[Cryptography] Fun and games with international transaction settlement (was Re: IBM looking at adopting bitcoin technology for major currencies)

Peter Gutmann pgut001 at cs.auckland.ac.nz
Sun Mar 15 01:10:27 EDT 2015

Jerry Leichter <leichter at lrw.com> writes:

>Unlike banks, which simply hold financial assets that others have lent them
>(they own some of them, to som e degree or another - that's their
>capitalization - but that's a tiny part of their to tal assets even if they
>are very well capitalized) nation-states actually govern (as in control)
>large numbers of people, who in turn have large capital assets.
>The reason the world treats the dollar as having real value is that the US
>has an almost-250-year-long history of paying back all its debts

Looking at the ever-useful http://usdebtclock.org (which currently seems to be
out of action, you can find older screenshots via Google, e.g.
http://dailyreckoning.com/dr-content/uploads/2014/08/USDebtClock.png), if I'm
reading that right then US personal debt is at about the same level as
sovereign debt, with savings essentially nonexistent.  This means that the
assets aren't capital but fixed (and some intangible) ones, and what will the
PRC do with Mt.Rushmore and Golden Gate Bridge?

>It's not clear how Bitcoin would necessarily change any of this.  If Bitcoin
>somehow becomes completely independent of the existing banking system

I think it's not so much that it's independent of the banking system, it's
that there's a perception that it's not tied to the house of cards that is the
current financial system.  Of course BTC is its own house of cards, but as
long as there are people around to believe in it...


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