
Finland's Central Bank Praises Bitcoin - cryptomatics
https://icowatchlist.com/blog/finland-central-bank-praises-bitcoin/
======
sctb
Main discussion here:
[https://news.ycombinator.com/item?id=15193443](https://news.ycombinator.com/item?id=15193443).

------
ciamac
I'm an author of the underlying paper:

[https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3025604](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3025604)

This article is very misleading in several ways:

(1) we do not work for the Finnish Central Bank in any way nor does the
content of the paper reflect any views of the Finnish Central Bank (so far as
I'm aware), the paper was merely included in their working paper series

(2) the main content of the paper is to contrast the economic model of bitcoin
that of a monopolist service provider, from the abstract:

"A simplified economic model that captures the system's properties answers
these questions. Transaction fees and infrastructure level are determined in
an equilibrium of a congestion queueing game derived from the system's limited
throughput. The system eliminates dead-weight loss from monopoly, but
introduces other inefficiencies and requires congestion to raise revenue and
fund infrastructure. We explore the future potential of such systems and
provide design suggestions."

------
vesinisa
Please note that this is not an official position by the Bank of Finland! It's
a paper by Columbia University researchers published in the bank's "research
discussion" journal. Indeed, the cover page explicitly notes:

> The opinions expressed in this paper are those of the authors and do not
> necessarily reflect the views of the Bank of Finland.

@admins, can we have the title properly attribute the source?

------
xutopia
A lot of people assume Bitcoin is just a bubble but there is a lot to say
about the technology behind it and its inevitable use.

~~~
StavrosK
Is it inevitable? I'd love it if I can pay for things by just scanning a QR
code, but the number of merchants accepting Bitcoin feels like it's going
_down_ , even though Stripe has made it trivial to support.

I would very much like to see everyone move away from speculation and into
actual use, but it's not looking good...

~~~
mrb
It is a very narrow-minded view to think that "customers paying merchants" is
the only use case of Bitcoin... There is a lot more growth and potential in
other areas: remittances, store of value, B2B payments, informal person-to-
person transactions, paying foreign remote employees, collecting donations
internationally, etc. It is all these areas that people are not seeing and
thinking about when evaluating Bitcoin. Paying the proverbial cup of coffee in
Bitcoin is probably the _least_ interesting use case for Bitcoin.

And why would you think that Bitcoin's use is not looking good? The
transaction rate, the best indicator of actual use, is sharply increasing:
[https://blockchain.info/charts/n-transactions?timespan=all&d...](https://blockchain.info/charts/n-transactions?timespan=all&daysAverageString=7)
(this indicator is not typically impacted by mere speculators: buying coins
and leaving them on an exchange does not create a transaction)

~~~
sebleon
> remmitances, paying remote employees, collecting donations

Blockchain seems like overkill here. Hardest parts are converting cash into
bits and back on both ends, transmitting bits from one account to another is
easy with, say, a MySQL db

> store of value

volatility makes bitcoin an interesting speculative investment. But without
any backing or federal insurance, seems like a poor store of value compared to
a bank account (though many currencies no longer have backing...)

> b2b, peer to peer payments

Again, solutions to these (ie. Venmo, Square Cash, Facebook Cash for p2p) do
not require blockchain. How does blockchain tech help in these use cases?

~~~
mrb
> Hardest parts are converting cash

There is a powerful network effect taking place: the more people accept
Bitcoin, the smaller the need to convert to cash, causing Bitcoin's
convenience to increase bit by bit, causing more people to use it, etc. That
is what we have been seeing over the last 7 years. And Bitcoin ATMs are
becoming the most convenient way to convert to cash. They are popping up
around the world at an impressive rate:
[https://coinatmradar.com/charts/#growth](https://coinatmradar.com/charts/#growth)

> poor store of value compared to a bank account

On the contrary, savings accounts are a terrible store of value as they lose
value over time: a 1% interest rate is eaten by a 3% inflation rate.

~~~
sebleon
> powerful network effect taking place is this actually happening, or is this
> wishful thinking?

> bitcoin ATMs cool concept, unclear when there will be enough of these
> outside of USA to make a dent in the remittance market

> savings accounts are terrible agreed, losing 2% annually sucks. however, BTC
> literally dropped 14.88% today 0_0 unclear if it will continue to grow or
> drop, only volatility seems inevitable

------
mrb
The Federal Reserve Bank of Chicago praised Bitcoin too, in 2013:
[https://www.chicagofed.org/digital_assets/publications/chica...](https://www.chicagofed.org/digital_assets/publications/chicago_fed_letter/2013/cfldecember2013_317.pdf)
Key quotes:

« _Bitcoin is an elegant implementation of a digital currency, but can it
truly rival or replace existing currencies?_ »

« _it represents a remarkable conceptual and technical achievement, which may
well be used by existing financial institutions (which could issue their own
bitcoins) or even by governments themselves._ »

« _At the time of this writing, the average worth of a bitcoin over the
previous six months had been a little over $100_ » (up 42× since then: $4,200)

« _Bitcoin solves two challenges of digital money—controlling its creation and
avoiding its duplication—at once._ »

------
JustAnotherPat
>“Bitcoin cannot be regulated. There is no need to regulate it because as a
system it is committed to the protocol as is and the transaction fees it
charges the users are determined by the users independently of the miners’
efforts.” The authors said.

Isn't this false and the reason why bitcoin cash exists?

~~~
AgentME
I'd think the continuing existence of Bitcoin separate from Bitcoin Cash
proves the quote.

