Much has been discussed regarding the Bitcoin as a crypto-currency and its functions as a currency. (Unit of Value, Means of Payment, Store of Value).
But today in one of our forum discussions in the University of Nicosia (I’m a student of this really interesting program: Master of Science in Digital Currencies), one question regarding the functions of Bitcoin as a Central Bank raised some of my concerns. Could Satoshi act like a Central Bank???
The discussion started as someone pointed out that the BTC is a Deflationary Currency. That means, the number of Bitcoins is limited, and one day, the fountain will dry. No more Bitcoins will be mined anymore…or the incentive to mine 0.00000001 BTC will not be that great anymore. So, we can assume that the Money Supply is capped.
I knew Satoshi owned some BTCs, but I didn’t know that this person/group of people had a total of 980,000 BTCs!!
If we consider the valuation of $10,000 (USD), this person or group of people has an amount of 9.8 Bn USD worth of Bitcoins.
For sure, this person/group of people has the power of “Lender of Last Resort” that is required from a Central Bank. The power to interfere in the cryptocurrency economy and regulate inflation through adjustments in the Monetary Base, is there.
I think that’s exactly when the world will know who Satoshi Nakamoto is…when chaos is around, he/she/they will appear to get the order back in the system. :-) (That’s my theory…I don’t know!)
also…Satoshi Nakamoto is a “japanese name”
Now think: “Which country in the world has been dealing with a systemic negative inflation rate for decades long?
Don’t you think the satire behind the name Satoshi Nakamoto makes some sense?
To create a DEFLATIONARY CURRENCY in a a system which praises that the Central Bank should be independent. In a system where the role of Central Banks is to keep inflation under control in the long run.
Also…the difficulty to mine the Bitcoin is self adjustable…don’t forget that.
Once the currency starts to exhaust the resources and the reward to mine a block will be minimal amount of BTC, *maybe* the system will regulate itself to a 2%-4% target inflation…(=again…I don’t know…that’s me, Juliana, speculating)
Mining (=creation of monetary base) could adjust depending on the real world economy.
Controlling the monetary base via level of difficulty to mine a new block could be seen as a function of a Central Bank.
if not…Satoshi will still be the biggest holder of 980,000 BTCs to help regulate “inflation”. He/She/They could do an OPEN MARKET AUCTION suddenly and throw some more bitcoins in the system.
Let’s see…the future will tell.