Federal Reserve Bank sees big innovation in Bitcoin
Image source: images.google.com
The Federal Reserve Bank of St. Louis, one of 12 regional Federal Reserves that make up the US Federal Reserve, has published a study on how Bitcoin fits into the current monetary system and whether it makes sense for central banks To spend cryptocurrency.
The Federal Reserve of St. Louis has divided actors involved in "money" into various dimensions. Bitcoin is in the "dimensions" virtual, decentralized and competitive.
All together with no surprises, if you have ever dealt with the subject of Bitcoin. Logically, bitcoin is not physical, has no central authority that outputs bitcoin, and is not monopolized, but can be gemined by anyone.
Image source: research.stlouisfed.org
The Federal Reserve of St. Louis emphasizes that the Bitcoin system is an innovative invention that has the potential to revolutionize the current way currencies and the financial system 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."
Like mining gold, Bitcoin mining is also exposed to miner competition. Everybody basically has the opportunity to participate in the process:
"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-based cryptocurrency
Right at the beginning of this section, the study indicates that each form of money has its advantages and disadvantages, and therefore several co-exist side by side:
"Each form of money has its benefits and drawbacks. This is why many forms of money coexist."
In particular, the study indicates that cash has significant benefits. So it is anonymous and subject to no permission. There is also no record of cash flow. Since it is physical, it can not be technically attacked (eg by hackers).
Nevertheless, the study believes that cash could soon end. The bank believes that cryptocurrencies are a real alternative to cash and will replace cash in the long term when problems such as scalability, high fees and acceptance are resolved. In particular, it calls the Bitcoin Lightning Network as one of the possible solutions to these problems.
The Federal Reserve, by dual mandate, is concerned with inflation and unemployment levels. Currency innovation and competition falls under the inflation category. The Federal Reserve has an interest in understanding the mechanics of crypto coins in order to predict how it will affect the inflation and integrity of the US Dollar. I think it's simplistic to think the Federal Reserve is simply thinking Bitcoin is a curiosity. A main tool of the Federal reserve is buying/selling USD to keep the relative competitiveness. I will be interested in seeing if the Federal Reserve eventually employs a mechanism to counter cryptocurrency invasive ness to day to day payments to maintain USD integrity.
Interesting news. I feel this year we're gonna have lots like this. Hopefully it will all be for the best. Upvoted and reestemed. Cheers!
Great article, thanks for sharing. I've smashed the upvote button for you!
Also, if you are looking to get some tokens without investing or mining check out Crowdholding (https://www.crowdholding.com). They are a co-creation platform were you get rewarded for giving feedback to crypto startups on the platform. You can earn Crowdholding's token as well as DeepOnion, ITT, Smartcash and many other ERC-20 tokens.
This is a great news @tradewonk! Cryptocurrency is really the future. For now there may be fear and resistance but soon there will be acceptance. A time will come when we will all look back and say I should have invested more! ;-) Thank you for sharing this @tradewonk! :)
what? :o
really ?
as far as heard banks are against the crypto :/
but this news is showing the other face!
if it is true, it a great win for crypto!
it is quite natural that cash will go. now I when I go to subway, bus, I think if I had the money in the purse, or just cards. )))
Great news for crypto enthusiasts. Thanks for sharing. 😊
To listen to the audio version of this article click on the play image.
![](https://steemitimages.com/640x0/https://s18.postimg.org/51o0kpijd/play200x46.png)
Brought to you by @tts. If you find it useful please consider upvote this reply.
This post has received a 14.76 % upvote from @boomerang.