Re Authoritarian Cryptocurrencies Are Coming

["Dave Farber" <farber () gmail com>]

Begin forwarded message:

> From: Frederick Noronha <fredericknoronha () gmail com>
> Date: October 18, 2017 at 3:18:01 PM EDT
> To: dave () farber net
> Cc: ip <ip () listbox com>
> Subject: Re: [IP] Authoritarian Cryptocurrencies Are Coming
>
>
>
> ... and India too, according to news reports:
>
> http://www.deccanchronicle.com/business/economy/160917/govt-may-launch-indias-own-cryptocurrency-lakshmi-reports.html
>
> Govt may launch India's own cryptocurrency 'Lakshmi': reports
> DECCAN CHRONICLE
> PublishedSep 16, 2017, 6:31 pm ISTUpdatedSep 16, 2017, 6:31 pm IST
> The introduction of this new cryptocurrency may require the amendment of the Currency Act.
>
>  The government is mulling launching India's own cryptocurrency.
> Mumbai: With cryptocurrencies like Bitcoin gaining popularity in India, the government may roll out the country’s 
> very own cryptocurrency.
>
> According to a report in Business Standard, sources in the government said that a committee was set up to discuss the 
> proposal of having India’s own cryptocurrency, as an alternative to the Indian rupee.
>
> The report also said the government might name its cryptocurrency “Lakshmi”. 
>
> Reserve Bank’s executive chairman Sudarshan Sen on Wednesday had said the central bank is not comfortable with 
> non-fiat cryptocurrencies like the Bitcoin. He had also hinted that it may launch its own cryptocurrency. “Right now, 
> we have a group of people who are looking at fiat cryptocurrencies. Something that is an alternative to the Indian 
> rupee, so to speak. We are looking at that closely," Sen had said.
>
> The introduction of this new cryptocurrency may require the amendment of the Currency Act.
>
>
> ‌
>
> > On 18 October 2017 at 23:43, Dave Farber <farber () gmail com> wrote:
> >
> >
> >
> > Begin forwarded message:
> >
> > > From: Dewayne Hendricks <dewayne () warpspeed com>
> > > Date: October 18, 2017 at 9:28:54 AM EDT
> > > To: Multiple recipients of Dewayne-Net <dewayne-net () warpspeed com>
> > > Subject: [Dewayne-Net] Authoritarian Cryptocurrencies Are Coming
> > > Reply-To: dewayne-net () warpspeed com
> > >
> > > Authoritarian Cryptocurrencies Are Coming
> > > Russia and China see a new way to completely control their financial systems.
> > > By Leonid Bershidsky
> > > Oct 17 2017
> > > <https://www.bloomberg.com/view/articles/2017-10-17/authoritarian-cryptocurrencies-are-coming>
> > >
> > > With Russia and China both embracing the idea of sovereign cryptocurrencies, it's time to ask a simple question: 
> > > Why is a technology threatening to decentralize money so attractive to highly centralized, authoritarian regimes?
> > >
> > > Last weekend, Argumenti i Fakti, a pro-government newspaper, quoted Russian Communication Minister Nikolai 
> > > Nikiforov as saying President Vladimir Putin had ordered the swift launching of a "crypto-ruble." According to the 
> > > report, Nikiforov said the currency would use "Russian cryptography" and would be impossible to "mine" like bitcoin 
> > > because it would be "a closed model with a definite volume of regulated emission." This follows statements by 
> > > Central Bank Governor Elvira Nabiullina and Finance Minister Anton Siluanov, who stressed the need for the Russian 
> > > state to bring cryptocurrency emission and use under control.  
> > >
> > > Nikidforov's vague description of the crypto-ruble sounds similar to recent unofficial Chinese proposals. Yao Qian, 
> > > deputy director of the People's Bank of China's technology division, has discussed a central bank-issued electronic 
> > > currency for which commercial banks would administer "wallets." Other Chinese officials and state-affiliated 
> > > researchers have also echoed the idea. 
> > >
> > > To those who believe bitcoin's main innovation is the exclusion of a central authority -- a peer-to-peer system in 
> > > which transactions are validated by "miners" -- the interest of China and Russia is baffling. But those governments 
> > > aren't looking to give up control to the blockchain. On the contrary, they are trying to figure out how to lower 
> > > the cost for a centralized issuer to control everything that's going on in the financial system. 
> > >
> > > The electronic money we use today is produced by private banks: It is, essentially, their liabilities to each 
> > > other. As a recent Bank of International Settlements paperpointed out, "Cash is the only means by which the public 
> > > can hold central bank money. If someone wishes to digitize that holding, he/she has to convert the central bank 
> > > liability into a commercial bank liability by depositing the cash in a bank." Cash, however, has disadvantages for 
> > > both central banks and governments. For one thing, it's costly to print, mint, distribute and destroy. Changes to 
> > > the banknotes and coins can take years to administer. Theft and robbery are risks. At the same time, cash is 
> > > anonymous; criminals and tax evaders depend on it.
> > >
> > > All these problems and some others -- such as the time lags in a traditional electronic payment system as money 
> > > moves between banks -- can be solved if a central bank can issue its own cryptocurrency and have transactions 
> > > registered in a bitcoin-like distributed ledger, verified by central bank-approved agents. If that sounds like a 
> > > version of the traditional banking system, there is, potentially, a big difference thanks to the verifiers' more 
> > > limited role than that played by commercial banks. "With a lower entry hurdle to becoming a transactions verifier 
> > > in a distributed system than to becoming a member bank in a tiered system, we would expect more intense competition 
> > > in the provision of payment services," Bank of England's John Barrdear and Michael Kumhof wrote in a paper last 
> > > year. "To the extent that existing systems grant pricing power to member institutions, this should ensure that 
> > > transaction fees more accurately reflect the marginal cost of verification."
> > >
> > > The costs of running a monetary system would go down, payments between companies and individuals would speed up, 
> > > and transactions would become traceable by governments, above all for tax purposes. Nikiforov talked of imposing 
> > > income tax on the conversion of crypto-rubles into ordinary rubles unless their owner can show how the digital 
> > > currency was obtained.
> > >
> > > [snip]
> > >
> > > Dewayne-Net RSS Feed: http://dewaynenet.wordpress.com/feed/
> > > Twitter: https://twitter.com/wa8dzp
> >
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