> the government couldn’t be allowed to arbitrarily inflate the currency when it wanted to
Then why would the government bother to implement this? If anything it's disincentivized to set things up in this fashion.
US Digital Currency
31–40 of 139 posts
Re: US Digital Currency
#32On a similar note, here's a NYT article from last week quoting a former Fed governor stating that this is something central banks should look into:
https://www.nytimes.com/2018/05/04/upshot/should-the-fed-cre...
Re: US Digital Currency
#33How 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. 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.
Cryptocurrency with a centralized authority is not subject to these issues. After all, if there is a trusted authority then what you really have is a database with some API layered on top. You don't need miners, you don't need a blockchain, etc. It's no more difficult to scale a currency like this than it is for Visa. Canada was looking at exactly this idea about 5 years ago, with the MintChip project.
http://business.financialpost.com/news/fp-street/canadian-mi...
Think of this as a bank account that you can interact with in a programmatic/scriptable fashion using a private key. Which is really a lot of what people find desirable about cryptocurrency.
The deflationary monetary policy ponzi-schemes, the waste of energy and data, etc can all go. And in turn, the government gets to eventually eliminate the cash economy and make sure that all of that gets taxed (this is the dark side of cryptocurrency - since everyone gets to see all transactions, it's quite easy to trace the flows of money, and it's only anonymous until you try to do something outside the network, like cash out or exchange it for real-world goods).
Re: US Digital Currency
#34I think we'll get viable cryptocurrencies when the people designing them understand the basic and well-known economics of how money works; AND, when basic scalability problems are solved. It's well-known that deflationary currencies do not work. That is a severe problem that must be solved before cryptocurrency is viable. Limiting the total number of coins means that the currency is deflationary. Furthermore, our cur…
> It's well-known that deflationary currencies do not work. Deflationary currencies have worked out fine for literally thousand of years. Inflationary currencies are a modern concept, with their own advantages AND disadvantages. I'm surprised this is such a sticking point for people, and that they think the system will literally collapse, when we have centuries of history proving otherwise. > It's also well-known tha…
Here's a thought experiment. Satoshi (who we'll pretend is Hal Finney) owns 10% of Bitcoin, we assume he's lost the keys. Bitcoin becomes a global, and universal currency as we slowly colonize the entire galaxy. Satoshi has been unfrozen from his cryogenic sleep, and remembers his keys. Satoshi now owns 10% of the entire economy of the galaxy.
Seems ridiculous right? Satoshi contributed nothing for hundreds or thousands of years yet still owns the same fixed portion of the total economy.
Re: US Digital Currency
#35How 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'…
You live in a bubble, your argument is not valid for millions of people that don’t have bank accounts, have you seen western union fees? Africa and Latin America will embrace cryptocurrencies because it will be faster and cheaper and will not require people to open a bank account, only a cell phone with data which most people already have
Re: US Digital Currency
#36> The current practices seem to be for governments to mostly ignore cryptocurrency and cryptocurrency enthusiasts to mostly ignore government To me this is the biggest falsehood about cryptocurrency. There is virtually no anonymity in cryptocurrency. You can't do anything with cryptocurrency without verifying your ID. It is now ubiquitous to provide your driver license and social security on every reputable exchange.…
That's not correct. You are talking about fiat ramps (to get "old" money in or out). If you mine or stake and get awarded and just use it within the ecosystem there's no need for "id verification". So saying "You cannot do anything with cryptocurrency without verifying your ID" is an overgeneralisation of "You cannot exchange other fiat money for cryptocurrency or visa versa without verifying your id".
To add to your comments:
1) Mining is still possible with individual GPUs for certain cryptocurrencies (e.g. Ethereum), although you probably aren't making more than 50 cents per days.
2) Decentralized exchanges will let you convert any cryptocurrency to another (e.g. mined Ethereum to privacy centric coins and back again).
3) In addition to mining, earning crypto for work, and receiving crypto for payments, you can still buy crypto locally for cash.
Re: US Digital Currency
#37>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…
The big thing is the ability to pay bond repayments with inflated currency. The vast majority of government debt is fixed rate
Re: US Digital Currency
#38I think we'll get viable cryptocurrencies when the people designing them understand the basic and well-known economics of how money works; AND, when basic scalability problems are solved. It's well-known that deflationary currencies do not work. That is a severe problem that must be solved before cryptocurrency is viable. Limiting the total number of coins means that the currency is deflationary. Furthermore, our cur…
1. Not all cryptocurrencies are deflationary. Some have inflation built in.
2. Scalability will be much improved over the next year (see: lightning network, plasma, raiden, sharding, alternate consensus systems like dPOS, etc.; for a deep dive, this is a good place to start: https://multicoin.capital/2018/02/23/models-scaling-trustles...).
Re: US Digital Currency
#39> 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 arbitrarily inflate the currency when it wanted to).
This is a partially direct democracy (for monetary policy) using digital voting with no paper trail! Unless there are crap load of formal methods backing this, it sounds like a recipe for disaster.
(Also, if this is the problem to be solved, why don't we just pass a constitutional amendment requiring a referendum for certain changes to monetary policy...)
> The government can likely create a lot of de novo wealth for its citizens in the process.
The thing that always confuses me: where is the fundamental value creation? I don't see much other than maybe saving on some inefficiencies in the current monetary/financial system. But that's not "de novo wealth"; that's "financial engineering".
How does a state-backed cryptocurrency generate "de novo wealth"?
Re: US Digital Currency
#40How 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'…
You live in a bubble, your argument is not valid for millions of people that don’t have bank accounts, have you seen western union fees? Africa and Latin America will embrace cryptocurrencies because it will be faster and cheaper and will not require people to open a bank account, only a cell phone with data which most people already have
If you know more, could you share? I haven't read anything about cryptocurrency being successful in Africa or Latin America. (Versus, say, M-Pesa in Kenya.)