The author's entire premise is off. The recent filing is a continuation of an application filed on Feb 3, 2000 (see patent 6,609,113). So, Chase wasnt taking a "swipe" at Bitcoin because the original application was filed 13 years ago. (Hmmm, is Chase...Satoshi?)
Yes, there is a need for a better bitcoin alternative (even centralized).
No, what they propose is not a new paradigm.
I believe people will support an electronic payment system backed by financial giants but only if it is based on a limited supply of money like bitcoin.
We are not sick of all the wonderful services the banks provide. We are sick of the fed and banks inflating money. Period.
If JPChase created their own alt, JPCoin, with a trillion coins fixed, no fine print, insured, protected, with a check card, a mobile app, available 24/7 from around the world, that and only that may compete with bitcoin.
People do not support bitcoin because it is geeky or nerdy, they support it because it protects them from government confiscation and inflation. They have to offer both protections, or at least one, in order to excite us to take a look at their offer.
Bitcoin is doing fine, thanks. They have to make it better.
> We are sick of the fed and banks inflating money.
Actually, I quite like it. It has advantages like stabilising the economy and encouraging investment. I've never heard a serious economist suggest that moderate inflation is anything but good for the economy, and I've heard plenty tell me why deflation is dangerous.
Inflation is important because economics is all about creating incentives. We have property rights because it gives people an incentive to work hard and takes risks. We have patents because they give people an incentive to explain how their invention works. We have a market economy because it means that if a company wants to gain market share, it has to create value for the consumer. In the same way, central banks try to maintain low levels of inflation (~3%) because it encourages people to invest their money in profitable ventures, rather than just leaving it under the mattress. Investment is the way wealth is created, so it should be pretty obvious that deflation is bad for the economy.
Notice that I'm talking about the economic health of the country, not the individual citizen. If you're only concerned about immediate short term benefits, you should push for zero taxes, high deflation, and the gold standard. But that's penny wise and pound foolish. You're shooting yourself in the foot. Better by far is to support actions which improve the economy, because a rising tide lifts all boats.
The problem is, the current money supply increase of $85B a month is not a moderate amount of inflation. And they are not tapering anytime soon either.
Case in point: M1-Money Supply has doubled from $1.2T to $2.6T since late 2008.
This is not leading to the stabilization of the economy and the encouragement of investment.
This can be seen in that unemployment/underemployment has spiked to 24%. And worker participation has dropped from 66% to 63% over the last 4 years. And it is still dropping.
So, we have a devaluation of currency and real wealth, tied to an increase in unemployment. How is this a net gain for people who work for a living? And this devaluation will accelerate as Govt's debts increase.
> In the same way, central banks try to maintain low levels of inflation (~3%)
You must be joking. The way the inflation is officially calculated is totally biased (they don't even take in account energy costs properly) and 3% is basically the best number they can get by tweaking it like crazy. The actual inflation is way higher.
Energy is so volatile that it makes little sense to count it in measures of inflation. When oil prices double in a year, is that really because USD became less valuable?
There are certainly a number of methodologies for calculating inflation, but this idea that inflation is 10+% seems to be something of an Austrian fantasy.
The consensus that moderate inflation is good for the economy is about as uncontroversial as you get in economics, and is generally agreed upon by economists across the political spectrum.
The fact is that oil prices affect significantly your purchasing power across every product you buy. There is no reason why you should remove energy costs since there are a significant cost in most of what we buy. And the price of oil does not double every year, it's been rather stable most of the time.
Again, if moderate inflation is that good for the economy, why do they need to tweak the numbers? (rhetorical question, the answer is obvious).
Note that I said they try to maintain low levels of inflation. It's sure better than nothing. The economy is a chaotic system, and you need to use all means at your disposal to try to counter the boom-and-bust cycle.
It's certainly been even more chaotic since Central Banks have so much power in the first place. How many crashes were directly linked to the artificially low interest rates decided by the Central Banks ?
Yeah, they've got far too much power. We should stop trying to regulate the economy. The market knows best. </sarcasm>
I don't think that Central Banks have always made the right decisions. To the contrary: they're made plenty of bad mistakes. But they have to keep trying, because the alternative is much worse. And slowly, very slowly, we'll get better at riding the dragon.
Obviously we are not on the same end of the philosophical spectrum, because of course the market knows best. The market is the sum of invididuals' actions. No amount of geniuses sitting around a table can predict how each decision they take impacts people's lives. That's why Central Banks make stupid decisions. It's not that they are learning, it's the best they can do.
And Central Banks were supposed to be independent in the first place from political power, but we all know how that turned out.
I hate to say it, but I think the overwhelming majority of consumers don't care whether their money supply is manipulated by the fed and banks or not. They might dislike the long-terms negative effects of it on the economy (if you believe such effects are caused by a non-limited money supply), but they don't blame them on that.
What people who are not bitcoin enthusiasts want, and might go for, is a currency that is easy, cheap, and looks safe. Credit cards without all the hassle. Payments without all the overhead cost. Transfers without waiting several days. International transfers without all red tape and fees.
Bitcoin provides these things, but with a few major (albeit hopefully transient) flaws: it's a pain in the ass to get bitcoins, they don't feel safe to most people, and they're super-volatile.
If a bank comes along and creates a centralized digital currency, it could deliver everything that the average person might like about bitcoin (ease-of-use, lack of overhead, etc) without the current growing pains of bitcoin. It won't have the things we techies like (a solid crypotographic foundation, limited money supply, decentralization, etc), but it'll gain adoption much faster because most people don't care about that.
Such a patent application is not evidence of JPMorgan building anything, only that they feel that the ability to stop someone else from building it could be worth a few bucks.
There's nothing being built here and nothing different from a dozen existing electronic peer to peer payment networks. (Venmo, PayPal, Dwolla, Square Cash).
If bitcoin is successful, I think existing national currencies will eventually roll their own and it will be absorbed in the same way as promissory notes were.
Bitcoin is a revolutionary way to run a currency, but it is still a currency and national banks have already successfully absorbed several monetary revolutions. If anything, they are getting rather good at it.
"For a currency that has been lauded for its frictionless characteristics, Bitcoin sure has been causing a lot a friction over at the legacy banking institutions."
Um, isn't it the other way around? Legacy banking institutions have been causing a lot of friction for Bitcoin by refusing to do business with Bitcoin businesses.
