[jordigh]

If it's the only currency in Ecuador, the price of a house in Ecuador in bitcoins doesn't have to match the fluctuations of BTC<->USD. If Ecuador also tightly controls exchange with foreign currencies (which they likely already control, just not tightly?), then they can make the value of bitcoins within Ecuador as stable as any other currency.

As for how they would acquire bitcoins in the first place, all they have to do is mine enough for most citizens to access them and then distribute them. Or fork off a new blockchain with a different cryptocurrency that can only be mined by the central government (say, because it requires private keys to mine that only the government controls).

[tinco]

The private key idea is a catastrophe practically begging to happen ;) They'd base their entire economy on the idea that at no point in the future a meager kb of data will not leak from a government or bank in a historically rather unstable country.

Bitcoin's designed to be decentralized, and I don't think it's possible to force Bitcoin into centralized control. If they are going with a virtual currency that's in their control their best bet is going to be a Ripple like currency, like the one Stripe backed last week.

[jordigh]

Yeah, I know, it's just a stupid suggestion. :-)

There were many other online currencies proposed before bitcoins. The real innovation in bitcoins is decentralisation, so I suppose if you want to centralise it again, you can just throw out the whole blockchain idea.