Should we prioritise policy development re cryptocurrencies & blockchains?

Commenting as someone who has looked into this at some level but certainly not an expert. My impression is it is an experiment that individuals may embrace as interesting or promising but is not ready to be introduced as the currency of a country.

That is, at this stage it needs to be explored more as a technology by the geeks and enthusiasts until they can present it as something that obviously works and they can lay out a scenario for a country to take it on.

“Blockchain is the tech. Bitcoin is merely the first mainstream manifestation of its potential.”
– Marc Kenigsberg

There are 2 obvious problems that stand out for me even on initial inspection that are already damaging at the very least, if not fatal.

1) Bitcoin, for example, fluctuates as a volatile stock based on investors' changing perception of its worth. Afaik imho that's no basis for a stable currency.

Illustrated well by tweet from 36 minutes ago:
"#Ethereum Price Plunges 20% on Sunday, Then Recoups "
https://twitter.com/BitcoinUpdated/status/886872671681748993

2) The method for continually verifying the integrity of the blockchain - known as "mining" - relies on an enormous amount of computing using an enormous amount of energy. This is by design so no one entity can do more than half of the mining which, if it happened, would allow that entity to gain control of the blockchain.
Link: https://en.wikipedia.org/wiki/Bitcoin#Mining
(See also the discussion on this between Marc Whinery and Rangi Kemara taking place towards the end of the 2014 thread.)
So it is an enormous energy hog, by design. That is not environmentally friendly.

So in my view it is premature to make political policy on cryptocurrencies.

1) Bitcoin, for example, fluctuates as a volatile stock based on investors' changing perception of its worth. Afaik imho that's no basis for a stable currency.

Our own currency does that due to the value being set by the speculators rather than the actual trade weighting.

So in my view it is premature to make political policy on cryptocurrencies.

Personally, I don't think it's even possible. We've used private currencies before and they've always crashed. I don't see anything in a block-chain that changes the fact allowing private currencies essentially allows an infinite number of them and that is simply unsupportable.

New Zealand should take the initiative to expand into cryptocurrency, though I don't think NZ needs to have its own crypto just yet until we plan it out first. I've always liked the idea of including Bitcoin as part of the superannuation fund in a diversified portfolio. As Bitcoin has a higher risk class than stock it would maybe make up at the very most 1% to 2% of the portfolio but it would raise the returns much higher. And even then we could diversify between BTC,LTC,ETH etc.

At least from a finance perspective I support investment in crypto as an Extremely High risk and Extremely high return classification. Will post some returns down here at some point.

Rumour has it, we're working on launching an "ALTCOIN" with something of a PIRATE flair, sometime w/in the next YEAR. How much of a priority should projects like this be?
https://www.wprpn.com/digital-treasure-island/

As I said above. Once we allow private currencies we'll end up with an unlimited amount of them and none of them will work due to inconsistency thus bringing about the collapse of the economy.

Meh - FIAT, "monopoly" INTEREST burdened currencies have long been a bane upon the world. Free-market rules, and the INVISIBLE hand of God. AS per Charles Darwin: Diversify or DIE.

BARTER is another viable option which has long vexed statist BLOOD suckers, & crooked Kraken minions https://www.minds.com/search;q=barter;type=groups

All currencies are fiat and they need to be a monopoly. They don't and shouldn't have to have interest on them. A sovereign money system can address the interest and maintain a stable economy whereas the private systems will always collapse.

Barter is a little difficult to work with.

The internet party needs to oppose capital gains taxes.

Every crypto currency transaction is like any foreign currency transaction or stock trade. The exchange rate when the coin is acquired and divested must be recorded for capital gains taxes in capital gains jurisdictions. Failing to do so opens one up to enormous tax fraud liabilities.

https://twitter.com/BrianDEvans/status/896210545820311552

I'm not sure what good having our own one would be, But countries like Australia and Japan it is now recognised and treated just like money in regards to tax.

Banks absolutely hate it though, People in NZ have had their bank accounts closed for trading Bitcoin, Bitcoin related startups like MyBitcoinSaver and exchanges have had the same struggle

Having just read back over this thread. What exactly is the benefit to a crypto currency that outweighs the risks?

None that I can find. The idea that it's better than state money has been proven wrong for centuries.

Gov't needs to simply allow it to exist and see what happens. Blockchain technology is a technology akin to the internet itself. There is no need to regulate any of the cryptocurrencies.

It would be great if the banking industry wasn't so against it here and actually held bitcoin/ethereum/dash balances. Forget the anonymous angles, if there is a link between a cryptocurrency address and the real world, there is no anonymity. And for anyone wanting to do anything practical with it nearly all transactions are going to link to the real world, be it a business or an individual. Already have laws to get information from these entities. There is always a link between the value of a Bitcoin & NZD at a point in time, so if the issue is one of Income Tax etc well it can be calculated, just like if someone earned USD. This tech is not magical.

There are upcoming projects like Skycoin (Obelisk), IOTA (The Tangle), Tezos that are attempting to move away from the electricity usage of securing the blockchains. To that end the only usefulness of a Government operated blockchain is for some kind of public ledger or chain of events, perhaps Voting? However once that becomes a goal usually all that is being created is a distributed database and the tools already exist to do that without getting into Blockchain. Where Blockchain makes sense is when there is no central authority. The network needs to operate in this mode "crap the genie is out of the bottle now, we can't stop this even if we wanted to" (like how Bittorrent has destroyed the music gatekeepers business model and if the movie/tv industry don't pull their collective fingers out they'll end up in a similar state), once a Blockchain gets to that point then it becomes useful. Auspost/CSIRO are looking into uses as well.

So any Government Blockchain ideas really need to be implemented on existing networks, maintaining a proprietary one is pretty useless. Government already has a state controlled currency in the NZD, so no need to go and invent a new one (if it is really necessary, can simply create a digital NZD [which would exist on an existing network Ethereum/Skyledger/Tezos etc and would require the 1:1 exchange of analog NZD for digital NZD - none of this M2 money business], as well as paper it is bits [banks won't be happy about that though, they make lots of money on fees related to moving NZD around etc]).

OH, actually the one place that could really benefit from a blockchain solution is Land Titles/Asset Ownership. Preferably done on Skyledger_(Skycoin), Tezos _(coming soon), IOTA (maybe not), Ethereum (not so much, still a lot of electricity used in this network). Done properly the world would adopt it and it would become a standard of some kind. A lot of incentives in place to not do this of course, lots of value to be generated from obscurity etc.

been following cryptocurrency/blockchain developments technically since Feb 2011

Gov't needs to simply allow it to exist and see what happens.

We know what will happen as it's happened before - the economy collapses.

Government already has a state controlled currency in the NZD

No it doesn't. The NZ$ is controlled by the private banks. Some 98% of NZ$ are digital created by the private banks.

Quote from Auckland University Economics Professor on the NZ Herald finance writer's podcast yesterday: "People said no one would ever buy anything on the Internet. Resistance to bitcoin is like that." // "Bitcoin is the future"