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US Digital Currency

blog.samaltman.com

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Re: US Digital Currency

#71

Post by raesene9 »

drewrobb wrote: post #51
raesene9 wrote: post #23

As others have already commented, existing currencies are already "digital". On my most recent trip abroad (to Copenhagen) I took some physical currency, and didn't use it at all. Every transaction was digital and instantaneous (I use a Monzo Mastercard). I got a smartphone notification within 5 seconds of having approved the transaction. The original promise of "cryptocurrencies" appeared, to me, to be decentralizat…

Having transaction data hidden from governments isn't the essential feature of decentralization in the original promise of cryptocurrencies. The essential feature is preventing a single party from tampering with transactions or account balances. This is still true for bitcoin and many others.

We have that with existing currencies in most countries. My bank will implement a journal and double-entry bookkeeping system, along with internal fraud controls to reduce the risk of a single staff member defrauding me.

There are then external controls (banking ombudsman, the police, the judiciary) if the bank decides to take my money from me.

Also in the country I live in (the UK) there is a government guarantee, that even if my bank fails entirely, up to £75000 I'll get my money back.

For all practical purposes, my bank is very unlikely to try and take my money from me like that.

whilst cryptocurrencies might in isolation provide that immutability, in practice we have seen several cases where trusted parties involved in the cryptocurrency ecosystem have taken currency from participants in their marketplaces.

I'd be willing to wager that the risks of me losing money to a traditional fiat fraud are far lower than my risks of making use of cryptocurrencies in practice given the current state of regulation of the exchanges that are used.

Re: US Digital Currency

#72

Post by foepys »

starshadowx2 wrote: post #5

What do you think the effects would be if China did this instead of/before the US?

China is already on its way of doing this. WeChat (built by Tencent, a government supported company) is the payment platform between businesses and customers nowadays. As soon as China gets reliable internet and power into its western parts, everything will become digital.

Re: US Digital Currency

#73

Post by dnomad »

The US federal government and its partner banks would not be interested in a currency they did not absolutely control. Superpowers are simply not in the business of giving up power and it's not clear that the surrender of such power would lead to a stable system.

The entities that could reap enormous benefits from cryptocurrencies are precisely those entities which today for various reasons have tax power but do not have currency power. But tax power is currency power. This means those states with truly dynamic (high tax, high growth) economies -- California, Massachusetts, New York -- could issue transferable tax credits [1] which would be, fundamentally, money. There would be widespread and deep demand for such credits. The problem is that today the trading, control and verification of such credits is very difficult and costly [2][3]. A distributed public ledger could dramatically decrease the trading and operational costs.

Monetizing state credits with a block chain could reap enormous efficiencies. The immediate big win would be in welfare. Today California has extraordinarily vast, complicated, and inefficient welfare system [4]. All of this could be replaced with a highly efficient system where credit-money is issued directly to those who most need it. There's a lot of literature that such direct cash grants are the most efficient mechanism to fight poverty and this is why modern welfare is so inefficient [5]. Imagine the effect of a system where the hundreds of billions of California welfare money could be efficiently and securely distributed directly to those who truly need it with the press of a button with zero cost. The recipients of these credits wouldn't have to wait until one magical date nor would they have to file complicated returns to claim and monetize these credits they could go out and spend them immediately.

Note that here the advantages of a distributed public ledger would work particularly well for California Credits. The transparency of the scheme means it is always immediately clear how many credits are outstanding and who owns them. There would never be any doubt about whether a credit is transferable or valid. The big problem with tax credits -- fraud[6] and "double spends" [7] -- would be eliminated over night. A distributed public ledger for all this public money would allow true, real-time public accountability.

[1] http://www.pewtrusts.org/en/research-and-analysis/blogs/stat...

[2] http://www.hmblaw.com/media/97814/the_transferability_and_mo...

[3] https://www.bna.com/incentives-watch-monetizing-b17179870903...

[4] https://www.quora.com/Does-California-really-have-30-of-the-...

[5] https://fivethirtyeight.com/features/most-welfare-dollars-do...

[6] https://www.nevadabusiness.com/2016/12/transferable-tax-cred...

[7] https://www.bna.com/incentives-watch-transferable-b579820651...

Re: US Digital Currency

#74

Post by mindslight »

andrewla wrote: post #66
mindslight wrote: post #52

Why the hell is it a foregone conclusion that government-blessed money would need to surveillance built in ("USDC could require that certain [all] transaction can only happen with wallets with known owners")? I know that's clearly what the totalitarian pervs in power desire, but why would someone out in the free world just accept and advocate such a thing?! USG could have started issuing simple Chaumian-blinded token…

Chaum blind-signed tokens are vulnerable to double-spends. As far as I understand it, this is unfixable without appealing to the issuer and keeping revocations lists.

Um, what? The basic system obviously isn't vulnerable to double spends. Are you perhaps talking about why the construction is unsuitable for offline use or for grafting onto a blockchain?

Re: US Digital Currency

#75

Post by splintercell »

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.

Two cryptocurrencies come to mind:

a) Nano (formerly RaiBlocks) which achieves 7000 tps, compared to Visa's capacity of 25k-65k tps (but VISA rarely spikes over 4000 tps), its wallets and network is already live

b) Solana (still in dev stages), which claims to be able to achieve 710k tps without network partitioning. This actually knock centralized systems out of the water. Of course, the centralized systems can always mimic the behavior and achieve similar throughput.

But the main point is, because a lot of money is in blockchain, a lot of it is being spent on finding ways to make it faster (which is why, innovation for faster throughput is happening in the blockchain field).

Re: US Digital Currency

#76

Post by otakucode »

Why is pseudonymity a problem? Is it a problem with cash? Should we get rid of all the cash because it can't be tracked and profiled and subject to disapproval or punishment? Were we not able to tax cash? All the nonsensical hand-wringing about cryptocurrency enabling crime is ludicrous. It is exactly identical to cash except for the fact that no one has to cut in a payment processor dealer when wanting to transact with someone not physically present.

I do think a nationally-backed cryptocurrency would be a great idea, and have been saying so for a couple years. There are 2 major problems it would solve. First, we have turned payment processors into de-facto taxation bodies. Payment processors have more control over the US economy than the Federal Reserve does. If the Federal Reserve decided to increase/decrease monetary supply and the payment processors disagreed, they could very easily override the Federal Reserve with raising or lowering their bogus "service fees" (bogus primarily because they use a percentage of the transaction amount - as if moving a bigger number across a wire cost more). That is dangerous, and should be avoided.

Second, how long is it until a large scale IT problem destroys all credibility of the US banking system? How long until we wake up one day and find out that Walmart hired some coders to whip up some malware that infected their banks in order to cover up losses and to massage the numbers to make them look like they had more capital than they ever actually earned? How long until other countries refuse a payment of $1 billion on a debt because they don't believe the money is 'real' and want proof it wasn't just some funny accounting on the back of swiss-cheese no-standards 'IT is a cost center' garbage systems? A cryptocurrency wouldn't have this problem. It can be proven 'real' with trivial ease. Fiat currency can never be proven 'real'. And since it's all just bits in computers now, eventually someone is going to realize the computers aren't trustworthy.

Re: US Digital Currency

#77

Post by icehawk219 »

powera wrote: post #44
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 really, on a per-transaction basis. If you buy something at a store with a credit card, it takes weeks to get the money. With Bitcoin, you can spend the money in an hour. For small transactions, there's generally no need to wait past the point that the transaction is broadcast; and for online transactions it's not inconvenient to wait an hour before providing the p…

Waiting that long before the merchant gets their money is a feature, not a bug. It forces the merchant to float a balance that can be used to issue refunds and charge backs back to the consumer without the bank, card network, or consumer taking the hit.

Re: US Digital Currency

#78

Post by dang »

rbreve wrote: post #35
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'…

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

Probably this got downvoted because of the "you live in a bubble" part, which crosses into personal attack. Could you please (re-)read https://news.ycombinator.com/newsguidelines.html and edit those bits out of what you post here? This comment would be just fine without it.

Re: US Digital Currency

#79

Post by vinniejames »

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'…

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 an incomplete view of the potential here.

1. https://www.nerdwallet.com/blog/banking/ach-transfers-costs-... M

Re: US Digital Currency

#80

Post by toomuchtodo »

QML wrote: post #70
toomuchtodo wrote: post #45

Earlier quoted context omitted.

Payments in developing countries is already fast through the use of mobile phones, no cryptocurrency overhead required.

Which apps or companies are these? I have not heard of widespread use of mobile payments in developing countries besides China.

Africa: https://www.pymnts.com/news/mobile-payments/2016/mobile-paym...

Latin America: http://www.idgconnect.com/abstract/10231/latin-america-warms...

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