STAFF NEWS & ANALYSIS
Introducing Citicoin, 'Equivalent to Bitcoin'
By Philippe Gastonne - July 17, 2015

Ken Moore, head of Citi Innovation Labs told IBTimes UK during a technology briefing that the bank has been looking at distributed ledger technology for "the last few years" and has amassed a skilled team.

They have constructed three blockchains and a test currency to run across them.

Moore said: "We have up and running three separate systems within Citi now that actually deploy blockchain distributed ledger technologies. They are all within the labs just now so there is no real money passing through these systems yet, they are at a pre-production level to be clear.

"We also have an equivalent to bitcoin up and running, again within the labs, so we can mine what we call a 'Citicoin', for want of a better term. It's in the labs, but it's to make sure we are at the leading edge of this technology and that we can exploit the opportunities within it." – International Business Times UK, July 1, 2015

A few months ago we looked at Citigroup's apparent desire to abolish cash altogether. Now we learn they are actively working in that direction, using bitcoin's blockchain technology as a model.

More shocking, however, is the news that Citigroup has an "Innovation Labs" unit. If you had asked us last week to name some words describing Citigroup, "innovative" would not have made the list. Citigroup and its fellow too-big-to-fail banks seem the opposite of innovative.

Nevertheless, Citi seems to have impressed the IBTimes reporter, who describes the bank's "seasoned" innovation culture. "Like many big banks, [Citi] is now operating more like a venture capital funder in the fintech space," the story says.

Join the club if you find this hard to believe. There must be a missing piece, right? Indeed, there is. Citi's idea of innovation involves "talking to governments and regulators" and seizing "the opportunity to create a state-backed digital currency in a number of different countries."

So, the Citi stereotype holds. Their first instinct is still to line up alongside Caesar and help drive the chariot of state. They seem especially interested in serving Africa's vast "unbanked" population.

There was a time centuries ago when many banks issued their own currencies. Conceivably, it could happen again. An open Citicoin blockchain might give users at least the same confidence they have in greenbacks or euros, if not more.

Citi's innovation department will draw the line at innovating the bank out of existence, though. Non-aligned cryptocurrencies should still have a cost advantage. Bitcoin has nothing to fear.

Posted in STAFF NEWS & ANALYSIS
  • Mots

    This is a very interesting article/news story and indicates how the TBTF intend to corral/channel/control us even after the inevitable fiat collapse. However, they cannot lead and the way forward will be at the community level. In particular we need value backed currenc(ies) based on the real bills doctrine (not the basterized federal reserve unrestricted version of this, but only currency units based on (attached to) REAL wealth produced by wealth creators). In a world of non-exponential growth, the money/credit supply must be auto-limited by the amount of REAL wealth created. Local community institutions are capable of doing this but the big banksters with their bags of tricks vannot cannot. Proper application of the real goods doctrine of the sort envisioned by Adam Smith could do this at the community level where true wealth is understood, measured, contracted, and passed.. The non-community TBTF banks and their trickster/psychopath managers have no ability to do this and must be bypassed by wealth creators and wealth consumers, Wealth creators and their local buyers need to organize at the community level using a real, real goods doctrine to start up commerce again after the system collapses or (more likely) while the system slowly grinds to a halt. Wealth creators create wealth (and need attached currency units) based on recognized needs. The TBTF psychopaths have no idea what wealth is and cause more problems than they solve when we let them get involved in our transactions. They can spin all the Citicoin make believe units they want but we the people will know who to trust (the wealth producers with palpable goods and services that we want, and THEIR currencies valued and backed by the REAL wealth) as the system grinds down or collapses.

    • Hippity

      Mots, Is there a way to invest in Citicoin?

      • Bill Ross

        Short ’em…

      • Praetor

        Yes, your plastic, already in your pocket.

        • Praetor

          But look out, plastic melts.

    • Bill Ross

      Where’s Ingo Bischoff when we need him…

  • Bill Ross

    “Trusting” “promises to pay” by those decreed “too big to fail” (meaning, YOU pay for their “success”) is equivalent to ignoring the sage wisdom of our ancestors: “a bird in the hand is far better than two in the bush”

    “A gold coin in the hand is far better than empty promises to pay / debt”

    • Praetor

      Reminds me of, J Wellington Wimpy, ‘ I’ll gladly pay you Tuesday for hamburger today’, and it be only Wednesday.

      • Bill Ross

        …and, then the “law” steps in, in defense of Wimpy’s default from the week before: He didn’t agree to “which Tuesday”

        • Praetor

          Yep!!!

  • LawrenceNeal

    Is The Daily Bell on FaceBook, and if not, could you? It would make sharing your articles much easier.

    • notwithabang

      Not sure about DB, but most here would likely not be. There is, however, a share button in the Comments Section pointing to Twitter & FB.

      • Praetor

        Thank You, Sir or Lady, as much as I would like to see the DB expand far and wide to all corners of this earth, F facebook, commie SoB’s, slimy slug sh!?T freaks down right dumb A$$ nuts born from the pits of heck. Screw them. Thank You.

      • LawrenceNeal

        Thanks. Facebook might be all the things Praetor says, but spreading knowledge and opinion can count.

  • Ras

    Have you checked out Bitgold?
    https://www.bitgold.com/about-bitgold

  • Charles Savoie

    http://www.silvermarketnewsonline.com/articles/TakeoverOfBitCoin_Savoie012315.pdf
    Citigroup is crawling with Pilgrims Society members on its board and upper management same as the other megabanks.
    I caution trusting megabanker creations from this group that was created in 1902-1903 to help England recover its “colonies.”
    http://www.pilgrimsociety.org notice this group refuses to post any roster of members whereas Bilderberg which is there for distraction purposes, does. The Pilgrims site went up in June 2011 six months after I posted http://www.silverstealers.net
    You may wish to read about the so-called “free banking era” in the US, after the Panic of 1837 to just after the start of the Civil War, in which banks certainly did print their own notes. Drastic measures were set up against anyone who applied for conversion into gold or silver! So-called addresses for note conversion ended up taking people deep into forests where there was no office. People who hold savings in cyber currency eventually may face a “POOF” moment when it’s all gone. It isn’t technophobia but sense that makes people choose gold and silver over all other forms of currency. Anything in the banking system is subject to this “POOF” I caution against.

  • Hal Taylor

    A private bank or bank consortium sponsored crypto currency with the ledger on a blockchain mined by bank employees will never work. They might as well put all the coins on a database and keep track of what customer owns how many like they do now with dollar accounts.

    However a decentralized private blockchain with a digital currency like “citicoin” for a unit of account is an interesting idea since it will shift the costs of securing the ledger from bricks and mortar data centers with their expensive staffing to inexpensive miners living in apartments or low rent wilderness areas with cheap power. The blockchain, however, will not truly be decentralized since, without a real market for “citicoin”, the miners will be captives of the bank(s), dependent on them for converting their mined citicoins to real money to meet their expenses.

  • Bruce C.

    Maybe I’m missing something because I don’t understand why so many seem intrigued with “digital currencies”.

    However, rather than argue about them directly I will instead ask some rhetorical questions: What is so attractive about them? What problem(s) do they supposedly solve? For that matter, what are the fundamental problems with the monetary and currency systems we have today?

    Whatever the answers I submit that whatever new currency system is proposed or adopted, gold and silver metals themselves should also be lawful “legal tender” alongside any others. This would serve as an inherent balancing mechanism in that all Contracts could specify payment in any one of many parallel currencies (but possibly only two), one of which would be gold or silver. The idea being that at times of payment the seller has a right to demand payment in either (or any one of many) currencies – including physical gold or silver. (This is essentially the same as having a “gold clause” in Contracts used up until the late 1800’s in the US.) At any given time PMs may be considered more or less “valuable” compared to some other currency like Bitcoin or Citicoin and so the seller can choose. Therefore, no matter how wonderful or awful digital currencies come to be one always has the option to go physical – which is to say tangible and inherently valuable.

    With two or more parallel/competing “legal tender” currencies potentially in use, not only would they be inherently stabilizing amongst themselves, but the annual production of refined physical gold and silver would provide a “natural” means of increasing the “money supply” as the “real” economy grows because the rate of gold and silver production would automatically follow the “real” economy, eliminating the need for theoretical algorithms and the problems caused by political considerations and interference.

    Furthermore, the entire problem of the currency supply not following the growth of real production (e.g, government deficit spending, “money printing” via “debt monetization”) would be foiled by allowing transactions in some other parallel currency, specifically physical gold or silver, much like the dollar-for-gold exchange system of the US up until 1971.

    There is a reason that “the globalists” want not only a one-world government but a one-world currency as well, as the drama between the “EU” and one of its “member states” – Greece – has shown. Since Greece did not have any other currency to use or fall back on it was effectively controlled by the “the Troika” (ECB, IMF, and European Commssion).

    Multiple currencies are the way around that kind of enslavement, and having gold and silver be legal tenders will provide that protection. PMs, like any true asset, have no liabilities or third party risks. Any other parallel currencies (digital or otherwise) can only benefit, but in case they don’t PMs can always be a dependable back stop, if not the preferred one.

    • me

      For that matter, what are the fundamental problems with the monetary and currency systems we have today?

      The fundamental problem is centralization. Right now, the money supply is controlled by a tight clique of banksters and politicians who use it to loot entire countries by debasing the currency and flooding the markets with cheap credit. This power can also be (and is) used to pump and burst inflationary bubbles at will, and therefore to create instant economic crises to topple governments the banksterocracy doesn’t like. They also have the power to persecute specific people and groups they don’t like by denying them ability to earn and spend money within the system, as already happened e.g. with WikiLeaks. This can obviously be extended to a much larger set of targets, should things go full nazi. Transfers and ownership of money are recorded and can potentially be later used for theft (or “confiscation”, as the thieves like to call it) and persecution.

      Physical metal currencies are free of these problems, but suffer their own set of problems. Storage and transfer is expensive, risky and inconvenient – and gets progressively slower, more risky and more expensive the further you want to send it. There is still the risk of debasement (e.g. by spiking the gold with tungsten rods), which is not only hard to detect, but can hit you hard personally, as opposed to spreading the harm on entire economy. You unwittingly receive those gold-plated tungsten coins, you lose your savings. The modern banking system evolved precisely to combat those problems.

      Oh, and you can hide your metal from governmental theft with some success, but transferring it to a different place and/or owner is risky as hell under confiscatory conditions.

      So to return to your question:

      What is so attractive about [digital currencies]? What problem(s) do they supposedly solve?

      They merge the benefits of fiat and physical asset currencies, while avoiding the disadvantages of both. The money supply grows at a fixed, slow pace that is hardcoded in the protocol, making debasement by any agent impossible. They work independently of any centralized entity, making targeted denial of service impossible. You can instantly transfer money from anybody, to anybody around the globe, for a very small fee (typically a few cents’ worth for Bitcoin) and without asking anybody for permission or assistance – that’s faster, cheaper and safer than bank transfers. You can store large quantities of money in an offline wallet, on a tiny MicroSD card or printed out on paper. Both are much easier to hide, safeguard and (if necessary) smuggle than large and heavy physical valuables are. You can make multiple backup copies of that wallet, safeguarding you from losing one of them.

      The level of financial privacy provided by e-currencies is somewhere in between banking and face-to-face cash transactions. While the entire history of transactions and money ownership by address is recorded in a public blockchain, the ownership of those addresses is not recorded in any way. You can generate as many addresses as you want on the fly, using a different address to receive every incoming transfer. Sticking to this practice and separating funds obtained from different sources makes it extremely hard to connect your addresses with your identity. That’s a definite upgrade over the totalitarian banking system.

      • Bruce C.

        My questions were rhetorical and meant to point out that digital currencies are even more abstract and elusive than fiat currencies.

        There are a number of points you make that I’d like to discuss, but instead I’ll ask you two basic questions that you might be able to answer.

        1) How does “bitcoin” mining work? What limits the rate at which bitcoins can be “mined”/produced?

        2) How does bitcoin mining relate to the production of currency/bitcoins by fractional reserve bank lending?

  • DrBryant

    “An open Citicoin blockchain might give users at least the same confidence they have in greenbacks or euros, if not more.”…..the most honest part of “Citicoin” claims…..Confidence levels for “greenbacks” and “euros” = ZERO…..Same for anything “Citi”.
    I find it amazing that proponents steer clear of any conversation concerning “utility reliance”, and then claim there is this huge market in Africa, …where utilities are likely the least reliable…….the making of a “POOF moment” ??

loading