JPMorgan Chase Building Bitcoin-Killer
letstalkbitcoin.com
letstalkbitcoin.com
No, what they propose is not a new paradigm.
I believe people will support an electronic payment system backed by financial giants but only if it is based on a limited supply of money like bitcoin.
We are not sick of all the wonderful services the banks provide. We are sick of the fed and banks inflating money. Period.
If JPChase created their own alt, JPCoin, with a trillion coins fixed, no fine print, insured, protected, with a check card, a mobile app, available 24/7 from around the world, that and only that may compete with bitcoin.
People do not support bitcoin because it is geeky or nerdy, they support it because it protects them from government confiscation and inflation. They have to offer both protections, or at least one, in order to excite us to take a look at their offer.
Bitcoin is doing fine, thanks. They have to make it better.
Actually, I quite like it. It has advantages like stabilising the economy and encouraging investment. I've never heard a serious economist suggest that moderate inflation is anything but good for the economy, and I've heard plenty tell me why deflation is dangerous.
Inflation is important because economics is all about creating incentives. We have property rights because it gives people an incentive to work hard and takes risks. We have patents because they give people an incentive to explain how their invention works. We have a market economy because it means that if a company wants to gain market share, it has to create value for the consumer. In the same way, central banks try to maintain low levels of inflation (~3%) because it encourages people to invest their money in profitable ventures, rather than just leaving it under the mattress. Investment is the way wealth is created, so it should be pretty obvious that deflation is bad for the economy.
Notice that I'm talking about the economic health of the country, not the individual citizen. If you're only concerned about immediate short term benefits, you should push for zero taxes, high deflation, and the gold standard. But that's penny wise and pound foolish. You're shooting yourself in the foot. Better by far is to support actions which improve the economy, because a rising tide lifts all boats.
You must be joking. The way the inflation is officially calculated is totally biased (they don't even take in account energy costs properly) and 3% is basically the best number they can get by tweaking it like crazy. The actual inflation is way higher.
There are certainly a number of methodologies for calculating inflation, but this idea that inflation is 10+% seems to be something of an Austrian fantasy.
The consensus that moderate inflation is good for the economy is about as uncontroversial as you get in economics, and is generally agreed upon by economists across the political spectrum.
Again, if moderate inflation is that good for the economy, why do they need to tweak the numbers? (rhetorical question, the answer is obvious).
It's certainly been even more chaotic since Central Banks have so much power in the first place. How many crashes were directly linked to the artificially low interest rates decided by the Central Banks ?
I don't think that Central Banks have always made the right decisions. To the contrary: they're made plenty of bad mistakes. But they have to keep trying, because the alternative is much worse. And slowly, very slowly, we'll get better at riding the dragon.
And Central Banks were supposed to be independent in the first place from political power, but we all know how that turned out.
Case in point: M1-Money Supply has doubled from $1.2T to $2.6T since late 2008.
This is not leading to the stabilization of the economy and the encouragement of investment.
This can be seen in that unemployment/underemployment has spiked to 24%. And worker participation has dropped from 66% to 63% over the last 4 years. And it is still dropping.
So, we have a devaluation of currency and real wealth, tied to an increase in unemployment. How is this a net gain for people who work for a living? And this devaluation will accelerate as Govt's debts increase.
References: http://www.shadowstats.com/alternate_data/unemployment-chart...
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/06/t...
What people who are not bitcoin enthusiasts want, and might go for, is a currency that is easy, cheap, and looks safe. Credit cards without all the hassle. Payments without all the overhead cost. Transfers without waiting several days. International transfers without all red tape and fees.
Bitcoin provides these things, but with a few major (albeit hopefully transient) flaws: it's a pain in the ass to get bitcoins, they don't feel safe to most people, and they're super-volatile.
If a bank comes along and creates a centralized digital currency, it could deliver everything that the average person might like about bitcoin (ease-of-use, lack of overhead, etc) without the current growing pains of bitcoin. It won't have the things we techies like (a solid crypotographic foundation, limited money supply, decentralization, etc), but it'll gain adoption much faster because most people don't care about that.
Thus is the patent.
There's nothing being built here and nothing different from a dozen existing electronic peer to peer payment networks. (Venmo, PayPal, Dwolla, Square Cash).
It's centralised, it's bank-controlled, it's USD denominated. Also this is just a patent, we don't even know that they're actually building it at all.
Bitcoin is a revolutionary way to run a currency, but it is still a currency and national banks have already successfully absorbed several monetary revolutions. If anything, they are getting rather good at it.
Um, isn't it the other way around? Legacy banking institutions have been causing a lot of friction for Bitcoin by refusing to do business with Bitcoin businesses.