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US Digital Currency

blog.samaltman.com

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Re: US Digital Currency

#101

Post by freeone3000 »

devinhelton wrote: post #93

I think it could make sense for the US government to provide a way to hold existing dollars in digital form, directly with the government. So I could go to a bank (or specially designated federal institution), deposit cash, and have that cash turned into a balance of 100% reserve digital cash held on the government's books. I could then make cost-free, instant transfers to other people or other accounts. The governme…

You can already hold US dollars in digital form. You're describing exactly how banks work. The reasons that transfers cost money or people outside the US can't hold accounts are not technical.

Re: US Digital Currency

#102

Post by vinniejames »

vkou wrote: post #86
vinniejames wrote: post #79

Earlier quoted context omitted.

I just had to pay $8 to convert USD to another currency. The fee is less than $1, and often less than $0.10 to make an exchange like this via cryptocurrency. In order to move money out of my own bank account, digitally, into another account, it is impossible to do instantly. Many banks charge a substantial fee, even for a 3 day turnaround[1]. Looking only at card networks, while ignoring the greater banking system is…

> I just had to pay $8 to convert USD to another currency. That's the cost of the spread. If you tried to convert $10000 BTC to USD today, you would pay anywhere between -$200 and $200 (Or ????$, if the market decides to go crazy), depending on the exchange rate when your transaction would clear. With a forex transaction through a bank, the bank fixes the exchange rate (And charges you money for it.)

That was just the “fee” without even including the spread, which was much more, often +20% depending on the exchange.

Converting $10k BTC to USD would not cost $200 in transaction fees. If that’s how much you’re paying, find another exchange as you’re getting ripped off.

Converting BTC to another crypto currency would barely incur any cost at all.

Re: US Digital Currency

#103

Post by freeone3000 »

kolbe wrote: post #48
stale2002 wrote: post #13

Earlier quoted context omitted.

"The "government" can't "arbitrarily inflate the currency"." The US government can literally do this. They can print as much money as they feel like. It would be 'dumb' for sure, but the US treasury is indeed allowed to do this. There was even talks of solving the national debt crisis by having Obama create a trillion dollar coin a couple years ago.

If the US Treasury did that, it would be illegal. The coin thing is a hack that would probably be challenged in court, because it's illegal for the Treasury to arbitrarily print money, except when it's silver. So, you're not wrong in that the treasury can physically do those things, but it's in the same way that you wouldn't be wrong if you claim North Korea can do the same by illegally counterfeiting endless dollars…

Why wouldn't north korea counterfeit endless dollars in order to get a liquid cash supply? It sounds like a pretty great plan.

Re: US Digital Currency

#104

Post by Toine »

davebryand wrote: post #16

"The US government could decide to treat USDC as a second legal currency, which would be hugely powerful." I'd love for Sam to dig deeply into The Federal Reserve System and write about this topic with that knowledge. [EDIT]: The more I think about this the more surprised I find myself. Sam assumes that the United States just can spin up a competitive currency to the Federal Reserve Note. This completely misunderstan…

Amen, and it's not some bullshit guru/conspiracy theorist talk. People have no idea how important the monetary system is for power, and how it really works.

Re: US Digital Currency

#105

Post by devinhelton »

freeone3000 wrote: post #101
devinhelton wrote: post #93

I think it could make sense for the US government to provide a way to hold existing dollars in digital form, directly with the government. So I could go to a bank (or specially designated federal institution), deposit cash, and have that cash turned into a balance of 100% reserve digital cash held on the government's books. I could then make cost-free, instant transfers to other people or other accounts. The governme…

You can already hold US dollars in digital form. You're describing exactly how banks work. The reasons that transfers cost money or people outside the US can't hold accounts are not technical.

No, that is not how banks work. You are not holding actual legal tender, your bank account is a credit with that specific bank that the bank promises to pay back to you with legal tender on demand. But the bank has lent out that money and might not be able to actually pay you back (or might need to be bailed out by the FDIC to pay you back if your account is under $250k).

I agree though that existing banks could technically implement costless transfers or accounts for people outside the US with existing tech, but it is not worth it because of regulatory compliance issues and the archaic nature of the banking systems. But if those issues were to be fixed, might as well just hold what are now checking accounts directly with the government, rather than have the convoluted system of banks + massive regulation + FDIC insurance.

Re: US Digital Currency

#106

Post by _5ysi »

joejohnson wrote: post #87

Amazing that someone so naive could be given such a platform. Oh, silicon valley :) >> A tricky part of this would be how to balance letting the network have control over itself and letting the government have some special degree of input on ‘monetary policy’. It’s certainly ok for the government to have some, but I think the network needs to be mostly in charge (e.g., the government couldn’t be allowed to arbitraril…

It may be naivety, but perhaps it's just clever marketing. As pointed out, any government has a short term incentive to retain maximum control over its currency . But if its citizens think the currency is being mismanaged and increasing inequality unfairly, then there's an incentive to come out with an alternative currency on the FEDs terms rather than being blindsided by some clever currency hatched by a private group. Silicon Valley style first mover advantages sounds more positive than fear of alternative cryptocurrencies though.

Thoughts are my own, not my employers.

Re: US Digital Currency

#107

Post by snissn »

bastawhiz wrote: post #26

How would this be better than what we have now? If the answer is "cryptocurrency increases in value," I can assure you that's a terrible reason. Cryptocurrency is slower than card networks. It's more expensive than practically any other way of sending money. And as far as scale goes, it would need to become orders of magnitude more efficient to handle even a small percentage of consumer transactions. After all, what'…

> Cryptocurrency is slower than card networks.

How long does it take you to set up a merchant account? With cryptocurrency, it's practically instant.

Re: US Digital Currency

#108

Post by _5ysi »

mundo wrote: post #50
jasode wrote: post #14

>Ideally the initial coins would be evenly distributed to US citizens and taxpayers— [...] The government can likely create a lot of de novo wealth for its citizens in the process. This USDC proposal seems to reiterate the same themes as a previous blog post "American Equity".[1] >, but I think the network needs to be mostly in charge (e.g., the government couldn’t be allowed to arbitrarily inflate the currency when…

> Inflating currency is a hidden way to spend money it doesn't have. This seems to be a recurring area of confusion in every thread about cryptocurrencies, so let's clear it up now: * The amount of money in circulation is manipulated by the Federal Reserve. When the Fed increases the money supply ("printing money"), it does so through banks, by creating money and letting them lend it. The recipient of the "printed mo…

But why do we "print more money" when inflation is too low?

A main reason is so that government debt can grow perpetually/exponentially. Hence a hidden tax taken from wages.

Opinions are my own not my employers.

Re: US Digital Currency

#109

Post by bastawhiz »

mrb wrote: post #91
bastawhiz wrote: post #26

How would this be better than what we have now? If the answer is "cryptocurrency increases in value," I can assure you that's a terrible reason. Cryptocurrency is slower than card networks. It's more expensive than practically any other way of sending money. And as far as scale goes, it would need to become orders of magnitude more efficient to handle even a small percentage of consumer transactions. After all, what'…

« Cryptocurrency is slower than card networks » Not inherently. If you compare apples to apples, accepting a credit card transaction is equivalent to accepting a zero-confirmation cryptocurrency transaction, which is just as fast as a CC charge (instantaneous.) And it is technically safer for a merchant to accept a 0-conf crypto tx because a CC charge is trivial to reverse (via a fraudulent chargeback) while a tx in…

> accepting a credit card transaction is equivalent to accepting a zero-confirmation cryptocurrency transaction, which is just as fast as a CC charge (instantaneous.)

Except my charge is guaranteed to happen (or be rejected) within a reasonable amount of time. If you scale up anything to the size of, say, Visa, the transaction times are going to grow to be unbounded. I know my credit card charges are going to settle in about a day. There's no guarantee when the miners will work through the backlog of transactions and actually give me my money in any time frame.

If you're a small business, this matters a LOT.

> Average remittance fees are around $7 per $100 sent. Meanwhile Ethereum has fees typically under $0.50 per tx

My bank charged me $10 to send a 50k wire transfer last week. What service, exactly, is more expensive than a 7% fee?

Ethereum, meanwhile, swings in price violently enough that in the time it takes for an ACH transfer to complete, the value could have shifted enough to negate the entire savings on fees. What benefit does low fees have on a currency if the currency is worth 5-10% more or less day to day?

There's no reason to assume a government issued cryptocurrency will be any less volatile than cryptocurrency.

> There have been proposals to implement what we call UTXO commitment sets, which is basically a way to revamp a blockchain so that it can discard old transactions and just keep track of current balances.

And here we are, talking about creating a new legal tender for the second largest economy on the planet. As I said in my original post, it doesn't matter if it's on its way. Speculative fixes for a real problem don't make the problem go away. Major cryptocurrencies currently don't do it, so we shouldn't talk about them as if they do.

Even still, the number of balances will grow over time. Unlike a real bank, you can't just close an account when someone dies. Anyone can create as many balances as they want. And losing your private key means there's a permanent record of the money you lost.

Re: US Digital Currency

#110

Post by uhihdjhd »

dnomad wrote: post #95
mundo wrote: post #50

Earlier quoted context omitted.

> Inflating currency is a hidden way to spend money it doesn't have. This seems to be a recurring area of confusion in every thread about cryptocurrencies, so let's clear it up now: * The amount of money in circulation is manipulated by the Federal Reserve. When the Fed increases the money supply ("printing money"), it does so through banks, by creating money and letting them lend it. The recipient of the "printed mo…

> When inflation is too low, we print money. This is really not how it works. Many economists think this is how it works but actual real world events have made it very clear that governments cannot simply manufacture inflation [1]. Governments like Japan wish they could produce inflation. Inflation is much, much, much more complicated than merely "too much money." It's much more about real economic quantities affecti…

You also exhibit a rather dangerous lack of knowledge.

Look up the federal discount window And then treasury bonds.

Typically a bank can get interest free money and plow that into interest baring bonds backed by the government. They then get is free profit off the spread, this was a common back door method of 'liquidty injection' during the financial crisis. Liquidity injection, literally a euphemism for giving away money, and who gets the money? Those closest to the federal spigot, and what happens when you have more money chasing fewer resources? Inflation. Let's not even get into the bizarro world of inflation measurements, ( food and energy aren't even included ), most 'inflation' is seen in asset inflation, rich people can only eat so much cavier and blue fin tuna, the vast majority of their money goes into assets, so they take free money and put it into real estate and stocks and bonds, meanwhile the poor suckers trading their labor for cash see their real income lose purchasing power as the real assets they want like homes and a retirement fund, become increasingly difficult pipe dreams.

I'm truly sick of people who think they have economic knowledge try to explain away the real experience of the vast majority of people, such people and such experts are really just the well paid propagandists of the rich and powerful. Disgusting.

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