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Central Bank Digital Currencies are coming

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Re: Central Bank Digital Currencies are coming

#91

Post by I_am_tiberius »

Summary of the biggest problem with digital currency managed by central banks:

Central banks can use negative interests in order to force people to buy stuff. In the current system people would just withdraw cash in order to avoid negative interest rates if they are too high/low. In the future people will be forced to pay the interests or buy stuff. Governments want to use this mechanism in order to control the economy.

If digital currencies managed by central banks really do get approved, it is like being forced to use Facebook.

Re: Central Bank Digital Currencies are coming

#93

Post by chrisco255 »

grey-area wrote: post #43
fh973 wrote: post #29

Earlier quoted context omitted.

I can half answer that and hope somebody can complete the story. What you have in your bank account is not digital cash. It's effectively a note that the bank owes you cash. This may sound like a technical detail but as far as I understood without physical money there would be no bank accounts. That's what I always wondered about: how could an economy go 100 percent electronic banking, if banking is built on the exis…

Bitcoin is not 'electronic cash' as you define it here - it's a shared ledger - there are no coins. The only difference with a current account at your bank is central ledger vs distributed consensus ledger. Also why would a bank require physical cash? Banking is based on savings and loans, debt and credit, not cash. The money in your bank account is not backed by real coins somewhere in a vault.

There's a big difference. The bank is able to create money from thin air when you deposit funds, thanks to fractional reserve banking. Banks typically only need to hold 10% (or less) of total funds deposited. The rest they loan out, which always finds its way back into the banking system, so that effectively, banks are able to loan out about 10x what their depositors have in their accounts.

Holding Bitcoin, on the other hand, is more like gold in that there is only so much of it.

Re: Central Bank Digital Currencies are coming

#94

Post by chrisco255 »

throwawaygh wrote: post #32
fh973 wrote: post #29

Earlier quoted context omitted.

I can half answer that and hope somebody can complete the story. What you have in your bank account is not digital cash. It's effectively a note that the bank owes you cash. This may sound like a technical detail but as far as I understood without physical money there would be no bank accounts. That's what I always wondered about: how could an economy go 100 percent electronic banking, if banking is built on the exis…

> What you have in your bank account is not digital cash. It's effectively a note that the bank owes you cash. Yes. > as far as I understood without physical money there would be no bank accounts. I'm not sure why that would be the case. I've never withdrawn a physical dollar from my bank account. > how could an economy go 100 percent electronic banking, if banking is built on the existence of physical cash? This is…

Right, and also provides a mechanism to directly punish political opponents.

Re: Central Bank Digital Currencies are coming

#95

Post by chrisco255 »

A4ET8a8uTh0 wrote: post #65
jdsalaro wrote: post #55

Earlier quoted context omitted.

> The entire reason for crypto is the already ridiculous level of control exerted over various gatekeepers. How do I know? I am part of the system. Can you elaborate on the "ridiculous level of control over various gate-keepers"?

Sure. None of it is secret. There are regulations in place that enforce specific agenda under the guise of AML, fraud, sanctions, etc. For banks and MSBs type businesses that typically are covered under BSA. But even if you think you are not covered by BSA, there is always FinCEN, where OFAC's strict liability is a pretty big stick. That was high level, but during a more recent conference I participated in ( ages ago…

For sure. The government could easily freeze the funds or spending of any individual at any time. The hooks are already there. It tends to be used sparingly today, but for sure, that slippery slope will likely devolve into something Orwellian. Big brother is watching your spending.

Re: Central Bank Digital Currencies are coming

#96

Post by chrisco255 »

krmmalik wrote: post #80

I loved the discussion with Professor Richard Werner on a podcast lately. He talked about what the European Central Bank is planning and what this means for us as consumers and explains why CBDCs really mean for us. Here's the full interview https://youtu.be/OdYmdKUiQNw

Could you summarize what his thoughts are?

Re: Central Bank Digital Currencies are coming

#97

Post by drcode »

I_am_tiberius wrote: post #91

Summary of the biggest problem with digital currency managed by central banks: Central banks can use negative interests in order to force people to buy stuff. In the current system people would just withdraw cash in order to avoid negative interest rates if they are too high/low. In the future people will be forced to pay the interests or buy stuff. Governments want to use this mechanism in order to control the econo…

The technical term for what you're referring to is demurrage, i.e. when money that is sitting unused automatically, in any account, has fees applied to it. It's similar to "inflation", but instead of making new money, you take people's existing money. https://www.investopedia.com/terms/d/demurrage.asp

Re: Central Bank Digital Currencies are coming

#98

Post by fataliss »

I make the bet that "traditional" banks will steer to go cashless in the near future and start charging all kind of fees for things you never had to pay for back when you could hold money in your hand. This is why the utopia of a decentralized currency would be so needed and will be fought all the way.

Side-note: I don't like the environmental impact of BTC, but I don't like being a victim of banks (who tend to have a terrible impact on the env in their own ways).

Re: Central Bank Digital Currencies are coming

#99

Post by cinquemb »

I_am_tiberius wrote: post #91

Summary of the biggest problem with digital currency managed by central banks: Central banks can use negative interests in order to force people to buy stuff. In the current system people would just withdraw cash in order to avoid negative interest rates if they are too high/low. In the future people will be forced to pay the interests or buy stuff. Governments want to use this mechanism in order to control the econo…

That's what I like about CBDC's: They will incentivize more people to use non CBDC's than those who use them now the harder they try to enforce negative interest on savings on their CBDC's.
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