Source
AXTurboOP•

tl,dr:

"A report on the Bank for International Settlements (BIS) reveals that the 'central bank of all central banks' will now allow it´s members to hold Bitcoin as a currency reserve. However, the amount of BTC may not exceed 1% of the total assets of the respective bank.

This means that e.g. the European Central Bank, the Federal Reserve and the Deutsche Bundesbank will soon be able to invest in Bitcoin if the agreements come into force."

Most probably that won´t happen overnight, but it´s a pretty meaningful first step towards 'adoption' if the fat central banks, which all have mainly ignored Bitcoin completely to date, are now allowed to back their inflation-afflicted fiat reserves with Bitcoin.

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raresanevoiceGold | QC: DOGE 46 | VET 10 | r/Politics 341•

Bullish adoption

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CointestAdminMOD•

Bitcoin pros & cons and related info are in the collapsed comments below. Pros and cons will change for every new post.

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CointestAdmin•
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CointestAdmin•

#Bitcoin Pro-Arguments Below is an argument written by debeezneez which won 1st place in the Bitcoin Pro-Arguments topic for a prior Cointest round.

Once it is more widely accepted, Bitcoin will be the first complete currency human beings have ever had. Fiat doesn't have limited supply, gold doesn't have portability, proof of stake coins don't have durability. Bitcoin is only missing acceptability as a key component in a currency, and that is rapidly changing with increased adoption.

Even with a market cap of nearly 1 trillion dollars, bitcoin is extremely low in market cap compared to its potential. Some people expect that a sub billion dollar marketcap is the only way to make 100x, but that only relevant to coins that will top out in the billions. With the probable future of bitcoin being the worlds strongest currency, its value in TODAYS society is upwards of 100 trillion dollars (more on this later). In a future society that has had the benefit of using history's best monetary network, the potential market cap of bitcoin is indescribable.

Despite often being called 'slow' when compared to other crypto based networks, Bitcoins development is optimized. You don't need to have layer one staking or smart contracts to fulfill the purpose of bitcoin. All that needs to happen is flawless protocol defence and network uptime. The tech is simple but the importance is vast, replicate the factors of hard money in a digital space, forever.

Doing so in a decentralized manner ensures that Bitcoin is strengthened with every blow. The network is so reliable that it pays more to support it than it does to attack it. So when China bans mining, America buys asiics. When someone tries to acquire all the coins, the price chases them up. There are no individuals to prosecute so you have to attack the network head on, and market participates are enticed to learn from each attack.

This is why regulation will hurt everything else but help the bitcoin network. No matter what the technology is or who uses it, if the government has a point of attack they will exploit it. Ethereum currently won't succeed without the vast changes being implemented by the ethereum foundation. That is a vulnerability. Fiat won't succeed without the federal government. That is a vulnerability. Bitcoin won't succeed if 51% of a largely spread group of financially successful people are somehow coerced to all betray themselves at the same time. That is not a serious vulnerability.

BUT HEY! You made a lot of assumptions! What if Bitcoin doesn't become widely accepted? Bitcoin is superior at all the other aspects of money. (Durability, Portability, Divisibility, Uniformity, Limited supply). People are going to want to own it and eventually want to spend some. If you don't accept it as payment but it is popular, your competition will.

How is 100 trillion even a real number? There is more than just the money in everyones savings account. People already know that fiat can be outpaced with superior assets, and the equity market is estimated at around 300 trillion dollars today. None of those options have as many monetary aspects covered as bitcoin does.

Why would anyone new buy it if you can't yield farm shit coins? Jokes aside, the purpose of bitcoin is to preserve purchasing power, which is does almost flawlessly. Everyone is going to want this ability for a large portion of their capital eventually. Other protocols are acting sort of like a bank when they run defi. Its really you lending your purchasing power to an actor for credit. Its pretty neat but not revolutionary just because its on blockchain.

How is it decentralized when michael saylor owns it all? Two part answer. The network is secured not just by holders but by nodes and miners. Microstrategy will get large returns for taking a large risk if bitcoins price goes up, and that is perfectly fair. But as they buy more and more, it is going to cost more and more, where every other financial system in history has had some sort of corruption in its growth from unequal opportunity. As of today and as of 10 years ago, you and apple have the same purchase price.

Don't hate on ETH, why can't something newer take Bitcoins place? Other blockchain technologies are cool, and may create super awesome internet, banking and ownership applications. But none of these things could ever replace bitcoin without copying its protocol. Its set up just right for maintaining integrity over time as a currency. If ETH did so, it would just be bitcoin #2 with a lower market cap and thus less security. So other coins are not a threat at all to bitcoins future utilization/ceiling. They do take some of the speculative dollars away from bitcoin, which I think is why alts are more volatile in price.

Would you like to learn more? Click here to be taken to the original topic-thread or you can scan through the Cointest archive to find arguments on this topic in other rounds.

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CointestAdmin•

#Bitcoin Con-Arguments Below is an argument written by bkcrypt0 which won 1st place in the Bitcoin Con-Arguments topic for a prior Cointest round.

Bitcoin is failing its original mission, and institutional interest is going to make things worse.

Background

Satoshi Nakamoto was a financial revolutionary out to counter the fiat money presses that destroy a currency's value with inflation (looking at you Turkey and the U.S.) The method—create a currency with a fixed supply, mined liked gold to make it scarce, and digitally transferable anywhere in the world between any parties.

Lack of Stability

Bitcoin can't be used as a global currency to replace fiat and eliminate politicized money printing because it has to hold its value steady over time.

Why?

People work for dollars, euros, yen, or yuan because there is relative stability in their paychecks from week to week. Their food, rent/mortgage, clothing, energy costs are also relatively stable (inflation is the cost for using that particular currency, but it beats a 50% drop in value over the course of a few months, and most inflation around the world isn't as bad as Turkey or Venezuela.)

Imagine being paid a flat 1BTC / year for a particular job. But you live in the U.S. and the value of that BTC just dropped over the course of the year by 50%. Your lease is fixed over 12 months. Your food costs are the same or maybe even higher. Not only do you still get hit with local inflation, your buying power just dropped by half.

This is why over $155B* have flowed into stable coins like USDT, USDC, BUSD, UST, and DAI)

Lack of Accountability

The relatively anonymous transfer of value between parties was supposed to be a positive aspect of bitcoin. Your money, so do what you want with it. The problem is, there are a lot of other people that also want anonymity — human traffickers, dangerous drug smugglers, crime syndicates, tax evaders. Sure they can also use USD (and most of them do), but they are also traceable if they enter the global financial system.

Making it easier for criminals to evade authorities makes everyone less safe. And sure, no one likes to pay taxes, but consider the alternative. Roads, schools, social services, some hospitals, police and fire departments, they all rely on taxes.

Lack of security

Unlike gold, which is pretty much indestructible, Bitcoin holdings depend on keeping seed phrases secure. If there were a house fire a gold bar might melt, but it can be reformed. A hardware wallet will be destroyed and any seed phrases stored on paper will be gone. That's part of gold's appeal as a store of value.

Also, were there to be an internet outage in any widespread way, Bitcoin is useless as a transaction currency (part of the appeal of physical paper money and metal coins.) While unlikely, this scenario speaks to the lack of overall security in Bitcoin as a means of exchange (it has other benefits like cryptographic security, but its lack of physicality poses problems with public perception, and practical uses.)

Acts like fiat, moves like fiat . . .

Bitcoin remains highly correlated to traditional finance markets (two recent readings were the highest they've been -- see link below) and doesn't exactly act as a hedge against inflation when it plummets in the face of, well, high inflation.

What this shows is that big money is controlling Bitcoin (and by association the rest of crypto) by reacting in the same risk-off reaction when inflation flares up.

It goes something like this:

  • When inflation rises, the Fed tightens money supply to slow things down.
  • Big money flees from riskier assets like company stock (they likely won't be as profitable in a high inflation world)
  • Stock prices drop [and here's the problem]
  • Money does not flow INTO crypto as a hedge against this risk, it also flees.

Conclusion

Fighting fiat money printing excesses was never going to be easy, but as with most revolutions, unintended consequences often derail the original vision.

For one, government policies can avert the worst of political impulses. That doesn't require a wholesale financial market revolution.

U.S. inflation has also been remarkably low for well over two decades. It was a once in a century global pandemic that forced a massive print run of dollars.

Bitcoin has also become just another a plaything for the rich, a commodity to be bought and sold for profit rather than the antidote to centralized money creation. And because even larger stacks of fiat are on the sidelines waiting to jump in, volatility is going to get even worse with big swings as fund managers chase and take profits.

None of this means Bitcoin has no value in global finance. It just means it isn't going to serve the purpose as originally intended.

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Would you like to learn more? Click here to be taken to the original topic-thread or you can scan through the Cointest archive to find arguments on this topic in other rounds.

Since this is a con-argument, what could be a better time to promote the Skeptics Discussion thread? You can find the latest thread here.

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tiktaktok_65Bronze | 6 months old•

It's not BIS but the Basel Committee which is based at the BIS in Basel that made these "recommendations" in a proposal that is open for comments now.

this summarises it better:

The key changes are:

  • An overall limit on exposure to cryptocurrencies to 1% of tier capital 
  • A recognition of hedging of cryptocurrencies 
  • Stricter rules for stablecoins
  • For traditional assets tokenized using DLT there is an infrastructure risk of 2.5%

The one area of significant accommodation is hedging. Where risk exposures to cryptocurrencies are hedged, the amounts are netted, but there is a 100% capital charge. That’s significantly better than previously, which effectively ignored hedging. 

For all other cryptocurrency exposures, the risk weighting is the highest given for any risk at 1250%, making it unattractive for banks to keep them on the balance sheet.

The proposed Basel rules impose tests to ensure stablecoins are redeemable and their price doesn’t deviate too much from par. Additionally, there are requirements for managing reserve assets.

Based on the pricing tests alone, our assessment is that no current large stablecoin would pass the tests. In terms of reserve assets, the stablecoin providers would need to give weekly breakdowns of the backing assets. Although surprisingly, there only needs to be an external audit annually.

To fully qualify as a lower risk stablecoin, the price cannot go below 99.9 cents on more than three days in 12 months. A stablecoin outright fails the test if it drops below 99.8 cents more than ten times during a year. We assume this is at any point during the day, but that’s unclear.

Using data from Messari, USDC, considered higher quality than Tether, would have failed both tests intraday every day during the past month. Tether managed to pass on six out of 30 days. However, at ‘close’ USDC would have failed the first test just four times compared to 16 times for Tether. But extrapolating to a year, that’s enough for both to be classed as a pure cryptocurrencies.

typical example how this industry twists and fakes news whilst getting the details wrong.

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