Crypto-euros, the bitcoin currency of the future

The future of bitcoin and crypto-currencies will depend on governments' patience with a tool that facilitates anonymity and tax evasion. As nothing is easier than cloning bitcoin or improving technology, more daring states could create their own cryptocurrency to blend the virtues of official currency with cryptocurrency innovations. By Jean-Jacques Quisquater, Louvain Polytechnic University, Louvain University and Charles Cuvelliez, Brussels Polytechnic School, University of Brussels.
No offense to the critics of Bitcoin predicting its fall, the Chicago Stock Exchange gives it a serious boost in honor, proposing in late 2017, futures bitcoin. It has already launched a bitcoin trading instrument by aggregating data from the most important trading platforms, but it is careful not to be a platform itself. Its strategy is to offer derivative products of bitcoin to smooth its volatility.

Anonymity and tax evasion, for how long?
Meanwhile, the European financial regulator has issued a warning on ICO (Initial Coin Offering) in bitcoin, a right to use a service of a startup that does not exist yet (a way to raise funds out of everything regulated framework).

The future of bitcoin and crypto-currencies will depend on governments' patience with a tool that facilitates anonymity and tax evasion. Since nothing is simpler than cloning bitcoin (evidenced by the multitude of competitors) or improving technology, more daring states could create their own cryptocurrency, in order to blend the virtues of an official currency with cryptocurrency innovations. In short, what would crypto-euros give?

Stop the drift of the three basic bricks
First of all, instead of letting the three basic building blocks of cryptocurrency payments (the public and private keys, the equivalent of email address to validate and receive bitcoin transfers) drift into the bitcoin network that generate them automatically, we can entrust them to the banks that would create them for you. A first basic principle would be respected: know your customer, namely the obligation for a bank to know his client before opening an account. The private key remains under the control of the end user and is sufficient for payments in bitcoins. It does not remove its soul bitcoin: we can always do without banks but in case of a judicial request, with the private key, we can go back to the public key that the bank keeps. It only identifies the end user when needed. The anonymity of bitcoin payments is no longer irreversible.Entrusting a custodial role to banks
It is a bitcoin guardian role that is assigned to the banks which, to do so, would receive a license from the central bank. They form the nodes of the peer-to-peer network whose role is the validation of bitcoin transactions. The banks would therefore play the role of clearing house by themselves ... without having to create one. This is another advantage of bitcoin that we keep.

Nodes, banks, are not anonymous PCs of individuals. They are known, identified, trustworthy: it is no longer necessary to go through this expensive and stupid mathematical challenge to be solved (randomly) by computers (a necessary step to prevent a group of computers from taking control to make counterfeit money) since one operates in a closed circle. This made bitcoin uneconomical and cost-effective given the common computing power required. The transaction in bitcoin validated would be found, as before, on the bitchain blockchain, transparent, visible to all, auditable and irreversible, like any payment.

The protagonists of this transfer would retain discretion as long as a request does not force the bank to establish a link between the public key and the user. Because bitcoin only needs the private key. That said, nothing prevents the bitcoin saver from opening an account at his bank and transferring his assets there: sites already exist to host bitcoin wallets. They are also the sulfur link (storage of bitcoins by third parties is not provided in the protocol of its inventor).

Bitcoin or crypto-euro?
We can push the reflection further: why is it necessary to create a cryptocurrency ex-nihilo? What would prevent the arrival of real euros, transformed into their crypto equivalent, injected by the central bank within the blockchain bitcoin. One thus eliminates another of its recurring defects to make a real money: its volatility. The central bank then has, in this scheme, its own private key, like any other user. She handles it to turn euros into crypto-euros. She then introduces them into the blockchain.Nothing prevents him from practicing his monetary policy here, as in the real world: the banks would have, in addition to their traditional account with the central bank, a blockchain account for which the central bank would impose ratios and other obligations of deposits. It can even impose differentiated interest rates between euros and crypto-euros to control the money supply in both systems. The effect on inflation would be explosive.

Make the bitcoin "crypto-euro" respectable? Everyone would win
It does not take much to make the bitcoin "crypto-euro" respectable and everyone would benefit: the banks, instead of undergoing, will develop new services related to crypto-euro. They ensure payment on payment validation transactions between users. The "crypto-euro" bitcoins will fill the bank's product portfolio. If it tries to distinguish itself in front of the tsunami of mobile payment solutions, which involve a lot of intermediaries, which sweeps, this is an ideal way: it is a matter between the bank and the user ... without bank account .

Who says better ? In addition, managing a blockchain is much cheaper than participating in clearing houses (hence the bad mood of JP Morgan). Governments in countries that rely on cash can reduce their dependence without having to bankarize the population first.

Finally, a nontuberous bitcoin will allow investment to drop, a boon for banks in search of a second wind.