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Virtual Currencies Threaten Central Banks

January 30, 2013 by  

Virtual Currencies Threaten Central Banks

If the shaky state of the current central banking systems throughout the world wasn’t already obvious, the fact that virtual currencies are worrying central bankers is further highlighting the weakness of most modern financial systems.

Bitcoin, a virtual currency issued by a decentralized network of computers, has more than doubled in value to $16.37. As the currency keeps gaining in popularity, government officials and economists throughout the world worry that the online currency could undermine the ability of central banks to manipulate the economy.

Bitcoin, unlike central banking systems, relies solely on supply and demand. The decentralized and unregulated currency exchange operates solely on the principles of the free market, unlike government banking schemes which rely on the force of the state to manipulate money supply.

In Europe, where the economy continues to falter, the central bank has rallied against Bitcoin.

Steve Hanke, a professor at Johns Hopkins University in Baltimore, told Bloomberg: “I think the ECB obviously is concerned, and it’s not reputational. I think it’s a competitive threat. Maybe virtual currencies will be so convenient that they will pose a threat because of their ease of use.”

Bitcoin has also gained popularity in some unexpected parts of the world. It has been reported that some people in Iran have begun using the currency exchange because of economic troubles brought on by U.N. sanctions.

Sam Rolley

Staff writer Sam Rolley began a career in journalism working for a small town newspaper while seeking a B.A. in English. After learning about many of the biases present in most modern newsrooms, Rolley became determined to find a position in journalism that would allow him to combat the unsavory image that the news industry has gained. He is dedicated to seeking the truth and exposing the lies disseminated by the mainstream media at the behest of their corporate masters, special interest groups and information gatekeepers.

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  • Vicki

    What is really funny is that the central banks use virtual currency all the time. Sometimes they print some paper receipts for them

  • Alex Frazier

    The world governments will pass laws to shut it down. The global currencies are so tied together, if one fell, many others would fall with it. They don’t have a problem with virtual money. In fact, they have been pushing for it. They want everyone using a plastic card and paying their bills online with online bill pay. When the money is all digital, it’s easy to make as much as you want, and unlike paper money, it doesn’t cost you seven cents per bill to print.

    If there’s competition that doesn’t benefit the government in some way, governments will shut it down. That’s why the Federal Reserve has a monopoly in the first place. The agreement is that the Federal Reserve would act as a lender of last resort, and in exchange, they get a monopoly on money creation and control over money/economy related issues.

  • Vigilant

    Any celebration of the downfall of international bankers as a result of the bitcoin is premature to say the least.

    Unlike bank transactions, Bitcoin transactions are made in the public sector with fewer guarantees of privacy. As it’s a digitized currency, a number of bitcoin exchanges have already been hacked. As if that’s not bad enough, governments (including the USG) are looking into the taxability of bitcoin transactions.

    And I think we all know that the USG would never allow the bitcoin to become the new global currency as it would completely emasculate the Federal Reserve.

    As for avoiding transaction fees, does anyone really believe that the bitcoin payment processing companies, if they ever superannuated the banks, would continue to keep their processing fees reasonable?

    Lastly, no virtual, or even paper, currency will be safe once the balloon goes up. In the event of an EMP or CME event, your virtual wallet will disappear.

    No, in your glee simply to punish the Int’l bansters, be careful what you wish for.

  • Adrienne O’Donnell

    If we would apply the philosophy of Social Credit of C.H. Douglas / Louis Even that would put money at the service of man instead of being a dictator, populations would be freed of a debt money system that creates wars, famines, suffering of all kinds.

  • keith

    can anyone say “one world order” you can thank a republican for that one !
    i hope i live long enough to see a virtual government led by watson, programed for honesty, i use to think a buddest monk would make a better US president but i’m sure thier would be ,—a yak butter gate or prayer wheel spinning co. kickback.

  • Jimmy the Greek

    What is a bitcoin ? i never even herd of this until just now ?

  • John J Kiernan (@Goldbeard6)

    Oh now isn’t this so interesting! The big Federal Reserve Ponzi scheme I think has at last met it downfall. Because Saddam Hussein began trading oil in Euros America had to find a way of wiping him off of the face of the earth. WMD became the plausible excust to attack him. They thus stopped him from undermining the petro-Dollar. Yes backed by oil instead of gold, which the thief Nixon got rid of back around 1972. However it is one thing to attack a small country like Iraq and a small country like Libya, remember Mr Ghaddafi began to do the same thing Hussein was doing, so he too was attacked and wiped out. However just let us suppose that China or Russia should now support this new “BitCoin” currency. What could Europe or the USA do then? Take on the world’s biggest Nuclear armed countries? . The bitcoin currency if issued from a secure location could become world dominating and put an end to the various currencies which are no longer au fait but are indeed now SANS FAIT. I think strange times are ahead.

    • Jimmy the Greek

      No way in hell i well use money i cant put in my pocket or hold in my hand !

      • Vicki

        How are those little slips of paper any more valuable just cause you can hold them?


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