Posted by WARREN MOSLER on December 10th, 2012
Been looking at Bitcoins for a while and seems it’s not a currency but a payments system.
For example, a acquaintance of mine who wanted to buy an item arranged with the seller to do it via Bitcoins to ‘save’ on vat taxes.
Say the Bitcoin happened to be valued at $12, the buyer wanted to pay $120 dollars.(Note that the value per se was of no consequence for this transaction.)
What the buyer of the item did was buy 10 Bitcoins for the $120, while simultaneously the seller sold 10 bit coins for $120.
The buyer then then bought the item by transferring his 10 Bitcoins to the seller via the exchange, who ‘delivered’ them to the exchange for his prearranged $120.
Bitcoins facilitate untaxed and anonymous transactions. The value of a Bitcoin is of no particular consequence to the buyer and seller in the case of transactions like this, and will fluctuate as a function of the policies of the exchange management.
And seems the right to ‘operate as a bank’ now officially sanctions this type of activity.
** Bitcoins join global bank network **
A currency exchange that specialises in the virtual currency known as bitcoins has won the right to operate as a bank.