What is the fuss over central-bank digital currencies? • Hacker News Board

Re: What is the fuss over central-bank digital currencies?

#21

Post by WEFwoof » Sat, Feb 20, 2021, 7:16 AM UTC

jmnicolas wrote: post #3

Digital currencies allow for full tracking of every transactions and are a privacy nightmare. They allow applying negative interest rate on everybody and they would facilitate neverending hyperinflation (no need to print new bills at great expense). Hence they can't coexist with cash so say goodbye to cash. I don't like where we're going.

> I don't like where we're going.

Me neither, not at all.

The idea of a digital Euro is already worked on:

https://www.ecb.europa.eu/euro/html/digitaleuro.en.html

Obviously, it's an "inclusive" system, a term that evokes in me strong feelings of mistrust, as it has no provisions of alternatives like not moving to a digital currency. "Inclusive" by mandate and without consent, or the possibility to opt out. (Somewhat reminds me the Onion's Google privacy village.)

Let's crack open the windows, so we can throw privacy and liberty right out.

Re: What is the fuss over central-bank digital currencies?

#22

Post by vladvasiliu » Sat, Feb 20, 2021, 7:18 AM UTC

louloulou wrote: post #18

yenwodyah wrote: post #7

One benefit I didn't see mentioned was that central banks, being an arm of the government, presumably won't cut off payment processing for completely-legal-but-socially-unacceptable sites like private payment services do. I know this happens to porn artists/websites all the time, and recently it's been happening to political extremist sites like Parler etc. too.

A lot of that was due to government "suggestion": https://en.wikipedia.org/wiki/Operation_Choke_Point

That's interesting. As I commented elsewhere on the thread, I'm not sure why people think that with a central bank digital currency the retail banking and payment processor sectors would be shut down, or at the least that it would be possible to easily circumvent them.

I think they will continue the way they do today, but instead of trading in "paper" tokens they will trade in digital ones. Which, what with the fractional reserve and all, shouldn't be all that different. So they could continue with their current kind of policies, like "we won't do business with people / companies we consider undesirable".

Re: What is the fuss over central-bank digital currencies?

#23

Post by xorcist » Sat, Feb 20, 2021, 7:21 AM UTC

rahimnathwani wrote: post #8

The central bank (government) issues money in two forms: 1. Paper money (notes and coins) 2. Digital money (deposit account at the central bank) #1 is not practical for much modern commerce, e.g. online shopping. #2 is only available to banks and a few other select institutions So, most of us don't really use government issued money much. We use money issued by retail banks (credit balances in checking accounts) and,…

If regular citizens could get an account with the central bank, with a specified protocol and digital currency, there could be several providers in open competition using this protocol.

Switching banks would become like switching email clients. They could expose new functionality over an existing prococol. But it would also introduce new problems, malware banks could proliferate just like malware flashlight apps.

These comments threads always attracts comments like how these are not trustless, not mined by anyone etc. That misses the point. CBDCs are exciting. Citizens never had an account with central banks before.

Re: What is the fuss over central-bank digital currencies?

#24

Post by danialtz » Sat, Feb 20, 2021, 7:21 AM UTC

jmnicolas wrote: post #3

Digital currencies allow for full tracking of every transactions and are a privacy nightmare. They allow applying negative interest rate on everybody and they would facilitate neverending hyperinflation (no need to print new bills at great expense). Hence they can't coexist with cash so say goodbye to cash. I don't like where we're going.

Privacy is ranked the second after security in a recent survey from ECB, so it is a known demand and design criteria for both sides.

CBDC will co-exist with cash for years to come. Fully monitored CBDC will be at a high disadvantage by citizens specially in modern world, while fully private one would not be allowed by CBs due to need for transparency.

Here also comes the product builders. We could design a CBDC that is fully transparent, which is the easiest to build, these days mostly DLT based. The challenge is how to enable some TXNs to be private by design and not only policies.

A major country is taking the extreme case of full transparency, while ECB and others like Canada are strongly focusing on privacy as a feature.

Re: What is the fuss over central-bank digital currencies?

#25

Post by GoblinSlayer » Sat, Feb 20, 2021, 7:23 AM UTC

yenwodyah wrote: post #7

One benefit I didn't see mentioned was that central banks, being an arm of the government, presumably won't cut off payment processing for completely-legal-but-socially-unacceptable sites like private payment services do. I know this happens to porn artists/websites all the time, and recently it's been happening to political extremist sites like Parler etc. too.

In the end it's just another censorship mechanism, and the only question will be how to extend its use. Once the system is in place, it becomes a neverending temptation.

Re: What is the fuss over central-bank digital currencies?

#26

Post by GNU_James » Sat, Feb 20, 2021, 7:28 AM UTC

yenwodyah wrote: post #7

One benefit I didn't see mentioned was that central banks, being an arm of the government, presumably won't cut off payment processing for completely-legal-but-socially-unacceptable sites like private payment services do. I know this happens to porn artists/websites all the time, and recently it's been happening to political extremist sites like Parler etc. too.

>political extremist sites like Parler

Re: What is the fuss over central-bank digital currencies?

#27

Post by WEFwoof » Sat, Feb 20, 2021, 7:29 AM UTC

vladvasiliu wrote: post #19

Barrin92 wrote: post #15

Earlier quoted context omitted.

Applying negative interest rates can be a good thing depending on what policy the central bank pursues, and they don't add to any risk of hyperinflation, because central banks if anything pursue price stability or targeted inflation as one of their policy goals. (and have been very good at it in fact, and digital cash changes no incentives here). I personally have absolutely no problem with them and I'd be very glad…

> I'd be very glad if I could settle every transaction with a digital Euro. I don't particularly enjoy the middlemen in the form of countless payment processors who all take cuts out of transactions Are we sure those digital currencies would be handled directly and fully by the central bank at no (direct) fee per transaction? Who's to say that the way things currently work won't stay exactly the same, except for your…

Just because the central banks issue the money, it doesn't necessarily mean that they also have to handle the transactions.

The current state of merchant banks and payment providers can very well continue, without CBs having to assume new responsibilities.

After all, the trend is towards more privatisation, not less.

I share your pessimism. I'd say the central bank is the oven wherein the commercial banks bake their pies.

Re: What is the fuss over central-bank digital currencies?

#28

Post by danialtz » Sat, Feb 20, 2021, 7:30 AM UTC

anm89 wrote: post #14

Important note: central bank digital currencies are not crypto currrencies. They are not block chains. They are not decentralized. They are not permissionless. I cannot find a record of any CBDC which clearly states that it want's to use any of these technologies. I'd be interested to be proven wrong. Central bank digital currencies are essentially a new hybrid monetary/fiscal policy tool. Historically the Federal re…

> Important note: central bank digital currencies are not crypto currrencies. They are not block chains. They are not decentralized. They are not permissionless. I cannot find a record of any CBDC which clearly states that it want's to use any of these technologies. I'd be interested to be proven wrong.

Indeed, by default almost majority of CBDCs are permissioned chains since CB is the only authority to create money and destroy, aka mint.

Technology-wise though you‘d be surprised. Most of the solutions out there are actually DLT based, almost all blockchain based. There are modern aspects that work differently than other cryptos (well, borrowed), e.g. there are permissioned blockchain solutions that allow „channels“ to be private. This allows a bank to still be on a ledger while txns are hidden from other banks. They are also decentralized because Central banks are not high tech companies, but they have trusted middle layer still to be fast and cheap at some other disadvantages for citizen, e.g. control.

Re: What is the fuss over central-bank digital currencies?

#29

Post by dv_dt » Sat, Feb 20, 2021, 7:32 AM UTC

nfoz wrote: post #13

jmnicolas wrote: post #3

Digital currencies allow for full tracking of every transactions and are a privacy nightmare. They allow applying negative interest rate on everybody and they would facilitate neverending hyperinflation (no need to print new bills at great expense). Hence they can't coexist with cash so say goodbye to cash. I don't like where we're going.

I buy pretty much everything with VISA or Paypal. If I want something to be private, I could do it with cash or a cryptocoin. I think it would be nice if govt (via crown-corp or some such) provided an alternative that I can choose to use sometimes. They might have a better privacy-policy than I'm getting from the big companies lol. This might also open up new markets, e.g. micropayments, because govt could choose to…

Cash is private. Most cryptocoin are not particularly private. The few that set out to be private may or may not succeed at being private or being a widely exchanged digital currency.

Re: What is the fuss over central-bank digital currencies?

#30

Post by GoblinSlayer » Sat, Feb 20, 2021, 7:35 AM UTC

xorcist wrote: post #23

rahimnathwani wrote: post #8

The central bank (government) issues money in two forms: 1. Paper money (notes and coins) 2. Digital money (deposit account at the central bank) #1 is not practical for much modern commerce, e.g. online shopping. #2 is only available to banks and a few other select institutions So, most of us don't really use government issued money much. We use money issued by retail banks (credit balances in checking accounts) and,…

If regular citizens could get an account with the central bank, with a specified protocol and digital currency, there could be several providers in open competition using this protocol. Switching banks would become like switching email clients. They could expose new functionality over an existing prococol. But it would also introduce new problems, malware banks could proliferate just like malware flashlight apps. The…

Currently digital money are used for the reserve deposits of commercial banks at central banks. If it keeps working this way, it won't be just a client, and you won't be able to switch it easier than now.