schemes” Were they plainly state that they are worried about Bitcoins. Linden dollars or Chinas Q-coin were different but they they scared the “bankers” when they translated to goods and service, the Q-coin was put down by China because they did not want an uncontrolled currency competing for the state coins. let me back up and explain it – gAtO StYlE-
The bottom line is “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 “ the other fear is “ On the one hand, they could have an impact on the velocity of money existing in the economy. On the other, the interaction between virtual currencies and the real economy could also increase if widely used. “ So now we see the big picture. Fear that they will lose income generated by transactions and generating their “nominal income” this means Bonus money-
What fears them even more is virtual currencies could have a substitution effect on central bank money if they become widely accepted. WordPress just add Bitcoins as a payment method and they are the #1 Blog Web-App so now this buts Bitcoins on the international stage not supporting Wikileaks but a legit organization like WordPress. Now we look at another aspect of their report which is another blow they call it – “velocity of money” in other words Bitcoin can and will effect the volume-velocity of moneys that are controlled by “banker”. Fraud concern are of little impact on the bankers but they will shout it out loud that they are worried about the consumer, but there eye are on bonus money…
The Subjective theory of value claims- things become valuable in the economic sense (have exchange value or price) under two conditions:
1) They are useful in satisfying human wants, and are therefore desired.
2) There are not enough of them, or just enough of them, to satisfy demand.
3. Any goods that are in unlimited supply would have no value.
gAtO has been trying to figure out how currency have value and the “Subjective Theory of Value” the part about unlimited supply is the JOKE that the bankers have had on us for centuries. They have an unlimited supply of banknotes – “Print more up in a New York Minute” but hey have convinced us that they are right to control the presses and print all the money they need because “we” need to pay them back their interest.
Interest to you means profit for the bankers, and let’s not forget their fees for anything under the sun that they want to charge you for letting them hold YOUR MONEY. So Bitcoins (virtual currency) are a BIG fear for “evil global bankers” as more respected merchants use Bitcoins the more bankers will have to deal with it. The Keynesian Viewpoint say fractional Reserve Banking with Bitcoins is possible and practical so bankers have no more excuse except that once again their fees will go down and their power will go down so the fear is real.
So expect governments controlled by bankers to fight Bitcoins kicking and screaming but the world is ready for a world wide currency that works and controlled by the people not the bankers - gAtO oUt
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).
The substitution effect would also make it more difficult to measure monetary aggregates and, as a consequence, would affect the relationship between the monetary aggregates as measured and inflation, which is used to gauge risks to price stability in the medium to longer term. Lastly, on this second aspect, when virtual money is created outside the realm of the central bank and virtual credit can be extended, this may have implications for the way interest rate decisions by the central bank are transmitted through the economy and the central bank’s control over money and credit developments could become less effective.
The third aspect to examine is the interaction between the virtual currencies and the real economy. Second Life and Bitcoin users are spread around the globe and therefore their impact should also be interpreted globally. However, if a virtual currency scheme was to be focused on one specific country, it could indeed have an impact on the money supply of this country. This is what happened in China with the Chinese virtual currency scheme Q-coin, introduced by the company Tencent, one of the leading telecom operators in the country. QQ is an instant messaging service rovided by this company that also allows virtual payments to be made with Q-coins. This currency can be purchased by credit card or by using the remaining balance on a prepaid telephone card. The exchange rate is fixed against the renminbi. Originally, this currency was implemented only for the purchase of goods and services provided by Tencent. However, users started using it for person to person (P2P) payments and some merchants also started accepting Q-coins as a means of payment.
In addition, several online games rewarded users with points that could be exchanged against Q-coins and ultimately also against yuan in the black market. The virtual currency had evolved into an illegal money scheme. Chinese authorities saw the amount of Q-coins traded reach several billion yuan in one year, after rising around 20% annually. In June 2009, the Chinese authorities decided to ban this currency for trading in real goods in order to “limit its possible impact on the real financial system”.5 They also provided a definition of a virtual currency and stressed that they would only allowed it to be used for purchasing the virtual goods and services provided by its issuer and not for real goods and services.
Box 3 shows a few examples of innovations based on Bitcoin. Apart from fraud concerns, two possible effects can be expected if these kinds of innovation proliferate and succeed. On the one hand, they could have an impact on the velocity of money existing in the economy. On the other, the interaction between virtual currencies and the real economy could also increase if widely used.
In both cases, there would be a need to monitor these innovations.—
The ECB is the central bank for Europe’s single currency, the euro. The ECB’s main task is to maintain the euro’s purchasing power and thus price stability in the euro area. The euro area comprises the 17 European Union countries that have introduced the euro since 1999.