U.S. is considering a radical rethinking of the dollar for today's digital world

https://www.npr.org/2022/02/06/1072406109/digital-dollar-federal-reserve-apple-pay-venmo-cbdc

by pseudolus • 4 years ago

88 101 4 years ago

xvilka• 4 years ago

The question also if they plan to allow smart contracts on this new USD CBDC or not. e-CNY, for example, incorporates[1] them.

[1] https://www.theblockcrypto.com/post/111648/china-digital-yua...

rektide• 4 years ago

Is this talking in any way about cutting out banks, credit card services, or payment processors? This is all just fluff talk right now is my guess. I'd feel like I'd be way more interested in trying to formalize an inter-bank payment system that works better than ACH, which seemingly will never be real-time enough to make it viable for things like point-of-sale use.

djdjfhsje33edh2• 4 years ago

Isn't that what FedNow is trying to do?

judge20203• 4 years ago

Perhaps, but the marketing has been very careful to only show things like "account to account transfers, bill pay, and person-to-person transactions"[0]. There is a slight mentions of paying for services at 2:25, but it's brief.

0: https://youtu.be/WGOW_1cYgM4?t=111

hn_throwaway_99• 4 years ago

That already exists, although is still in its early stages:

https://www.theclearinghouse.org/payment-systems/rtp

https://www.zellepay.com/

djdjfhsje33edh2• 4 years ago

How would they handle theft? Would all payments (except for maybe major systemic hacks) be irreversible?

Surely they couldn't blacklist stolen dollars that may have been subsequently spent multiple times. Would they mint new dollars to replace funds that have been proven to have been stolen (i.e., providing similar protection that bank and credit card customers have now)?

Qworg• 4 years ago

If it truly is a dollar (which seems like what they're aiming at given UTxOs, etc), there's no recourse for the dollars (tokens) themselves - much like dollars today.

shmatt• 4 years ago

They currently destroy old bills and print new ones into circulation, so destroying black listed funds and sending the legal owner newly minted ones sounds right

errcorrectcode4• 4 years ago

Suppose some piece of infrastructure along the way lacks a checksum or ECC, and gets hit by a cosmic ray or a hardware defect. You now have +2^17 USD - txamount more or 2^19 - 2^18 USD + txamount less in said account. Throw FDIC insurance out the window because they're probably a) not going to do it and b) stick you with fees and losses.

agucova• 4 years ago

This seems interesting, but I doubt this would be a vulnerability of any properly redundant digital coin.

jtsiskin• 4 years ago

…I imagine the whole thing wouldn’t be running off a single server + hard drive. There’s not any conceivable system design where this bit flip would be possible

TedShiller• 4 years ago

What could possibly go wrong?

reactspa• 4 years ago

You know how on Twitter sometimes you can "heart" a tweet by mistake (just scrolling and inadvertently tapping the heart icon), and that can be used against you years later?

Donate $1 to some charity, and later it turns out this charity gave to Trump. And you'll be cancelled for life!

koshergweilo• 4 years ago

This is a pretty moot point because A. All political donations are already public [1]

B. Most Trump supporters voluntarily make their preference known

[1] https://www.fec.gov/data/receipts/individual-contributions/

errcorrectcode4• 4 years ago

Tuttle, Buttle. Ministry of Information charges.

Also ran into this interesting history-fiction comparative analysis from 2004: http://www.oilempire.us/brazil.html

hayd• 4 years ago

I suppose it makes it easier to print...

judge20203• 4 years ago

Most inflation and money supply is handled via the interest rate nowadays as the bank's own money they lend and store has been mostly digital for decades.

asabjorn2• 4 years ago

Just look at the promo video of the digital wallet of Bill Gates funded Thales for how this would combine with vaccine passport and ESG scores to usher in China style tyranny

https://youtu.be/PxvNzzgoJX8

Of cause, because on a government controlled digital currency there would be no anonymous transaction and like the Chinese anyone with a low ESG score can be stopped from spending their cash. Yes, all across the world a social credit score called ESG is adopted by banks.

https://youtu.be/8f1Z57hwbWY

Or what if they decide you used up your quota? No flight, no meat or no car ride for you because they won’t let you spend your money

AtlasBarfed• 4 years ago

The US already has all the infrastructure for "total tyranny". If private consumer information databases already know everyone in america and their spending habits, then the Feds have that and then some.

It is what makes presidential elections scarier each year: all it takes is one president with a false flag attack (or maybe not even that). Bush had the opportunity, but not really the means or the motive. Obama had the means, but not really the opportunity or the motive. Trump had the motive and means, but not the opportunity.

In a more ideal world, the "social karma" would be a good thing: crypto and such tracking could enable actually effective environmental regulation and rewards. It could enable penalizing previous revenues/profits/gains for economic activity that turned out to be deleterious.

For example, I would very much like to be able to reduce the value of all profits from oil by 90% historically, if I had such powers as god-emperor treehugger.

Crypto could provide such powers. Of course they won't be used properly, and tyranny. But it is theoretically possible.

asabjorn2• 4 years ago

Yes. That’s exactly why you want a system where the means are not there to institute tyranny, and there is a separation of power where multiple powerful hierarchies check each other.

My point isn’t that some of this can’t be done now, but that this tech is a force multiplier as evidenced with how China use this kind of tech for social control

Systems like this that are marketed assuming an enlightened selfless group control it fails to take human nature into account. It never worked before and with the means we have no it will fail spectacularly.

Certainly the WEF and it’s Young Global Leaders haven’t shown selfless restraint so far. Eg Boris Johnson, Trudeau, Markel all were caught partying while forcing everyone else to do the opposite. They all become wealthy while in power.

max51• 4 years ago

You should see the microchip ads from one of the think-tank he is funding. I wish I had kept the links/videos of them. They were strait up talking about the advantages of having a microchip in your hand and had testimony from "normal" people telling us how great it was to no longer have to carry around key cards to open doors. It was very creepy knowing who funded it and how much influence they have.

On a positive note, it was nice to see the extremely negative reaction from social media at the time. Hopefully that got us an extra decade before someone more serious than a shitty think tank (eg. a government) makes a push for it.

edrxty• 4 years ago

I don't think I want the Fed to have access to every recipient and source of every dollar I ever spend. That database can only be misused.

ryanmarsh• 4 years ago

Too late. The Fed requests ad-hoc reporting of all kinds and the banks comply. In addition to raw transaction flows which the Fed does in fact receive in many cases. People have no idea what all those people at the Fed do and people who work there are not free to discuss it.

silisili• 4 years ago

Agreed.

They'll play this as a safe something, but it's really all about taxes.

So many people and even industries today run afoul of taxes. If you didn't know or disagree, you've never worked or lived around the less privileged.

Example: I called to have my windshield replaced last month by a local company. The guy said 'if you pay cash, 307 dollars. Credit card you need to add tax and fees, so 350.'

Also, at least in the southeastern US, nearly every gun store heavily dissuades you from using anything but cash.

BenjiWiebe• 4 years ago

Of course, for the windshield company to be legal, they need to add sales tax to cash sales as well.

brjiro8• 4 years ago

Government is just humans.

There’s no reason to believe any organization of humans has your personal interests at heart.

Ostensibly politicians can be replaced. Despite believing government to be inherently corrupt, we still seem to think the ledger of ownership is inherently correct and incorruptible.

The mental gymnastics everyone goes through to demonize government and accept privatization which locks them out of accounts, absconds funds, and offers no path to remediation, resulting in posts here hoping a Big Tech Corp worker happens to be browsing is pretty stunning display of how media has influenced our beliefs

_xnmw7• 4 years ago

Ever heard of FBAR? [1] The IRS already has access to all your domestic and international bank accounts opened in your name, even if not in the US, because they are required by law to send this info to the IRS, or risk being sanctioned by the USG.

[1] https://www.irs.gov/businesses/small-businesses-self-employe...

HideousKojima• 4 years ago

And I'm sure that database is already being abused by all manner of federal agencies in ways it isn't supposed to be, so I don't see any reason to make it even easier for them.

propogandist• 4 years ago

the linked site clearly states this only applies to international account rather than domestic accounts.

The Biden administration has, however, provided the IRS more power by requiring financial institutions to report transactions over $600 to the IRS, a significant reduction fdown from the previous $10K threshold.

This new law went into effect in 2022 and shows the govt’s desire to shake down the middle class for more taxes, while eliminating privacy.

Supermancho• 4 years ago

I don't think I want the Fed to have access to every recipient and source of every dollar I ever spend.

That won't matter much when people inevitably start to trade in a physical proxy.

BLKNSLVR• 4 years ago

Having kept my finger on the pulse of cryptocurrencies on and off over the last few years, I'm very interested to see how CBDCs are marketed to society. I feel like it could be a new peak in political two-faced-ness (no mean feat given very recent history, but also merely an extrapolation of the current trend line).

beaned2• 4 years ago

I have a fear that in our current political climate, the introduction of CBDCs at scale will fracture digital money into Democrat money (CBDCs) and Republican money (crypto), and maybe even our economy into Blue and Red, every single economic action tinged with suspicion of either "censorship" or "racism," "communist" or "fascist" (though, to be political, they're the same thing), "self sacrificial" vs "hateful," etc, depending on which one chooses to use.

programmarchy• 4 years ago

Keen insight but not sure the factions would be aligned by political party, or if there’d be some other fracture line like corporatist (neo-liberal/neo-conservative) or populist (Bernie/Trump).

JetAlone2• 4 years ago

Split it four ways. UCPD (United Communist People's Dollars; it's an absolute inflation station, but in its defence, people just haven't really tried it yet), GrillBuxx (on the George Foreman standard), Diversynergium (On the front of the commemorative card it says "We celebrate our diversity; the concept is profitable." in latin) and Conspiracoin (A coin that goes up in value the more people discuss whether or not it should be shut down).

errcorrectcode4• 4 years ago

Hell f'ing no. Traditional and inverse totalitarianism in one go. This would be "amazing" for taxation, mining people's habits, and financial crimes but brutal to individuals who can be located or shut-out of the economy entirely. The unbanked would also be left twisting in the wind.

choward• 4 years ago

This would be a great idea if our government wasn't complete corrupt and we could trust it. I find it hard to believe that the people pushing it are acting in good faith.

csa3• 4 years ago

The narrative on HN seems to be about how this is not good/useful for digital currency users in the US.

This is straight up a competitor for the digital yuan (Chinese RMB), and the most valuable use cases from a US federal perspective are international uses (mostly developing countries).

Some ideas:

- The USD is used as a default currency in many places for many transactions, but there is friction in the system, especially for small payments, and especially with hostile regimes.

- The USD as a default currency gives many benefits to the US (e.g., essentially free money).

- China and the US are and will be battling for the market of the default currency of non-domestic microtransactions with digital currency. This is just a part of that battle.

- There may be some benefits (or not) for domestic users of the eUSD, but that is not the main purpose of this currency. If the eUSD doesn’t resonate for you, then consider that you may not be the target market.

- Note that this currency will most likely be presented/marketed in a very different way than I am suggesting above, and this will be more for political reasons than anything else.

Edit1: Note that when taken in this light, certain aspects of the eUSD like non-distributed ledger, centralized control, etc. should make more sense.

Edit2: Here is a link with more info:

https://www.mauldineconomics.com/frontlinethoughts/a-giant-c...

seanmcdirmid3• 4 years ago

If China wanted more people around the world to use its currency, freely floating its exchange rate on the market is a must. That the RMB is not freely convertible like the dollar is is a huge hurdle to its international adoption.

American cash usage is already way way down and has been falling for the last 3 decades. That this is often because of expensive banking and credit card interchange networks has to be of some concern to the US government, those fees add up to extra friction in the economy, and a digital currency looks really appealing even for domestic use (see what happened with using WeChat for payments in China).

csa3• 4 years ago

If China wanted more people around the world to use its currency, freely floating its exchange rate on the market is a must. That the RMB is not freely convertible like the dollar is is a huge hurdle to its international adoption.

In some circles, especially for very large cross-border transactions, this is definitely true.

That said, for microtransactions in developing countries, this is less of an issue. China will go out of its way to make this a stable and easily convertible currency for folks in these markets.

ur-whale• 4 years ago

then consider that you may not be the target market.

You're assuming you will be given a choice.

mercy_dude2• 4 years ago

The USD as a default currency gives many benefits to the US (e.g., essentially free money).

This is not true. USD as a default reserve currency is bad for US since US is no longer a net producer economy. What happens is other countries like China which are net producer economies take our paper dollars and invest it in our hard assets - such as stocks and real estates essentially inflating their prices and pricing out many US citizens. If you look at the foreign ownership trend of these assets over recent years, this is quite clear.

echelon2• 4 years ago

The USD as a default reserve currency gives US citizens outsized PPP. If the USD was no longer the reserve currency, there would be pricing shocks throughout the economy.

Reserve currency status allows the US to advantageously print away its debt and more easily navigate global recessions. It's essentially a superpower, and the US won't give it up easily.

While it's true that the US is not a net producer, it has a best in class service economy. Software, entertainment, financials.

Soon China won't be able to cheaply afford to run its factories and it too will be looking to outsource to developing countries. This is why it's morphing into a service economy as well.

Manufacturing hopping from country to country is a great tool for bringing entire nations out of poverty. The lack of low hanging fruit for developed economies makes it harder for the middle class than in earlier generations (midpoint in the S-curve), but bringing manufacturing back won't work without tariffs and a shut off of cheap imports.

While the US could do well to onshore production of critical components (semiconductors, pharmaceuticals, chemicals, steel, etc.), or to place them in more friendly international jurisdictions (bonus if they're not concentrated to one country/region), the long-term future for production is automation.

DevKoala• 4 years ago

How would this stop individuals who can obscure wealth through trusts and other international financial engineering?

It seems like a ploy to go after the little guy while negating to take a look at tax evasion schemes for the individuals who control the biggest chunk of wealth.

georgyo2• 4 years ago

I'm trying to figure out the why, and the ones in the article do not make a lot of sense to me.

Dollars in things like Venmo are already digital currency. I have some balance and I can send that balance to various places.

How will this actually help under banked people? Would the people who don't have a back account today want to use digital cash?

Fees are big issue, but they are for most part baked in and keep many people employed. It seems it would very difficult to make a policy change that would harm visa and Mastercard.

Offline transactions are very unlikely to happen as well, people will double spend if transactions work offline.

They only leaves surveillance as the goal. Being able to track cash transactions that works otherwise be untraceable.

Barrin922• 4 years ago

I'm trying to figure out the why,

because it disintermediates the entire payment sector, and every single dollar going into the pockets of banks /payment processors is going to go to consumers, or be returned to the public.

It'll help underbanked people because by virtue of being a US citizen, or whatever jurisdiction we're talking about, you'll have free access to a costless payment system. It'd also unify and standardize payments across an entire currency zone, getting rid of the bazillion API / interface issues that the currently glued together system has.

The benefits are pretty obvious. As to employment, if we're going to create employment through bullshit jobs we might as well set up a toll booth every ten meters until there's no unemployment or have people roll stones up and down mountains.

erentz2• 4 years ago

If you just want one government owned and operated payment system what does that have to do with having a CBDC?

walkerbrown• 4 years ago

disintermediates the entire payment sector

Unfortunately, the recent proposal specifically reassures commercial banks that any US CBDC will be intermediated (right on page 2) [1]. Board of Governors can't risk jeopardizing their speaking fees.

Individual FedAccounts via USPS locations is the way to go for the underbanked [2]. But, disappointingly, this is not that.

[1] https://www.federalreserve.gov/publications/files/money-and-... [2] https://dx.doi.org/10.2139/ssrn.3192162

fauigerzigerk• 4 years ago

every single dollar going into the pockets of banks /payment processors is going to go to consumers, or be returned to the public.

I doubt that. It would cut some costs and profit margins, but it wouldn’t be free to run the new system either. Someone needs to run the infrastructure, provide customer support, resolve conflicts, fight fraud, create apps and integrations, etc.

It seems unlikely that central banks will do all of it themselves. The payment processing industry won’t go away, but the system will be simpler and they will have some welcome competition in some areas, which should depress the fees in high fee countries such as the US. In Europe it wouldn’t change much in terms of cost I think.

erentz2• 4 years ago

I haven’t seen any good arguments for it that couldn’t be done in more mundane ways. Want to make banking easier? Regulate free accounts or set up postal banking. Want instant transfers? Other countries have had that for decades. So on so forth. Really most of this is a solution looking for a problem, but unfortunately it comes with a lot of baggage around privacy and controlling what you can do with your money that people wave away.

judge20203• 4 years ago

Re instant transfers: https://www.frbservices.org/financial-services/fednow

_xnmw7• 4 years ago

What is easier: getting 20,000 banks in the US to adopt a new protocol, or issue a new central government USD app? In theory yes, regulation could enable easier banking and faster transfers, and this has been tried with SEPA in the EU -- still far from being a truly instant transfer system. In practice, it would be much faster and more efficient for the central government to do this themselves. Part of the reason this whole crypto craze happened is because banks are incredibly slow to innovate, and there is STILL no way to transfer money internationally instantly.

As for "privacy" and "controlling what you can do with your money", Visa and Mastercard have pretty much full control over that now anyway, unless you're dealing with pure paper cash, which almost no one does anymore.

Laforet• 4 years ago

Cash is already heavily monitored and most petty criminals have already moved on to Amazon gift cards. The latter is easier to track in theory but nobody bothers.

At the risk of sounding conspiratorial, I think this is part of an overarching move to slowly phase out physical cash co we could have practical negative interest rate one day. Otherwise it is not actionable as long as people could literally stockpile money under their mattress.

gizmo686• 4 years ago

I don't think people would do this at scale, even today. Suppose I have $30,000 that I want to keep cash (either physical, or a bank account). If I were to keep this at home, I would want to insure it. I can't find what this insurance would cost [0], but jewlery insurance seems fairly comparable, and comes in at about 1-2%. This means that a negative interest of at least -1% is still cheaper than insuring the cash under my matress. Add to this the general convenience factor, and some distrust of insurance companies, and they could push the rate even lower than that.

While there are plenty of individual households that would probably make the decision to store money under their mattresses in a negative interest rate environment, those households are not where most of the cash is. In general as an entity (be it individuals or bussinesses) have more money, they become increasingly aware of the costs of having many.

A convenience store that has security cameras fixed on the cash registers; reguarly has a manager cycle cash from the registers to a safe, and hires an armored car to transport cash to the bank is well aware that keeping cash as physical cash is not free. It is nice if the bank pays you to keep your cash in a bank account; but if the bank decides that you need to pay a reasonable them to keep your money safe; that is a price that most people (when weighted by the amount of money they are handling) would be willing to pay.

The threat of storing money as physical cash still puts a lower bound on how low interest rates could go; but that is far below 0%

In practical terms, I suspect it would be politically untenable to expose negative interest rates to individual savings accounts, but even a "small" subsidy allowing individuals to maintain personal savings accounts up to, say, $250k would still maintain most of the economic goals of a negative interest rate without the political backlash.

[0] Not that cash insurance isn't a thing, but you need to submit actual information to get a quote from anyone.

jbay808• 4 years ago

At the risk of sounding conspiratorial, I think this is part of an overarching move to slowly phase out physical cash co we could have practical negative interest rate one day.

I agree it's no coincidence that this development is occurring when interest rates have dropped to zero. A negative interest rate is most likely the main motivation for central bank digital currency. How else will the asset market be propped back up after the next crash?

_xnmw7• 4 years ago

Dollars in things like Venmo are already digital currency.

Yes, but I would prefer to NOT use a private network like Venmo if possible. For one, if it was government-issued with government benefits, everyone would have it, not just tech savvy people. Most Americans don't have Venmo, but almost everyone has some form of government ID (or would get one if they could receive some benefit).

bobthepanda2• 4 years ago

Also, the bar for barring someone from use of a public system is much, much higher than the same for a private one.

ralph84• 4 years ago

Most Americans may not have Venmo, but certainly all Americans have ways to send money to each other. What problem are you really hoping to solve with government Venmo?

trixie_• 4 years ago

Would this be any different than a government issued stable coin?

This has the potential to greatly simplify the entire banking infrastructure.

It would also make it harder to lend what you don’t have. Current banking balances are easily fudged. Stable coins are real records you can only lend if you have them.

I could see this driving up interest rates on savings accounts similar to how crypto savings accounts have decent returns.

xeromal• 4 years ago

It's similar except centralized, but I guess there are cryptos that are centralized?

netheril962• 4 years ago

Most stablecoins are indeed centralized.

dang• 4 years ago

Presumably related:

Boston Fed releases report, source code of digital currency prototype study - https://news.ycombinator.com/item?id=30233755 - Feb 2022 (154 comments)

_xnmw7• 4 years ago

This is exactly what I want: a trusted centralized database for no-fee instant domestic and international transfers - I want this NOW. A million times better than any crypto scam, because:

1. I trust the USG.

2. The value of a currency comes from the issuing entity, and acceptance by merchants, not speculation on a blockchain (or any other technology).

3. Since it is centralized it will be reversible in court if hacked or mistakenly sent.

4. Since it is centralized it will be able to handle millions of transactions per second assuming they don’t screw up the technology.

If they get this right it will simultaneously render all crypto useless (except for crime) AND actually deliver on the false claims of crypto which never materialized in the past 10 years.

fastball• 4 years ago

Bitcoin was invented to specifically avoid centralization, so it definitely doesn't solve the same problems.

McAtNite2• 4 years ago

I disagree on the idea that it would render crypto useless.

In one aspect this would absolutely fail to address an entire section of the crypto market - privacy. You can attempt to make the tired “if you have nothing to hide” argument against it, but I don’t think that will change a privacy conscious person’s mind to suddenly accept centralized spending tracking by the gov.

The other area this would utterly fail to address would be the existence of a central authority. Failure to understand why people in crypto look so negatively at centralization is a failure to understand why Bitcoin exists in the first place, and how it was a direct response to the 2008 crash and subsequent reaction of the USG. I’m sure a portion of the modern day crypto “investors” would migrate to whatever the USG puts out, but it certainly wouldn’t be embraced by a large part of the overall crypto community.

_xnmw7• 4 years ago

In other words, you're saying crypto really isn't about financial innovation, it's actually about anarchy. Well I want nothing of that.

quantified3• 4 years ago

Do you maybe trust some parts of USG less than others?

WalterBright• 4 years ago

I trust the USG.

FDR defaulted on the gold bonds, stealing from those bond holders.

Just last year, the government took 7% of your dollars (via inflation).

The value of a currency comes from a government

More specifically, it comes from the issuing entity. For example, a cashier's check is only as good as the bank that honors it. Same for a credit card.

Did you know that banks historically issued their own currency? I suppose everyone has forgotten American Express Travelers' Cheques, which were bank issued currency.

sb057• 4 years ago

I trust the USG.

You might, but I and many[1], many[2], many[3], many[4], many[5], many[6], many[7] others don't.

[1] https://www.latimes.com/archives/la-xpm-1997-03-03-mn-34339-...

[2] https://www.cnn.com/2013/03/05/politics/obama-drones-cia/ind...

[3] https://densho.org/learn/introduction/american-concentration...

[4] https://www.iraqbodycount.org/

[5] https://consortiumnews.com/2012/01/23/reagans-hand-in-guatem...

[6] https://apnews.com/article/business-33a88feb083ea35515de3c73...

[7] https://www.nytimes.com/2020/02/24/us/supreme-court-case-no-...

Please note that none of those are one-off incidents or perpetrated by a rogue party. All of the above were concerted efforts by the United States federal government that were carried out for years on end and, in almost all cases, have yet to be formally apologized for, with some continuing as I type this.

Edit: additionally, the Federal Reserve is not part of the United States government, and is instead owned by Citibank, JPMorgan, Morgan Stanley, Goldman Sachs, BNY, HSBC, Deutsche Bank, Mizuho Bank, and the Industrial and Commercial Bank of China, among others.

https://www.stlouisfed.org/in-plain-english/who-owns-the-fed...

https://www.institutionalinvestor.com/article/b1kh4p10qysrhv...

balls187• 4 years ago

Not to minimize or trivialize these numbers, but it puts what we're going through in perspective.

In 2008-2022 estimated 288,000 Iraqi's died, due to war.

2020-2022 estimated 926,029 American's died, due to covid-19.

I wonder when we will understand the true impact ~1m dead American's had on our nation.

netheril962• 4 years ago

It won’t render crypto useless because it is still subject to inflation unlike Bitcoins. The idea that Bitcoin protects owners from dollar inflation can be false, but as long as many believe in that notion, eUSD cannot replace Bitcoin.

stjohnswarts• 4 years ago

You should never trust any government. Open up a history book. Even our own (USA) current government is trending towards authoritarianism and total surveillance, both of which are very very bad things when the totalitarian types are knocking on the gates (Trumpers). If I were you I'd take a look around.

quantified3• 4 years ago

Superficial and ignorant. Need journalists who don’t just repeat press releases with clearly labeling as such.

With a digital dollar, you could in theory eliminate those middlemen. If you wanted to buy a sandwich, for instance, you could transfer money from a digital wallet directly to a cashier.

Cash has no ?middleman. You trade one set for… how direct is the transfer? Who is extracting the money from your account, depositing into theirs?

Can you invest them and get returns? Put them in the bank and get returns?

gorbypark• 4 years ago

Cash actually has a ton of middlemen, if you consider the lifecycle of most cash. From printing it, transporting it, counting it, etc. I bet each $20 bill is handled dozens of times in it’s lifespan by a person who is not the owner of it (think bank tellers, cashiers, armoured car drivers, the people that load ATMs, etc).

quantified3• 4 years ago

There are participants. Question of how you define “middle” and in between whom.

When you pay the deliveryperson, florist, kid who shoveled your driveway in cash, there are zero participants between you and that person.

How you got that cash depends on a physical supply chain. Generally, going to an ATM is pretty easy.

Our payment system is currently the worst of both: only electrons and magnetic regions, but lots of them in the way siphoning off their cut.

t8y• 4 years ago

Wont this have a huge impact on all banks? If I had this I'd shut down my bank account and just have this + investments. Banks offer too low yields to be worth while. I think digital currencies are the future but it would have a huge affect on banks and payments companies.

WriterGuy2021• 4 years ago

The U.S. isn't an entity capable of consideration. There's some wizard of oz style trickery going on here. If you pull back the curtain, you'll find a gaggle of corrupt bureaucrats pulling levers that control the illusion of the state.

Who wants money with surveillance and control built into it? Imagine a future where you post some wrongthink on social media and your dollar crypto wallet is automatically disabled by a precrime AI.

No thanks.

pmontra2• 4 years ago

Well, it can get worse in the way you write but we must be careful right now. PayPal freezes accounts, states know every single bank transfer, credit cards companies ban some kind of businesses. Add more examples.

throwaway4good• 4 years ago

Does anyone know how this would work?

Would it just be a pointer (a digital key sitting on your device) to an account at the central bank holding your dollars? Or is something more elaborate?

Would it allow anonymized holders of digital USD? If not how would they handle know-your-customer (KYC)? If so, how would they prevent evil people like Kim Jong Il or Carrie Lam holding USD?

pmontra2• 4 years ago

The first two questions: cash is anonymous, a digital money transfer could be anonymous or not depending on the design. I don't think governments want anonymous transfers but they might not give that information to the party that receives of the money. That is, they know I paid 10$ to that shop but the shop doesn't know who I am.

The last question: some people have rooms full of 100$ bills. Some of them are evil.

Examples

https://www.reuters.com/world/asia-pacific/russia-says-afgha...

https://www.cnn.com/2019/09/08/africa/sudan-al-bashir-trial-...

A technology people's fallacy is to expect technology to solve social problems. They are best solved socially.

lota-putty• 4 years ago

Gold(Noble Metals) Standard, where are you?

There is a local saying here "When fences eat crops, what can you do?" or "Fox guarding the hen-house", can you blame its instincts.

U.S. is considering a radical rethinking of the dollar for today's digital world

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