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Should we prioritise policy development re cryptocurrencies & blockchains?

SD
Suzie Dawson Public Seen by 580

There was some discussion around cryptocurrency in 2014 that should be updated for 2017. (Ref: https://www.loomio.org/d/CxFrT8X5/a-discussion-about-crypto-currencies) There has also been a number of expressions of interest in us developing policy around the blockchains.

There is a 'decision' here as to whether we should prioritise it - please vote on it: https://www.loomio.org/p/WC7YOfiq/should-we-prioritise-policy-development-re-cryptocurrencies-blockchains-?from=0&per=25

Please use the below thread for related discussion, research, links, questions, commentary, etc!

CE

Colin England Wed 12 Jul 2017

I'm in favour of a government run digital currency. I'm not in favour of privately run digital currencies as they will continue to trash the economy as bank money does now.

http://positivemoney.org/how-money-works/how-did-we-end-up-here/

SD

Suzie Dawson Thu 13 Jul 2017

forgive my naiveté but would a government run cryptocurrency ultimately be a replacement for fiat or run alongside it as a seperate currency?

CE

Colin England Thu 13 Jul 2017

Technically, all currencies are fiat currencies and that includes the so called Gold Standard.
Fiat

an authoritative decree, sanction, or order:
a royal fiat.

Most currencies only exist because of government decree but are backed by the nations economy which is what makes it possible for a government to create money.

BitCoin and the other digital currencies exist through peoples personal belief and aren't backed by anything. This image really sums up private digital currencies:
Exposure!!

The idea would be to replace cash and bank money with a government created and run digital currency in such a way so that private banks don't get to create money the way that they do now. This should cause a major decrease in inflation. Especially house price inflation and Why are House Prices So High?

SD

Suzie Dawson Fri 14 Jul 2017

lol that graphic is hilarious.

Personally I don't want to replace cash but I think we should have digital currency. Unless I can be convinced utterly that privacy and anonymity are still possible in a government-issued digital currency, which I currently am not

CE

Colin England Fri 14 Jul 2017

Some 70% of transactions are done by EFT-POS which is owned by the private banks.

Now, just how much privacy do you really think exists in that set up for the individual?

The banks will be looking at how much is being spent and where as it will be used to help determine if they make loans or not. They even have access to who's spending that money and where and that information is readily available to the police as Nicky Hager found out.

Now, a government run digital currency is going to be the same except for one thing. The corporations won't have direct access to that private data.

I consider that to be a major plus because the government can be held to account, their actions fully transparent. that does not apply to the private corporations.

If you really want better privacy for everyone then a government run digital currency is what you want. Just need to put in place the processes to prevent people abusing the personal data while also making the conglomerated information available to help make government decisions (government really does need to be able to make informed decisions).

Getting rid of cash will actually stop pretty much all financial crime or, at least, make it less likely people will be able to get a way with it. And it will definitely end the tax avoidance that we see today as we'll know exactly who's got the money.

Personally, I think moving to a government run digital currency is a no brainer as it also helps stop the private banks creating money which is something that also needs to happen.

SD

Suzie Dawson Sat 15 Jul 2017

"Getting rid of cash will actually stop pretty much all financial crime or, at least, make it less likely people will be able to get a way with it. And it will definitely end the tax avoidance that we see today as we'll know exactly who's got the money."

I have a couple of issues with this.

Firstly the biggest crimes are perpetuated by governments. While the Patriot Act promised to go after terrorism funding sources, the governments are in fact the ones arming and funding the terrorists. There is massive abuse of the existing anti-money laundering legislation to go after political targets rather than actual funders of terrorism. Almost all the crimes being perpetuated against activists and journalists are happening under the anti-terrorism and anti-money laundering legislation, despite the fact that we are neither money launderers nor terrorists.

Those who launder billions of dollars don't do it via cash transactions. They do it with the tacit approval of the government and tax systems which reward fraud committed on an epic scale while mercilessly hunting down those who infringe on a miniature scale.

Cash does afford privacy to a certain degree (unless you are individually targeted and tracked iRL) and is useful for many other reasons than to commit crimes.

On the electronic funds front, I find it incredible and noteworthy that the original creators of Bitcoin had to stay anonymous for their own safety, because the creation of new financial systems (as with some forms of tech) are so dangerous to engage in that they couldn't even openly create them. Also that the governments wanted to regulate against them until they realised that they couldn't. At which point they are now gung-ho in investing and regulating.

If we are to create cryptocurrencies in New Zealand we need to do so in line with the core values of the Party.

DS

David Sutton Sat 15 Jul 2017

The thing to remember about crypto-currency is that no-one controls it. It is inherently consensus based.

SD

Suzie Dawson Sat 15 Jul 2017

could you please explain more David, for those of us that don't know much about it? thank you!

CE

Colin England Sun 16 Jul 2017

The big thing about crypto-currency is that it uses too much infrastructure.

And if no one controls it how do we ensure that too much isn't produced?
How do we ensure that enough is produced?
How do we ensure that it's related to the economy rather than delusion?

CE

Colin England Sun 16 Jul 2017

Firstly the biggest crimes are perpetuated by governments. While the Patriot Act promised to go after terrorism funding sources, the governments are in fact the ones arming and funding the terrorists.

That may be so but that has nothing to do with the type of currency.

I'd also expect laws and processes that prevented such abuse by governments.

Governments need to be held to account. We shouldn't be saying well, they're corrupt and there's nothing we can do about it.

Those who launder billions of dollars don't do it via cash transactions.

They wouldn't be able to do that with the system I suggest in Cashless.

Cash does afford privacy to a certain degree (unless you are individually targeted and tracked iRL) and is useful for many other reasons than to commit crimes.

I personally haven't used cash since about 2003. I have no use for it and it's really irritating. And the number of people going the same way is increasing.

Put in place proper restrictions and peoples buying would actually be more private than what we have now with the corporations seeing almost all purchases.

On the electronic funds front, I find it incredible and noteworthy that the original creators of Bitcoin had to stay anonymous for their own safety, because the creation of new financial systems (as with some forms of tech) are so dangerous to engage in that they couldn't even openly create them.

They are dangerous - for the society. We know this if we bother to read history. Allowing private currencies always results in the collapse of the financial system and the economy.

Also that the governments wanted to regulate against them until they realised that they couldn't. At which point they are now gung-ho in investing and regulating.

Murder happens to be illegal but people still commit murder. What laws do is spell out such actions as being unacceptable to society and the consequences for breaking them.

BK

Bruce King Mon 17 Jul 2017

Commenting as someone who has looked into this at some level but certainly not an expert. My impression is it is an experiment that individuals may embrace as interesting or promising but is not ready to be introduced as the currency of a country.

That is, at this stage it needs to be explored more as a technology by the geeks and enthusiasts until they can present it as something that obviously works and they can lay out a scenario for a country to take it on.

“Blockchain is the tech. Bitcoin is merely the first mainstream manifestation of its potential.”
– Marc Kenigsberg

There are 2 obvious problems that stand out for me even on initial inspection that are already damaging at the very least, if not fatal.

1) Bitcoin, for example, fluctuates as a volatile stock based on investors' changing perception of its worth. Afaik imho that's no basis for a stable currency.

Illustrated well by tweet from 36 minutes ago:
"#Ethereum Price Plunges 20% on Sunday, Then Recoups "
https://twitter.com/BitcoinUpdated/status/886872671681748993

2) The method for continually verifying the integrity of the blockchain - known as "mining" - relies on an enormous amount of computing using an enormous amount of energy. This is by design so no one entity can do more than half of the mining which, if it happened, would allow that entity to gain control of the blockchain.
Link: https://en.wikipedia.org/wiki/Bitcoin#Mining
(See also the discussion on this between Marc Whinery and Rangi Kemara taking place towards the end of the 2014 thread.)
So it is an enormous energy hog, by design. That is not environmentally friendly.

So in my view it is premature to make political policy on cryptocurrencies.

CE

Colin England Mon 17 Jul 2017

1) Bitcoin, for example, fluctuates as a volatile stock based on investors' changing perception of its worth. Afaik imho that's no basis for a stable currency.

Our own currency does that due to the value being set by the speculators rather than the actual trade weighting.

So in my view it is premature to make political policy on cryptocurrencies.

Personally, I don't think it's even possible. We've used private currencies before and they've always crashed. I don't see anything in a block-chain that changes the fact allowing private currencies essentially allows an infinite number of them and that is simply unsupportable.

DG

Daymond Goulder-Horobin Tue 18 Jul 2017

New Zealand should take the initiative to expand into cryptocurrency, though I don't think NZ needs to have its own crypto just yet until we plan it out first. I've always liked the idea of including Bitcoin as part of the superannuation fund in a diversified portfolio. As Bitcoin has a higher risk class than stock it would maybe make up at the very most 1% to 2% of the portfolio but it would raise the returns much higher. And even then we could diversify between BTC,LTC,ETH etc.

At least from a finance perspective I support investment in crypto as an Extremely High risk and Extremely high return classification. Will post some returns down here at some point.

PRP

Pirate Radio Podcasts Sun 23 Jul 2017

Rumour has it, we're working on launching an "ALTCOIN" with something of a PIRATE flair, sometime w/in the next YEAR. How much of a priority should projects like this be?
https://www.wprpn.com/digital-treasure-island/

CE

Colin England Tue 25 Jul 2017

As I said above. Once we allow private currencies we'll end up with an unlimited amount of them and none of them will work due to inconsistency thus bringing about the collapse of the economy.

IA

idiom axiom Wed 26 Jul 2017

The internet party needs to oppose capital gains taxes.

Every crypto currency transaction is like any foreign currency transaction or stock trade. The exchange rate when the coin is acquired and divested must be recorded for capital gains taxes in capital gains jurisdictions. Failing to do so opens one up to enormous tax fraud liabilities.

PRP

Pirate Radio Podcasts Thu 27 Jul 2017

Meh - FIAT, "monopoly" INTEREST burdened currencies have long been a bane upon the world. Free-market rules, and the INVISIBLE hand of God. AS per Charles Darwin: Diversify or DIE.

BARTER is another viable option which has long vexed statist BLOOD suckers, & crooked Kraken minions https://www.minds.com/search;q=barter;type=groups

CE

Colin England Thu 27 Jul 2017

All currencies are fiat and they need to be a monopoly. They don't and shouldn't have to have interest on them. A sovereign money system can address the interest and maintain a stable economy whereas the private systems will always collapse.

Barter is a little difficult to work with.

BB

Blake Bedford-Palmer Sat 12 Aug 2017

I'm not sure what good having our own one would be, But countries like Australia and Japan it is now recognised and treated just like money in regards to tax.

Banks absolutely hate it though, People in NZ have had their bank accounts closed for trading Bitcoin, Bitcoin related startups like MyBitcoinSaver and exchanges have had the same struggle

TH

Tane Harre Sun 13 Aug 2017

Having just read back over this thread. What exactly is the benefit to a crypto currency that outweighs the risks?

CE

Colin England Mon 14 Aug 2017

None that I can find. The idea that it's better than state money has been proven wrong for centuries.

NO

Nicholas Orr Thu 21 Sep 2017

Gov't needs to simply allow it to exist and see what happens. Blockchain technology is a technology akin to the internet itself. There is no need to regulate any of the cryptocurrencies.

It would be great if the banking industry wasn't so against it here and actually held bitcoin/ethereum/dash balances. Forget the anonymous angles, if there is a link between a cryptocurrency address and the real world, there is no anonymity. And for anyone wanting to do anything practical with it nearly all transactions are going to link to the real world, be it a business or an individual. Already have laws to get information from these entities. There is always a link between the value of a Bitcoin & NZD at a point in time, so if the issue is one of Income Tax etc well it can be calculated, just like if someone earned USD. This tech is not magical.

There are upcoming projects like Skycoin (Obelisk), IOTA (The Tangle), Tezos that are attempting to move away from the electricity usage of securing the blockchains. To that end the only usefulness of a Government operated blockchain is for some kind of public ledger or chain of events, perhaps Voting? However once that becomes a goal usually all that is being created is a distributed database and the tools already exist to do that without getting into Blockchain. Where Blockchain makes sense is when there is no central authority. The network needs to operate in this mode "crap the genie is out of the bottle now, we can't stop this even if we wanted to" (like how Bittorrent has destroyed the music gatekeepers business model and if the movie/tv industry don't pull their collective fingers out they'll end up in a similar state), once a Blockchain gets to that point then it becomes useful. Auspost/CSIRO are looking into uses as well.

So any Government Blockchain ideas really need to be implemented on existing networks, maintaining a proprietary one is pretty useless. Government already has a state controlled currency in the NZD, so no need to go and invent a new one (if it is really necessary, can simply create a digital NZD [which would exist on an existing network Ethereum/Skyledger/Tezos etc and would require the 1:1 exchange of analog NZD for digital NZD - none of this M2 money business], as well as paper it is bits [banks won't be happy about that though, they make lots of money on fees related to moving NZD around etc]).

OH, actually the one place that could really benefit from a blockchain solution is Land Titles/Asset Ownership. Preferably done on Skyledger_(Skycoin), Tezos _(coming soon), IOTA (maybe not), Ethereum (not so much, still a lot of electricity used in this network). Done properly the world would adopt it and it would become a standard of some kind. A lot of incentives in place to not do this of course, lots of value to be generated from obscurity etc.

been following cryptocurrency/blockchain developments technically since Feb 2011

CE

Colin England Thu 21 Sep 2017

Gov't needs to simply allow it to exist and see what happens.

We know what will happen as it's happened before - the economy collapses.

Government already has a state controlled currency in the NZD

No it doesn't. The NZ$ is controlled by the private banks. Some 98% of NZ$ are digital created by the private banks.

SD

Suzie Dawson Thu 9 Nov 2017

Quote from Auckland University Economics Professor on the NZ Herald finance writer's podcast yesterday: "People said no one would ever buy anything on the Internet. Resistance to bitcoin is like that." // "Bitcoin is the future"