M. Ametrano [email protected] University of Milan-Bicocca, Banca IMI, Hayek Money, QuantLib Hogan Lovells, Rome/Milan, September 30th 2014 This presentation: http://goo.gl/ytFvrw
Jared Cohen: crypto-currencies are inevitable • Marc Andreessen: like Internet in 1994 • Nouriel Roubini: Ponzi game and conduit for criminal/illegal activities • Alan Greenspan: It’s a bubble. It has to have intrinsic value Ferdinando M. Ametrano 2014 2/22
backed by any government or organization • Instantaneous peer-to-peer transactions • No need for trusted third party • Cryptographic security • Low-cost banking for everybody everywhere https://bitcoin.org/en/faq http://www.coindesk.com/information/ Ferdinando M. Ametrano 2014 3/22
of eBay Inc: There’s no doubt digital currency is going to play an important role going forward: at PayPal, we’re going to have to integrate them into our wallet • Sridhar Ramaswamy, head of Google Wallet We are working in the payments team to figure out how to incorporate bitcoin into our plans • Amazon: granted patent for the use of digital currencies as payment on cloud platforms (Amazon Web Services) Ferdinando M. Ametrano 2014 6/22
to transfer a unique digital token • keeps records of each and every transaction forever It can replace any processing central authority with a decentralized peer-to-peer cryptographically secure equivalent Ferdinando M. Ametrano 2014 8/22
(car sharing) • Voting rights (liquid democracy) Distributed Autonomous Organizations: • Gambling online (no fees, no taxes) • Health insurance (without company costs) Ferdinando M. Ametrano 2014 9/22
created inside the Bitcoin protocol • the first powerful protocol application • authorities replaced: – central banks – financial intermediaries Ferdinando M. Ametrano 2014 10/22
– Bitcoin is a payment innovation that's taking place outside the banking industry – It's not so easy to regulate Bitcoin because there's no central issuer or network operator. This is a decentralized, global [entity] • ECB (October 2012 report): – governments and central banks would face serious difficulties if they tried to control or ban any virtual currency scheme – there is no server that could be shut down if the authorities deemed it necessary Ferdinando M. Ametrano 2014 11/22
north of USD 19M • July 17th: New York Department of Financial Services has released BitLicense draft: New York-sanctioned Bitcoin service users will no longer be anonymous Ferdinando M. Ametrano 2014 12/22
of America have established teams of experts focusing exclusively on digital currency Edmund Moy former director of the United States Mint http://www.coindesk.com/former-us-mint-director-save-bitcoin-regulators/ Ferdinando M. Ametrano 2014 13/22
the creation of governing authorities accountable for protocol and transaction ledger integrity • Until a comprehensive regulatory regime is developed: – discourage financial institutions from buying, selling, or holding virtual currencies – allow financial institutions to maintain current account relationship with businesses active in the field of virtual currencies Ferdinando M. Ametrano 2014 14/22
into a gift economy • As the relationship circle is enlarged, the need for an exchange economy arises • barter economy, coincidence of wants • Trade economy based on money as medium of exchange • Cryptocurrency: money for the global economy of mobile communication, Internet, and social networks Ferdinando M. Ametrano 2014 15/22
Account Live cattle Diamonds Gold Fiat coins and notes Cryptocurrency • swappable • fungible • portable • divisible • recognizable • resistant to counterfeiting • reliably saved, stored, and retrieved • retain usefulness over time • non-perishable or with low preservation cost • relative worth unit of measure • stable value for stable price comparison • supply must be limited in some way Ferdinando M. Ametrano 2014 16/22
of every other good is measured • A good in itself: its value is governed by supply and demand • The price system measures the value of goods relative to the value of money • Good money should provide stable prices to best perform its role as unit of account Ferdinando M. Ametrano 2014 17/22
successful at get rid of any centralized monetary authority • The bitcoin currency has inadvertently thrown away the flexibility of an elastic monetary policy Ferdinando M. Ametrano 2014 19/22
symmetallism • Fixed value of bullion (Aneurin Williams 1892) • Compensated dollar (1911-20 Irving Fisher) • Commodity Reserve Currency (1932 J. Goudriaan, 1937-44 B. Graham, 1942 F. Graham, 1951 M. Friedman) • ANCAP basket (1982 Robert Hall) • Futures contracts (1984 Miles, 1989-95 Sumner) • Quasi-futures contract (1994 Kevin Dowd) • Price index option (2000 Kevin Dowd) Ferdinando M. Ametrano 2014 21/22
non-discretionary supply regulated to achieve stable prices with respect to a (commodity) price index Working paper: ssrn.com/abstract=2425270 Forthcoming website: www.hayekmoney.com Ferdinando M. Ametrano 2014 22/22
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