THE FEDERAL RESERVE BITCOIN STRATEGY

By Alex Gorale

This morning The Federal Reserve Bitcoin Strategy was released in a paper outlining multiple options for improving the U.S. payment system.

In the past, Digital currency had been deemed too immature. Now, after pressure from private sector interests, the Fed is seriously analyzing the benefit of incorporating Bitcoin code in the U.S. fiat system.

“A U.S. payment system that is safe, efficient and broadly accessible is vital to the U.S. economy… the Federal Reserve plays an important role in promoting these qualities as a leader, catalyst for change and provider of payment services…”

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The Federal Reserve Publishes Another Paper on Bitcoin

By  Carlo Caraluzzo

The Federal Reserve Bank in Washington, D.C. has issued a report entitled Bitcoin: Technical Background and Data Analysis. The recently released report, dated October 7, is a technical analysis of Bitcoin and the Bitcoin protocol. While mostly accurate, it contains a number of assumptions and self-serving statements suggesting that, despite a great deal of empirical research and terabytes of data, the Federal Reserve lacks a fundamental understanding of Bitcoin.

Lack of Understanding

One of the first indications of their lack of understanding can be found in section two, entitled “Bitcoin: an Overview,” by researchers Anton Badev and Matthew Chen. In defining Bitcoin, they say:

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Instead of Fighting Bitcoin, the US Could Make Its Own Digital Currency

By Robert McMillian

The US government has been seriously studying bitcoin for about two years now. The FBI knows how to seize the digital currency. The Marshal’s Service knows how to sell it. The IRS knows how to tax it. And now, the Federal Reserve should copy it.

So says James Angel, a professor of economics at Georgetown University. He thinks the government should create what he calls “bitdollar,” a bitcoin-like digital currency that’s backed by the US dollar.

Yes, many believe the whole point of bitcoin is to separate money from the governments of the world. But bitcoin also seeks to create an open payment network anyone can use without jumping through the hoops that encumber, say, credit card or international money transfer networks, and Angel thinks the government can help accomplish such a thing. 

He is among those who believe the really powerful idea is bitcoin as a payment system, rather than bitcoin as a currency.

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