Austrian perspective on the assessment of the Deutsche Bank to the 7 bit coin standard statements read
published on 29 January Deutsche Bank research a paper about seven standard statements regarding Bitcoin and their classification and assessment thereof. In this article, I will first summarize the responses of Deutsche Bank on the individual statements and then say my personal opinion from the perspective of the Austrian school.
1 – bit coin is overrated.
Deutsche Bank: for a “real” review of Bitcoin Deutsche Bank lists several complications. So, it is unclear whether to classify the Bitcoin as a currency, a commodity or a capital investment is. Also, no need for refinancing has the Bitcoin, in contrast to conventional investment opportunities. It is decentralized, which makes it more robust against attacks and indicates a high probability of survival. Last bit coin could transform even the rating system. But Deutsche Bank concludes that the definition of “fair price” is not possible.
Austrian school: value ( bit coin or all other goods in the world) is subjective. i.e. every person has its own assessment of a given good and this review is purely mentally and can not be brought in experience. market prices, which are formed as a result of the various subjective ratings are everything an observer sees. Obtained a bit coin at a price of $ 10,000 assessed the buyer the value of Bitcoin subjectively greater than the purchase price, the seller values the $10,000 more. How much higher is the respective evaluation, can not be determined. It is therefore a mystery of what should be a “fair price” at all. A buyer evaluate a price as “fair”, then he sees a greater benefit in the probably than in the money that he gives it up. He finds the price ” unfair ”, he won’t give up his money. But here there is no objective fairness.
2 – bit coin is a rival to the U.S. dollar Dominaz.
Deutsche Bank: that Bitcoin is attacking the US dollar as a reserve currency in the next few years, Deutsche Bank considers that unlikely. Too many questions are open; about remuneration of workers at fluctuations look like would the impact on State budgets and taxation of citizens.
Austrian school: how the remuneration of workers just would look like bit coin would be the reserve currency, is in the future and thus uncertain. To reduce fluctuations in the salary payout, you might think, for example, the price average of the last month as the value. The question is an economic calculus and is answered by the individual actions of all actors in the economy. The impact of an independent, deflationary currency on State budgets would be fatal for the latter. So not simply new money could be printed to “repay debt” and the value / purchasing power of debt would increase deflationary – thank – time.
3 – dies as soon as the regulators to intervene, Bitcoin.
Deutsche Bank: regulations can affect the price of Bitcoin, however, Bitcoin is bound as a global phenomenon not to a special jurisdiction. Countries react differently to the Kryptowährung and is therefore difficult to enforce a global Regulation . Bitcoin has been still for 2010 over 200 times for “dead”, exists. He is so alive.
Austrian school: a significant added value of Bitcoin is, that it’s just not turn off can . A regulator has only a limited room for manoeuvre in the fight against Bitcoin. The gate, which States can monitor, is the so-called “Fiat gateway”, so the step from Fiat to crypto. For example by the know-your-customer policy, people can be excluded from the purchase of Bitcoin. Has however once you make the step in the Kryptowelt, there are several peer-to-peer solutions, can be censored by anyone anymore. Bitcoin ban would have probably similar effects on the price as for other black markets: declines the offer, demand falls relatively less, ergo, the price goes up.
4 – bit coin community is hostile to the Bank.
Deutsche Bank: the Deutsche Bank recognizes a hostile Bank part in the now very wide Bitcoin community. However, this characterization not on all Bitcoin users applies to. Bitcoin while Bank critical, however, there is the possibility for banks, the principle “banking the unbanked” to benefit from loans, for example, by placing an order.
Austrian school: historically a bank was nothing more than a warehouse for gold and silver. People could store their (relatively impractical) gold in the Bank and received an IOU in return for this – the birth of paper money. This mechanism there is nothing to expose, however, criticism of the banking system aimed at any other circumstance: since the 1970s there was no longer the connection from the paper IOU for gold! the current Fiat system is the market bound no real value and distorted by the expansionary monetary policy of central banks. Bitcoin allows you to store a good individually and Exchange, not only an IOU on this good. Who paid with Bitcoin paid so with “Pieces of gold” instead of paper tickets. Last but not least, it must be mentioned that banks are not immune from bankruptcy, also errors can make (and have made 2008) and life can ruin by they are gamble the money of others. The criticism against the centralized banking system is therefore not baseless, is Deutsche Bank but secretive.
5 – Bitcoin makes obsolete the traditional payments.
Deutsche Bank: Bitcoin is still not at a point arrived, where it could make serious competition the current financial system. Just the scale makes creating Bitcoin (currently maximum of 7 transactions per second). Solutions such as the lightning network are tested, are still not ready for the masses. Deutsche Bank sees Bitcoin as a an alternative means of payment with advantages and disadvantages. Banks can live in coexistence with Bitcoin. This classic payment transactions is not obsolete.
Austrian school: Bitcoin is still not perfect. That suggests the scaling debate. But even if Bitcoin is still not suitable for mass production, the advantages over the current inflationary Fiat money system are glaringly obvious. Especially deflation (so the rise in purchasing power over time) offers a safe haven to store savings, without compromising value. Keeping of own stocks is regarded by Deutsche Bank as a weakness, because a lot of people with this responsibility can not handle or want to. However, there was not this option before the invention of Bitcoin. What is the currency of the market as the best, most practical, most efficient etc. will select, time will tell.
6 – bit coin money offer is fixed.
Deutsche Bank: the final money amount of Bitcoin is reached in the year 2040. In addition, it would be Yes theoretically possible that the current fixed money supply could be changed by 21 million Bitcoin with the source code.
Austrian school: scarcity of resources is a natural attribute of our world. Gold is scarce and has partly as a means of payment on the history. Satoshi Nakamoto said in its white paper, the amount of money of the Bitcoin is modeled after the removal of gold (so that it’s finally here and the block of reward is halved every four years). The limit of 21 million Bitcoin is only achieved in the year 2143 and not already in the year 2040 (maybe there was a numbers Dreher at the DB here). The limited amount of money is one of the most fundamental characteristics of Bitcoin and it is very doubtful to me that this size is ever changed. Of course a fork can be thanks to open source with double or even an infinite amount of money established. The problem will be to convince users to use this fork first. The size of the money supply determines the price level. The loss of some Bitcoin is relatively unproblematic, because it leads to a price increase in the remaining coins.
The Central Bank’s unlimited power to create money and the Scriptural money, which artificially increased the money supply is more problematic. The result is inflation, the decline in purchasing power over time. Just poor people are severely affected, as they have insufficient capital to diversify and keep the savings mostly in the currency itself.
7 – bit coin transactions and Bitcoin users are anonymous.
Deutsche Bank: the Bitcoin Blockchain is public. Many exchanges because of the KYC policy request proof of identity from their customers. Deutsche Bank thinks, however, that you can be as anonymous as cash with Bitcoin.
Austrian school: Bitcoin transactions are not anonymous – s ie pseudonym. If you want, you can read my watch-my-block article . Deutsche Bank overlooks the difference between cash and bit coin, namely, that one is looking at as money ticket not the complete transaction history of which can be seen. For Bitcoin, this is not only possible, but inevitable.
we are early. I can see that as well as Deutsche Bank. However, I think that the added value of an independent, decentralized, deflationary, digital currency for today’s world is not to be underestimated. I find flawed and one-sided lit the paper of Deutsche Bank: namely from Keynesian point of view on the economy. In the think Bitcoin can be the Austrian school without problems as classified by the market brought forth means of payment (money). Who wants closer deal with the history of money and the State can be in first place at the freely available book by Murray N. Rothbard “the bogus money system: as the State keep our money zerstört”(Englisch). ”