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Could Iceland become the first country in the world to adopt Bitcoin (or an alternative crypto) as its national currency? If the Pirate Party wins, this could b

by jaza 10y ago

Could Iceland become the first country in the world to adopt Bitcoin (or an alternative crypto) as its national currency? If the Pirate Party wins, this could be one of the numerous cool experiments in government to take place.

Mikeb85 10y ago
Not having control over your own currency is a death sentence for your economy. Not to mention, cash realistically offers more freedom than any crypto-currency, as it's untraceable.
- lettergram 10y ago
  Not having your own currency (especially a crypocurrancy - where it's essentially dividable to millionth or billionth) is not a death sentence to an economy. The U.S. didn't have direct control over its currency until the early 1900's. And once they got direct control, it caused the great depression. A treasury can offer bonds and control the amount of liquidity in a market. It's not direct control, but all countries used to not have direct control over their currency and they managed (used to trade in gold/silver by weight). Finally, there are places - such as China which literally peg their currency to other countries. They don't have control either (at least until it's unpegged). I do agree with you on the traceability, but you can limit traceability via crypocurrancies. Given the pirate party is probably more interested in less government control, they might be willing to compromise traceability for lack of government control
  - res0nat0r 10y ago
    I'd rather my groceries, gas, bills, et al not cost 50% more/less day to day like the crazy Bitcoin swings we still see. A cryptocurrency for a nation state as of right now is still a pipe dream.
poshli 10y ago
I'm not sure how this would benefit Iceland. Just about everything needs to be imported. If the Grapvevine is to be believed, they're importing ice cubes! http://grapevine.is/news/2016/10/20/imported-ice-cubes-in-iceland-cheaper-than-domestic-ice-cubes/ http://grapevine.is/news/2016/10/20/imported-ice-cubes-in-ic...
- runarberg 10y ago
  Grapevine is one of the better journalistic medium in the country. I (an Icelander) often trust Grapevine more then the traditional media. Especially when covering politics or other serious matters (like refugees), Grapevine shines over the traditional media. But most of Grapevines content belongs to this cute or fun news category. In this instance, they source the government radio (RÚV)[http://www.ruv.is/frett/flytja-inn-klaka-i-tonnavis http://www.ruv.is/frett/flytja-inn-klaka-i-tonnavis], which is definitely a trusted source. So yes, apparently we do import ice-cubes "by the tonnes". Although, personally, I didn't even know they sold ice-cubes in a plastic bags at the store.
nols 10y ago
Bitcoin can't handle the number of transactions required. It's simply not technically possible for the blockchain to be used as a country's (or medium sized city's) primary currency.
- Natanael_L 10y ago
  With techniques like Lightning Network you can use networks of "payment channels" to effectively compress many transactions into a few, so it isn't impossible. You just won't have everything included directly in the blockchain individually.
- creepy_driver 10y ago
  Really? I always thought it was very powerful. Any place to read up more about this?
  - nols 10y ago
    You can read up on bitcoin scalability here: https://en.bitcoin.it/wiki/Scalability https://en.bitcoin.it/wiki/Scalability
- VLM 10y ago
  By direct analogy physical paper dollars cannot handle the transaction velocity in the NYSE financial markets or even the M1 / M2 accounts like checking and savings accounts, therefore the paper dollar cannot be the currency of the USA. I mean paper money at the small denominations currently issued would literally catch on fire if it moved fast enough to keep up with HFT. You could get away quite easily with BTC only as a partial M0 currency or more interestingly as a (partial?) M3 reserve. By partial M0 I mean we can abstract this "physical money currency" thing into paper bills and metal coins. Issue paper money down to thousandths of BTC as BTC certificates where theoretically one BTC worth of paper can be exchanged for one electronic BTC. Much like American Dollars used to be precious metal certificates. People will have plenty of fun wat the expense of the BTC as M3 idea but fact of the matter is you stick something volatile and non-volatile together tightly enough and it averages out a bit. So the real question isn't what happens to Icelands M3 when it becomes as volatile as BTC, but what happens to BTC when its welded to comparatively non-volatile Icelandic economy. If that kind of welding happened, BTC prices couldn't vary more than a percent per month or whatever. That's likely to drive BTC traders nuts because they make piles of dough off volatility so the people most in tune with BTC will very loudly hate the idea for self interest reasons, even if it would be a good idea for a mere 99.999% of the rest of the population. As for the partial idea, much as large banks keep literal tons of gold tied up in vaults, its quite possible for the Icelandic treasury to keep a pile of BTC tied up as one of numerous forms of reserve and that would certainly kill price volatility of BTC or at least drag it down to precious metals levels of price volatility. There's also the issue of putting on a show. The US Mint issues plenty of legal tender gold and silver coins, but those coins are not a major part of commerce. It would be trivial for the Icelandic treasury to allow payment of income tax in BTC or something similar that doesn't really change anything but makes some nice BTC related headlines. Frankly this is the most likely outcome. Perhaps you'll be able to buy a ticket for a tour of the Icelandic Dept of the Treasury with BTC, and this will be trumpeted very loudly, not much further real world impact. Yet it is a baby step along a path, and the result of buying tickets today might be in a decade everyone will pay taxes with BTC, who knows.
throwaway13337 10y ago
Interestingly, control over it's own currency is why Iceland has managed to come out of it's recession so quickly compared to other European countries. It may not be a death sentence, but as eurozone countries are now realizing, giving up that control is a major downer. https://www.washingtonpost.com/news/wonk/wp/2015/06/17/the-miraculous-story-of-iceland/ https://www.washingtonpost.com/news/wonk/wp/2015/06/17/the-m...

by jaza 10y ago

Mikeb85 10y ago

Not having control over your own currency is a death sentence for your economy. Not to mention, cash realistically offers more freedom than any crypto-currency, as it's untraceable.

lettergram 10y ago
Not having your own currency (especially a crypocurrancy - where it's essentially dividable to millionth or billionth) is not a death sentence to an economy. The U.S. didn't have direct control over its currency until the early 1900's. And once they got direct control, it caused the great depression. A treasury can offer bonds and control the amount of liquidity in a market. It's not direct control, but all countries used to not have direct control over their currency and they managed (used to trade in gold/silver by weight). Finally, there are places - such as China which literally peg their currency to other countries. They don't have control either (at least until it's unpegged). I do agree with you on the traceability, but you can limit traceability via crypocurrancies. Given the pirate party is probably more interested in less government control, they might be willing to compromise traceability for lack of government control
- res0nat0r 10y ago
  I'd rather my groceries, gas, bills, et al not cost 50% more/less day to day like the crazy Bitcoin swings we still see. A cryptocurrency for a nation state as of right now is still a pipe dream.

poshli 10y ago

I'm not sure how this would benefit Iceland. Just about everything needs to be imported. If the Grapvevine is to be believed, they're importing ice cubes! http://grapevine.is/news/2016/10/20/imported-ice-cubes-in-iceland-cheaper-than-domestic-ice-cubes/ http://grapevine.is/news/2016/10/20/imported-ice-cubes-in-ic...

runarberg 10y ago
Grapevine is one of the better journalistic medium in the country. I (an Icelander) often trust Grapevine more then the traditional media. Especially when covering politics or other serious matters (like refugees), Grapevine shines over the traditional media. But most of Grapevines content belongs to this cute or fun news category. In this instance, they source the government radio (RÚV)[http://www.ruv.is/frett/flytja-inn-klaka-i-tonnavis http://www.ruv.is/frett/flytja-inn-klaka-i-tonnavis], which is definitely a trusted source. So yes, apparently we do import ice-cubes "by the tonnes". Although, personally, I didn't even know they sold ice-cubes in a plastic bags at the store.

nols 10y ago

Bitcoin can't handle the number of transactions required. It's simply not technically possible for the blockchain to be used as a country's (or medium sized city's) primary currency.

Natanael_L 10y ago
With techniques like Lightning Network you can use networks of "payment channels" to effectively compress many transactions into a few, so it isn't impossible. You just won't have everything included directly in the blockchain individually.
creepy_driver 10y ago
Really? I always thought it was very powerful. Any place to read up more about this?
- nols 10y ago
  You can read up on bitcoin scalability here: https://en.bitcoin.it/wiki/Scalability https://en.bitcoin.it/wiki/Scalability
VLM 10y ago
By direct analogy physical paper dollars cannot handle the transaction velocity in the NYSE financial markets or even the M1 / M2 accounts like checking and savings accounts, therefore the paper dollar cannot be the currency of the USA. I mean paper money at the small denominations currently issued would literally catch on fire if it moved fast enough to keep up with HFT. You could get away quite easily with BTC only as a partial M0 currency or more interestingly as a (partial?) M3 reserve. By partial M0 I mean we can abstract this "physical money currency" thing into paper bills and metal coins. Issue paper money down to thousandths of BTC as BTC certificates where theoretically one BTC worth of paper can be exchanged for one electronic BTC. Much like American Dollars used to be precious metal certificates. People will have plenty of fun wat the expense of the BTC as M3 idea but fact of the matter is you stick something volatile and non-volatile together tightly enough and it averages out a bit. So the real question isn't what happens to Icelands M3 when it becomes as volatile as BTC, but what happens to BTC when its welded to comparatively non-volatile Icelandic economy. If that kind of welding happened, BTC prices couldn't vary more than a percent per month or whatever. That's likely to drive BTC traders nuts because they make piles of dough off volatility so the people most in tune with BTC will very loudly hate the idea for self interest reasons, even if it would be a good idea for a mere 99.999% of the rest of the population. As for the partial idea, much as large banks keep literal tons of gold tied up in vaults, its quite possible for the Icelandic treasury to keep a pile of BTC tied up as one of numerous forms of reserve and that would certainly kill price volatility of BTC or at least drag it down to precious metals levels of price volatility. There's also the issue of putting on a show. The US Mint issues plenty of legal tender gold and silver coins, but those coins are not a major part of commerce. It would be trivial for the Icelandic treasury to allow payment of income tax in BTC or something similar that doesn't really change anything but makes some nice BTC related headlines. Frankly this is the most likely outcome. Perhaps you'll be able to buy a ticket for a tour of the Icelandic Dept of the Treasury with BTC, and this will be trumpeted very loudly, not much further real world impact. Yet it is a baby step along a path, and the result of buying tickets today might be in a decade everyone will pay taxes with BTC, who knows.

throwaway13337 10y ago

Interestingly, control over it's own currency is why Iceland has managed to come out of it's recession so quickly compared to other European countries. It may not be a death sentence, but as eurozone countries are now realizing, giving up that control is a major downer. https://www.washingtonpost.com/news/wonk/wp/2015/06/17/the-miraculous-story-of-iceland/ https://www.washingtonpost.com/news/wonk/wp/2015/06/17/the-m...