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How the EU could get out of its present pickle – and negative interest

How the EU could get out of its present pickle – and negative interest

If you have been following what is going on over the Channel, you will know that Macron and Merkel have underwritten some more money for the whole of the EU. As ever, they don’t differentiate between the wealthy northern nations and the bankrupt southern ones, and as a result as of now the one size fits all remains in place.

Bear in mind the German Constitutional Court has already blown a massive hole below the waterline of the ECB, which may yet mean that ALL that the ECB has done in the last 10 years is ultra vires. That would spell the end not only of the EU but would also the bankruptcy of the ECB, Italy, Spain, Greece, Portugal etc etc. It could not be stitched back together.

The one thing that is clear from the present pandemic is that the good old US Dollar remains the world’s reserve currency. That means that the Americans – as they have always done for more than the last 100 years – have stepped up to the plate when money was needed anywhere in the world. Their present trillions of extra dollars is already keeping some countries going and they have made clear they will create trillions more if needed.

The problem in the EU is acute however. To take one example, Italy simply cannot afford to take on board any more debt, and the ECB has finally reached the point where the purchase of any more Italian issued EU notes is effectively at an end.

What Italy needs is to get out of the Euro – leaving massive losses for all concerned but especially the Germans – and return to the Lira or something like it. If Italy could issue Lira bonds which were funded ( at a lower rate than the notional Lira/Euro rate of exchange back in the day) they could be free in one bound. Sadly, of course, the EU won’t allow them to do this.

But here’s the thing. Suppose they created the Liracoin , a digital currency which worked alongside the Euro. I can practically guarantee people in Italy would stop using Euros on a day to day basis and use Liracoin. You would suddenly have the same sort of situation as pertains in China, where there is an official currency for international transactions, very tightly controlled, and effectively a lesser currency which remains in China. The Euro would be the international currency for Italy but the Liracoin would be the internal currency. And this could be repeated across all countries in the Eurozone.

Interestingly, when Scotcoin was originally created, its creator had something very similar in mind, had the Referendum been won. And there is a distinct move to country digital coin as opposed to the international likes of Bitcoin, Ethereum and so on.

So maybe, just maybe, digital currency is coming of age.

STOP PRESS: The UK Debt Management Office has just sold debt that will COST the buyers to hold. In other words, lend £100, receive no interest and in two years time you will get back LESS than £99.50. Remember, digital currency doesn’t pay interest, BUT IT ALSO DOESN’T COST YOU TO HOLD IT.

Scotcoin - ARE we going cashless

ARE we going cashless?

There has been much talk of the UK going cashless, particularly because of the relentless drive of contactless. ATMs are reducing in number, especially as the banks in the UK now rake in £100 million a year in fees from the consumer. That machine that charges £1.99 to take out £20 is now a profit centre not a cost centre.

There is great gnashing of teeth about how certain sectors of society rely on cash and “don’t” do internet, and the closing of branches means some areas are slowly but surely being strangled in terms of that good old economic axiom, the Velocity of Money.

However, amidst all the “woke” trumpeting, a fact has been completely ignored.

Over the last 5 years, the amount of cash in circulation has risen by 24% to top £70 billion. Some of that is accounted for by inflation (perhaps 7% or so) but the rest is pure increase.

How and why?

People are making fewer trips to ATMs (not least because that £1.99 charge is a real disincentive) but are taking out larger sums. They are storing around the same amounts in the wallets in their pockets, but are very definitely sticking more under the mattress. This is confirmed by the lack of use of for example £2 coins, but the relentless rise in the number of £50 notes.

In Sweden a similar crisis of cash happened a couple of years ago when both IKEA and their equivalent of the NHS stopped taking cash – card only please. There was such an outcry that the government of the day enacted certain measures to ensure that cash would not disappear and would always be useable. We may have to do the same thing here (indeed, all countries may need to), but we have a very much larger cash circulation both absolutely and per head of population than Sweden, and indeed than most countries.

People have come to the realisation that cash is a good store of value. As of now, the interest you can earn on money in an account is so pathetic that you might just as well keep it in cash. The banks aren’t helping themselves here – Halifax recently dropped an account yielding 1.5% to 0.1% – and wondered why most of the deposits disappeared.

Crypto is helping people realise that stores of value are increasingly important. I’ve argued before that cryptocurrency should be viewed as another asset class and store of value. Yes flows of money are important, but the “sitting still” of money is equally so.

So let’s hear it for cash – “The Cash is dead, Long live the Cash”

Why More Countries are Exploring Digital Currencies

Last week, reports emerged indicating that Russia had entered into talks over the development of a new national digital currency which would operate alongside the ruble. Now, the Bank of Tokyo-Mitsubishi UFJ has confirmed that it has been undertaking its own experiments with digital currency. Both parties are huge players in the world economy. For most people, this begs the question, what is it about cryptocurrency that currently has the world abuzz?

Quite simply, digital currency stands for innovation in payment methods. Whilst at first, many regulators treated cryptocurrencies with scepticism, now they are open to the possibilities that they represent. Many governments around the world are now in agreement that resources must be dedicated to understanding and researching blockchain and its possible implementations.

Our product, Scotcoin, is a digital currency. We hope that in time it can be used to revolutionise the way we make payments in Scotland. It is decentralised and as such, is continually being improved upon. So, why should you use Scotcoin? Well, let us tell you a little bit more about our vision and the benefits of using our product.

Our Vision

It is our hope that Scotcoin will become an effective alternative to the pound sterling. The way we make transactions is changing. You only need to glance at a news outlet to see how payment methods are becoming more and more entwined with technology. With Scotcoin, we want to ensure that this occurs in Scotland in the right way; in the safest and most secure way. This is the reason why we operate on a secure and continually innovating counterparty platform.

In the future, you will be able to use to Scotcoin with the same ease as using pounds and pence. The number of Scotcoins is fixed at 1 billion. So, the higher the demand for the coin then the higher the value.

If you wish to purchase Scotcoin, check out our full list of vendors.

The Benefits of Scotcoin

Security

We operate on the counterparty platform which operates on the same blockchain as Bitcoin. For those of you who are new to the world of digital currencies, this statement may mean nothing. However, we hope to provide more material to discuss why this is significant in the future. For now, quite simply, it means that our product is always being improved upon by the best minds in the world. As the blockchain is continually evolving, security is continually strengthened.

Only recently Judd Bagley of Overstock.com, one of Bitcoin’s first ever retailers stated that ‘the distributed nature of the network that verifies the integrity of the transactions and associated account balances makes a successful attack mathematically impossible.’

Peer to Peer Transactions

Unlike other payment transfer methods, Scotcoin removes the need for a bank or a building society to facilitate the transaction. In fact, it is more like using cash. As there is no bank or building society involved, there are no account numbers. Therefore, you do not have to share your information. You can ensure your anonymity.

Also, whilst banks are restricted to set operating hours, Scotcoin is not. Banks close at the end of the day, often causing delays in digital payments. Scotcoin transactions can take place all day, every day. They are completed almost instantly.

Very Low Processing Fees

With Scotcoin, you will be charged little or no processing fees for carrying out a transaction. Merchants, in particular, may find that they are losing valuable funds in processing fees for debit/credit cards or even PayPal transactions. At present, a merchant can typically expect to forfeit between 2.7-3.5% per PayPal transaction. You will face nowhere near this level of fee when using Scotcoin, meaning you keep more of the money that you’ve earned.

Digital currencies are changing the way we make transactions. Scotcoin is part of this positive change in Scotland. For further information on how you can become part of the innovation, see our merchant’s page or contact us. We want to make payments easier for everyone in Scotland. Help us achieve our goal.