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Well this Norman person is quite clearly wrong. Had he any inkling of history, it would have been littered with currencies and experiments where all that is needed for mediums of exchange be mutual agreement.

The author did indicate that he was able to see why people are attracted to the idea of a currency without the “alleged recklessness, capriciousness, siphoning and snooping inherent in the traditional financial system”, adding that there “is something” to the idea.

Hmm that sounds familiar, oh wait isn’t that JP Morgan?

“As fanciful – and indeed Matrix-like – as this bitcoin creation system sounds, perhaps it requires no more suspended disbelief than the traditional fiat system in which a government declares paper to have value and a central bank or national mint thus issues the specie. One doesn’t need to be the caricatured miscreant, Austrian economist or anarchist to appreciate the appeal of such a system.”

http://www.coindesk.com/jpmorgan-report-bitcoin-inferior-fiat-currency/

JPMorgan Report Slams Bitcoin as ‘Vastly Inferior’ to Fiat Currency

(@pete_rizzo_) | Published on February 11, 2014 at 17:24 GMT | Companies, Investors, Merchants, News
The eight-page report, authored by the company’s head of global FX strategy, John Normand, aimed to present the “risks and opportunities” posed by bitcoin.

Most notably, Normand suggests that bitcoin is “vastly inferior to fiat currencies” on several counts, and that it is unlikely to ever be afforded the status of legal tender by world governments. The later quality, Normand says, casts the most doubt on bitcoin’s future.

Normand writes:

“As a medium of exchange, unit of account and store of value, it is vastly inferior to fiat currencies.

Since governments are quite unlikely to accord it the status of legal tender, bitcoin or other virtual currencies would not reach the scale and scope to render them worthwhile for widespread commerce, payments or investment.”

Bitcoin as inferior money

Normand writes that there is much to dislike about bitcoin, first and foremost because it fails to meet traditional definitions of a ‘medium of exchange’ because it lacks a common power to compel its use.

Normand explains:

“Recall that currencies don’t become widely used spontaneously or through a grassroots campaign. They become widely used nationally because a government declares them legal tender, and they become widely used internationally because they are legal tender in a significant economic area with large, unrestricted capital markets.”

The author did indicate that he was able to see why people are attracted to the idea of a currency without the “alleged recklessness, capriciousness, siphoning and snooping inherent in the traditional financial system”, adding that there “is something” to the idea.

“As fanciful – and indeed Matrix-like – as this bitcoin creation system sounds, perhaps it requires no more suspended disbelief than the traditional fiat system in which a government declares paper to have value and a central bank or national mint thus issues the specie. One doesn’t need to be the caricatured miscreant, Austrian economist or anarchist to appreciate the appeal of such a system.”

http://www.coindesk.com/equities-research-wedbush-sells-reports-bitcoins/

J.P. Morgan may be highly skeptical about the prospects for bitcoin, but at least one financial research firm is behind the virtual currency. Institutional brokerage Wedbush Securities has become the first to accept bitcoin payments in the US.

Los Angeles-based Wedbush has thus far published two reports on bitcoin through its Wedbush Equity Research operation. At the start of December, it released “Bitcoin: Intrinsic Value As Conduit For Disruptive Payment Network Technology”. It followed this up with “Digitizing Trust: Leveraging the Bitcoin Protocol Beyond the Coin” a month later.

Gil Luria, managing director of Wedbush Securities, traditionally covers payment systems, and regularly monitors eBay/PayPal, Visa, and MasterCard. He decided to make these reports available for bitcoin to demonstrate his support for the payment protocol, he said.

“We decided that bitcoin and its associated technologies are a very important trend and will be an important part of the future of how financial services are doing,” he explained. “So we wanted to get involved as early as we can, and in as many ways as we can”.

The firm normally sells its services and reports exclusively to institutional clients, which can pay tens of thousands of dollars each year, Luria pointed out. However, individual customers paying in cryptocurrency can purchase these reports for just 0.1 bitcoins.

“We will learn about who’s interested enough to buy a report,” he told CoinDesk.

Swimming against the tide

At this point in time, the bigger institutions have a negative knee-jerk reaction.

Bitcoin may be a young asset class, but Wedbush is an established firm, having started in 1955. It is one of a handful of financial services firms interested in the technology – and its pro-bitcoin stance stands in stark contrast to that of some larger institutional players. Earlier this week, investment bank J.P. Morgan published a scathing report on bitcoin, calling it “vastly inferior” to fiat currency.

“At this point in time, the bigger institutions have a negative knee-jerk reaction. A distinction I would point to is that Bank of America and J.P Morgan had published reports through their currency analysts, and that points to a misunderstanding of what bitcoin actually is,” he argued. “It’s a payment network faith a series of innovations that are far reaching.”

That attitude is manifest in another bitcoin-focused Wedbush report published today, titled “Watch the Innovation, Not the Price”. That’ll be available for bitcoin customers on Monday. Luria explains that bitcoin’s position as an asset class is almost incidental to the value of the decentralized payment network. When you buy bitcoins, you’re effectively investing in Satoshi’s innovation in creating that decentralized consensual structure, he argued.

Wedbush will be taking payments through Coinbase, which will convert the bitcoins instantly to dollars. The investment brokerage may take a financial position in bitcoins in the future, Luria said, but he had no firm timeline.

There will be future reports on the cryptocurrency, he promised. When they appear, they will also be available for a nominal fee, payable in bitcoins.

http://www.coindesk.com/the-banking-industry-varied-views-bitcoin/

 

Wells Fargo

In January, the San Francisco-based bank Wells Fargo held a private meeting dubbed ‘Virtual Currency: Viability, Compliance and Direction’. The event, held in New York City, was at the offices of Union Square Ventures.

The venture capital firm has invested in bitcoin over the last year, providing funding for Coinbase in several different rounds: one led by the firm last May, and then the latest $25m influx of cash led by Andreessen Horowitz.

 

Silicon Valley Bank

The Silicon Valley Bank (SVB), based in Santa Clara, California, is an early synergist within bitcoin and banking. The company’s relationship with Coinbase allows US bank holders to easily acquire bitcoin. Verify a bank account with Coinbase, and it’s simple to move your USD into bitcoin and vice versa.

Right now the bank is actively involved with bitcoin business, but not proving storage services. Instead, the bank’s role appears to be as an ACH wire transfer provider.

“They’re not really storing [bitcoin] or anything. They are just basically getting comfortable having a relationship with a bitcoin company,” Siems said.

However, he sees SVB’s position as a banking innovator as a significant part of what makes it so successful. “They are branding themselves as the go-to bank for the whole investor community of the Bay Area,” he said.

The bank is taking a risk by working with bitcoin, but doing so will give it singular expertise on how to work within today’s unclear regulatory environment.

Fraud is one problem with cryptocurrencies, something that SVB is having to learn about.

“It’s really hard when you try to facilitate the exchange between two forms of money – one of which is reversible, and one of which isn’t,” said Siems

That is a challenge that the entrepreneurial SVB appears willing to take on, however.

Silicon Valley Bank locations. Many do not realize SVB has a global reach. Source: Silicon Valley Bank
Silicon Valley Bank locations. Many do not realize SVB has a global reach. Source: Silicon Valley Bank
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