Quote from: Brandon Cheliak on October 16, 2017, 01:32:43 AM

Quote from: Chase on October 16, 2017, 12:29:02 AM

Quote from: DCEBrief on October 16, 2017, 12:02:17 AM

Russia Reportedly to Issue CryptoRuble

https://dcebrief.com/russia-reportedly-to-issue-cryptoruble/

"...the 13 percent tax will also be assessed on any value increase users enjoy as a result of that exchange. If, for example, the price of the CryptoRuble rises above the ruble, the difference in value will be taxed."

What a scary scenario this is! Does this mean they are letting a free and open market decide the price (certainly can't use the word value here Wink

) of the CryptoRuble? If the price doesn't go the way they want it to, what's to stop them from issuing more CryptoRubles, or dumping some of their massive holdings on unsuspecting buyers? I doubt the citizens will even understand what they are getting - a government controlled manipulatable digital fiat (for lack of a better description).

If they are issuing CryptoRubles in addition to traditional Rubles, what does that mean for their money supply?

In my opinion it could be a recipe for disaster. Without coinciding economic growth, more dollars chasing the same amount of goods does nothing to increase the prosperity of a nation, in fact it has left many nations in ruin. Their plan is innovative, but has some major flaws which could severely hurt the rubles value in terms of purchasing power.

Imagine there were 1,000,000,000 rubles, and you introduced 1,000,000 crytpo rubles into the equation, first traded at a 1:1 rate. Well let's say only 10,000 of those crypto rubles end up on the open market because people are holding, expecting that the value will increase. After some time passes, other people are now feverishly trying to get their hands on crypto rubles, especially after they hear about how people who invested in them are much better off. This high demand and restricted supply could drive the price up sky high. I'm not here to debate the price ceiling, but let's see what impact a crypto ruble valued at 1,000 rubles would have on the purchasing power of their currency... Granted production stayed the same, and your initial monetary base was 1 billion rubles, by adding another 1 billion rubles in money, you have effectively debased the money supply by 50%. The same could be said for any cryptocurrency adding too much money to the world's total supply at any given time; it could cause rapid currency debasement, and needs to be done with surgical precision.

If the Mainland Chinese government was to create a cryto Renminbi, the same would happen to their fiat Renminbi