https://nakamotoinstitute.org/mempool/speculative-attack/
"Regulating Digital Currencies: Bringing Bitcoin within the Reach of
the IMF", 2013
https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=1407&context=cjil
"Because Bitcoin is not formally backed by a country's government, it is not bound by the IMF's guidelines. As a result, Bitcoin poses a serious threat to the economic stability of the foreign currency exchange market if it continues to grow in both value and usage. Any other digital currency that enters widespread use would pose similar problems. Because private digital currencies like Bitcoin fall outside the IMF's legal framework, the IMF is unable to obtain those currencies directly. As a result, the IMF is limited in what it can do to intervene in the event that a private digital currency like Bitcoin is used to attack the value of a conventional currency through what is known as a "speculative attack." A speculative attack occurs when an investor wishes to take advantage of a "weak currency," a currency that has depreciated in value relative to other currencies.
If left unchecked, a successful attack can push a weak currency's value even lower, resulting in a destabilization of the international foreign currency exchange market." If Bitcoin--or a digital currency like it becomes an important currency in international commerce, its use in speculative attacks could cause serious economic harms unless the IMF develops a way to counter those attacks.
To further complicate things, the longer the IMF takes to bring Bitcoin within its control, the more difficult controlling Bitcoin will become. Bitcoins are generated through computer software which is programmed to halt the production of new Bitcoins by approximately 2025.12 Once Bitcoins can no longer be generated, their supply becomes finite and their value can be expected to increase. As their value increases, so does the expense that the IMF has to incur in order to obtain them. Because having a supply of Bitcoins is necessary to effectively counter a speculative attack, the sooner the IMF can acquire a supply of Bitcoins, the cheaper counteracting such an attack will be." 🔥🔥🔥
Henkypenky
npub1h0…rtf8e
2024-02-25 11:29:32
Author Public Key
npub1h0h4pyaajj5r7zu4jn0mx22vkw94avffzpd7hdarjkx56ufzskfqjrtf8ePublished at
2024-02-25 11:29:32Event JSON
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"content": "https://nakamotoinstitute.org/mempool/speculative-attack/ \n\n\"Regulating Digital Currencies: Bringing Bitcoin within the Reach of\nthe IMF\", 2013\n\nhttps://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=1407\u0026context=cjil\n\n\"Because Bitcoin is not formally backed by a country's government, it is not bound by the IMF's guidelines. As a result, Bitcoin poses a serious threat to the economic stability of the foreign currency exchange market if it continues to grow in both value and usage. Any other digital currency that enters widespread use would pose similar problems. Because private digital currencies like Bitcoin fall outside the IMF's legal framework, the IMF is unable to obtain those currencies directly. As a result, the IMF is limited in what it can do to intervene in the event that a private digital currency like Bitcoin is used to attack the value of a conventional currency through what is known as a \"speculative attack.\" A speculative attack occurs when an investor wishes to take advantage of a \"weak currency,\" a currency that has depreciated in value relative to other currencies.\n\nIf left unchecked, a successful attack can push a weak currency's value even lower, resulting in a destabilization of the international foreign currency exchange market.\" If Bitcoin--or a digital currency like it becomes an important currency in international commerce, its use in speculative attacks could cause serious economic harms unless the IMF develops a way to counter those attacks.\n\nTo further complicate things, the longer the IMF takes to bring Bitcoin within its control, the more difficult controlling Bitcoin will become. Bitcoins are generated through computer software which is programmed to halt the production of new Bitcoins by approximately 2025.12 Once Bitcoins can no longer be generated, their supply becomes finite and their value can be expected to increase. As their value increases, so does the expense that the IMF has to incur in order to obtain them. Because having a supply of Bitcoins is necessary to effectively counter a speculative attack, the sooner the IMF can acquire a supply of Bitcoins, the cheaper counteracting such an attack will be.\" 🔥🔥🔥",
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