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What is the fuss over central-bank digital currencies?

85 points by known 6y ago

hackypatch 6y ago
They dont have a public audit trail like other popular digital currencies maybe?
jmnicolas 6y ago
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.
- judge2020 6y ago
  Sure, BTC and other popular ones work this way, but monero is completely anonymous (as long as senders don’t collude), so it’s not an inherit trait of crypto.
  - GoblinSlayer 6y ago
    CBDC is half-transparent, it's a private database: the owner sees everything, people see nothing.
  - gruez 6y ago
    >but monero is completely anonymous (as long as senders don’t collude). Not exactly. The decoy inputs/outputs provide anonymity if you look at a transaction in isolation, but doesn't when you look at repeated transactions. This is a problem that any cryptocurrency with a transaction graph will have. There are cryptocurrencies that don't have transaction graphs, but those have other issues (ie. not being able to detect counterfeiting)
- nfoz 6y ago
  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 eat the cost of this to enable some industries that right now cannot exist because transactions are too expensive.
  - dv_dt 6y ago
    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.
    - nigerian-craft 6y ago
      I'd like to introduce you to a man named David Chaum https://en.wikipedia.org/wiki/Blind_signature https://en.wikipedia.org/wiki/Blind_signature https://docs.wasabiwallet.io/building-wasabi/TechnicalOverview.html#iv-bitcoin-privacy-improvements https://docs.wasabiwallet.io/building-wasabi/TechnicalOvervi...
      - Proven 6y ago
        DC's coin is here: https://xx.network https://xx.network
  - PurpleFoxy 6y ago
    Cash is doomed to be phased out and Covid has sped this up a lot. Eventually you won’t have the option to use cash.
- Barrin92 6y ago
  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 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, and I don't really see what privacy or tracking burden applies that existing firms don't already engage in. To me the payment infrastructure consisting of countless of private firms seems more like a relic of the past. Free, instant financial services to me are ideally a public utility in the same way the water or transport infrastructure is.
  - vladvasiliu 6y ago
    > 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 Visa card being denominated in dEuros instead of Euros? I may be a pessimist, but the way I see it, the current end-user facing financial system (retail banks and payment processors) are much too big and much too greedy to stand idly by while the central bank takes their pie away.
    - WEFwoof 6y ago
      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.
- erentz 6y ago
  To the uninitiated some of what you say may sound like conspiracy thinking. But it’s really not. People in ECB have been talking along these lines for over a year. Here is the latest example. [1] The more you follow it the more it really seems like if the people in the ECB had their way they’d force everyone to live paycheck to paycheck and never save. They’ve been running negative interest rates and they don’t work (because they simply, empirically don’t). They won’t accept the empirical evidence and go back to the drawing board. Instead the problem in their minds is always they’ve never gone far enough! They want to keep doubling down and try to gain more and more centralized control of people’s money. [1] https://www.bloomberg.com/news/articles/2021-02-10/ecb-s-panetta-says-digital-euro-may-come-with-a-penalty-clause https://www.bloomberg.com/news/articles/2021-02-10/ecb-s-pan...
  - pjc50 6y ago
    Negative rates are only popular because the technocrats can't get expansionary fiscal policy to happen. Because Eurozone governments are boxed in with debt rules. The only way out of this to getting money circulating in the real economy is to go after the giant concentrations of wealth that are distorting the situation so badly.
    - imtringued 6y ago
      Yeah, the central bank only has a hammer (interest rates) but its supposed to do jobs that require screwdrivers. That's why it gets dumber and dumber. At some point you apply so much force on your hammer that it can drive screws. That's the idea behind negative interest rates.
- WEFwoof 6y ago
  > 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 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.
  - danialtz 6y ago
    The mandate is not discsussed yet but could come. CBs are running many pilots since they don‘t know also whether CBDC would work for their incentive, since it has to be accepted by citizens and not create a shock to economy. side note, „inclusive“ here refers to unbanked population. Today they can use cash, but many people specially in poor countries have no access to banking. A no-smartphone no-bank-needed digital cash could enable big part of countries to be included in financial system (some up to 40% of population)
    - WEFwoof 6y ago
      The transition can be done quickly enough, though probably not overnight in Europe (like with India's overnight demonetisation of the 500 and 1,000 Rupee notes). In the current climate, where we're all ever so slightly microbiophobic, it'll even be easier to push through as a good thing, handwaving any concerns with respect to privacy and centralised control as conspiratorial. Indeed I am aware of the intended meaning of "inclusive" in their texts, I just played around with expanding it a bit.
  - danialtz 6y ago
    Right on point distinction. There are various models: - almost all CBDC designs are transparent (monitored and stored), since they sit on the ledger and has to be auditable by a third party. So, the only way to allow privacy is to give some „vouchers“ that those transactions are either not stored or stored with a different key. ECB has proposed one such designs, e.g. 300 euro vouchers a day. - there are other models that do not use DLTs so they can provide means not to store specific txns, hence private. If stored, it can be audited.
- danialtz 6y ago
  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.
  - brobdingnagians 6y ago
    "privacy" as defined by the grocery store down the street can't see your history of purchases or privacy as in the government doesn't have every detail of every sexual fetish you've ever paid for? The FBI has been stockpiling that for decades. Those are very different things, and from Europe's approach to the GDPR, I think it is the first.
    - danialtz 6y ago
      Great point. The control of privacy should be in the protocol and not in the hands of the authorities, if there is going to be a trust built around it. Otherwise, we have what is there today, without the anonymous cash element. There are different designs today to address this concern, see e.g. the one from Bank of Canada, as one of the frontiers of privacy for citizen: https://www.bankofcanada.ca/2020/06/staff-analytical-note-2020-9/ https://www.bankofcanada.ca/2020/06/staff-analytical-note-20...
    - WEFwoof 6y ago
      Rather privacy as there can't be a direct connection between you and each one of your transactions, nor can the ECB refuse and cancel transaction of yours or completely exclude you from the system altogether. The former is almost a given that it will in fact be possible. The latter was raised as an added benefit of the system either by BIS's Carstens or IMF's Georgieva -- can't recall with certainty currently. Both are promoted as weapons against black markets, corruption, and terrorism. Yet those who are willing to give up liberty for safety, and all that.
- cmdshiftf4 6y ago
  >I don't like where we're going. You'll own nothing and you'll be happy.
  - jmnicolas 6y ago
    I'm pretty sure for the first part of your sentence but not the second one ;)
    - supercollision 6y ago
      just to footnote the quote since I didn't know what it meant the first couple times I saw it: It's likely in reference to an article and line in a video as part of the World Economic Forum's "Great Reset" concept. The article generated some backlash so they changed the article title and added some notes to bookend it. (edit: WEFwoof posted this below as well) https://www.weforum.org/agenda/2016/11/how-life-could-change-2030/ https://www.weforum.org/agenda/2016/11/how-life-could-change... Video: 8 predictions for the world in 2030 https://www.youtube.com/watch?v=Hx3DhoLFO4s https://www.youtube.com/watch?v=Hx3DhoLFO4s
- alkonaut 6y ago
  > Digital currencies allow for full tracking of every transaction This is an implementation detail. Merely adding “digital currency” in the sense of “personal accounts at the treasury” isn’t proper cash replacement. It is however possible to make a more anonymous kind of e-cash in which your transactions are not tracked. Chaum E-cash and similar ideas are useful cash-replacements. They aren’t without their on problems so e.g the Swedish central bank appears to be eyeing a double system where you have both types of system: a centralized/non-anonymous store and a token based type which provides anonymity. The latter could be used with a cap on transactions because if it’s properties wrt double spending.
- SuoDuanDao 6y ago
  I take a more optimistic view. Digital currencies seem to be perfectly suited to transactions where corruption is rampant. Take the construction industry. There is poor chain-of-custody and a lot of counterparty trust involved, so things disappear and the mafia gets richer. I don't want the construction industry to have great privacy standards, I want it to be transparent. So digital currency can absolutely be bad for privacy and a boon in certain spaces, specifically ones where trust is commonly abused. Cash can still exist in industries where we want trust to exist between different parties, those kinds of spaces are small enough that I doubt they'd be worth the effort to eradicate anyway. Not to say that I like where all of this is going myself, but blockchain for large and official transactions + metal currency for local informal transactions is one direction I wouldn't mind at all.
- qeternity 6y ago
  > (no need to print new bills at great expense) This is not how modern money supply works. The M2 has increased massively, and the number of new bills in circulation will not change materially. Currency is already digital. And sometimes we use physical paper to represent it.
- imtringued 6y ago
  >They allow applying negative interest rate on everybody and they would facilitate neverending hyperinflation (no need to print new bills at great expense). The central bank doesn't have hyperinflation as a policy goal though. If you are worried about hyperinflation ask yourself this: Will the economy will suddenly have a collapse in production capacity (nimbys cough cough)? If yes, then expect inflation higher than the policy goal.
  - jmnicolas 6y ago
    Hyperinflation might be a (not so) sneaky way to pay public debts without defaulting.
fourstar 6y ago
BTC: normies know it; network effect wills it ALGO/XLM/Etc: CBDC hop on and ride the road to riches. ZEC: what Hal Finney was trying to make BTC.
- UShouldBWorking 6y ago
  BTC: a Ponzi scheme for the rich. BCH: what Bitcoin always was. ETH: decentralized computing. XMR: anonymous Bitcoin.
GoblinSlayer 6y ago
They are inherently dangerous, money as a service, with all associated risks. What's next? Car as a service? House as a service? Government as a service? Life as a service?
- WEFwoof 6y ago
  "Welcome To 2030: I Own Nothing, Have No Privacy And Life Has Never Been Better" https://www.weforum.org/agenda/2016/11/how-life-could-change-2030/ https://www.weforum.org/agenda/2016/11/how-life-could-change... Some people call that utopia "technocratic collectivism", and others still salivate at the mere thought. In any case, it's part of the "new normal" championed by Schwab's WEF.
  - GoblinSlayer 6y ago
    Except that we won't have post-scarcity by 2030.
    - WEFwoof 6y ago
      Exactly, like we didn't have a life of leisure to spend it in cultural pursuits after the 1950s. Ah, well, perhaps when the robots come to serve, and until they revolt.
  - ktkoffroth 6y ago
    This world sounds like hell.
  - imtringued 6y ago
    I remember this article being posted on HN. My response was basically: What prevents a single individual from taking all the free stuff and using it in a wasteful manner? E.g. you get a car for free, only use it for one trip, scrap it and get another car for the next trip.
    - WEFwoof 6y ago
      In the context of the post/video, I'd say the social credit system (the "calories card"). If you abuse the resources, your card gets zeroed out, and you're effectively banished from society. In the example of the car that you give: cars are pooled anyway, and assigned for a trip, then returned to the pool. So essentially you always get another car for each trip, but you don't own it.
yenwodyah 6y ago
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.
- UShouldBWorking 6y ago
  The us central bank is NOT an arm of the government any more that Federal Express is an arm of the government.
- louloulou 6y ago
  A lot of that was due to government "suggestion": https://en.wikipedia.org/wiki/Operation_Choke_Point https://en.wikipedia.org/wiki/Operation_Choke_Point
  - vladvasiliu 6y ago
    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".
- GoblinSlayer 6y ago
  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.
- GNU_James 6y ago
  >political extremist sites like Parler
rahimnathwani 6y ago
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, due to deposit guarantee schemes, everyone is happy to accept that private money as if it is government money. Central banks are still exploring model of CBDC. They could expand #2, and allow any of us to hold central bank deposit accounts. But some central bankers worry that they are not the best folks to provide consumer services, so maybe private companies should design and operate the apps which will interface with the central bank's ledger.
- xorcist 6y ago
  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.
  - GoblinSlayer 6y ago
    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.
  - sanxiyn 6y ago
    I agree. CBDC is super exciting. We could get rid of deposit guarantee scheme, which is an abomination, once CBDC is in place.
neonate 6y ago
https://archive.is/RqeP9 https://archive.is/RqeP9
anm89 6y ago
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 reserve and many other central banks function by buying and selling the debt of their sovereignty to influence interest rates. They pay for these securities by essentially creating money that didn't exist before and trading it to an institution for their debt security. For a long time this money has just been digital, when the Fed creates money to buy a bond from JP Morgan, all they do is to update a line in a database. So they already have a digital currency, but only for dealing with large institutions. The idea of these new CBDCs is to setup a similar system but where the digital currency could be distributed to individual citizens. This would give the Fed a more powerful tool than it has ever had before because giving money directly to people is almost guaranteed to create real economic activity unlike adding to bank reserves(which is why we haven't seen meaningful inflation after 11 years of the Fed spamming reserve creation). Some of this is lightly speculative but a detailed scheme which is almost exactly this was already proposed in a bill to congress, The Banking For All Act: https://www.congress.gov/bill/116th-congress/senate-bill/3571/text https://www.congress.gov/bill/116th-congress/senate-bill/357... I don't think it is hyperbolic to say that CBDCs are the "how" part of MMT. They take most of the logistical difficulties out of direct to citizen cash transfers and this is their primary goal.
- erentz 6y ago
  If you really just want everyone to have access to banking, create post banking. [1] Then, if you really just want everyone to get monthly checks from the government, deposit them electronically. That’s all you need to do. This already works in many countries. It can even work in the US with a bit of spit and polish (we used to have a post banking service and it’s been proposed to be reinstated). [1] https://en.m.wikipedia.org/wiki/Postal_savings_system https://en.m.wikipedia.org/wiki/Postal_savings_system
  - LargoLasskhyfv 6y ago
deleted 6y ago
[deleted]
nexthash 6y ago
I welcome the convenience CBDC provides, but I am absolutely against the abolition of cash. You don't need to be an economist to see that having no cash is a nightmare - every transaction you make across your lifetime is tracked and can be shot down by somebody that is not you. I believe that cash should always exist as an alternative backup to any convenient electronic system. With responsibility comes authority, and taking too much authority from individuals is not healthy for a free society.
- imtringued 6y ago
  The problem with electronic cash is the dependence on internet and electricity. That's a very complicated foundation to build your society on. At a minimum you would need to provide free internet access to banking apps and free access to banking devices for it to be a solution for literally every citizen.
danialtz 6y ago
The CBDCs started with a great idea: to share the stability and security banks enjoy today with all citizen and retail sector in digital format, as public layer similar to internet, between what we have today (cash) and what the future maybe (web3). At the same time, the way you have right to use cash today (almost) in the way you desire, you should have right and possibility to do so also in the digital world of future. Today, most of the digital money is actually a private sector coin backed by fiat: you send paypal coin to another person, not real euro, and exchange it via another CC provider service. Cross-borders are order of magnitude more messy. They have similar problems like other stablecoins and cryptocurrencies while a few of their main value added are the solution to the challenges of cryptocurrencies: UX, and security among others. The private sector also has an incentivized and risk-averse view towards the basic right, e.g. inclusion and usage. The covid crisis showed that we cannot leave it to the private sector and banks among others to ensure the financial safety of people. Bank-runs happened because people do not have trust toward private sector, and regulatory actions are reactive at best. So enter CBDCs. Central banks wanted to provide the benefits while retaining control of money flow in country. Same incentives of old age into the digital world. But the challenge is that by providing a real CB backed currency one disintermediates the banking system. One reason not to break the economy without understanding the effects and the other reason being CBs themselves are not high tech and prefer to piggy back available distribution channels. So, CBs started offering two-layer approaches, which is almost identical to the today‘s financial model, mostly a technological improvement at best. DLTs replace Swifts of the world. Accounts will stay accounts, KYC stays in place, maybe some tools would be given to not require accounts for e.g. <$1k etc. External sovereignty threats, e.g. e-renminbi, is also a whole different story, taken the topic to the extreme, while still acting as a strong external motivator. One could ask then what‘s the fuss then? So, there is a technological demand to build CBDC, CBs have all incentives for themselves to build it to keep control, banks get to have a modern payment system for themselves, but what would change for the end user? Lower fees? obviously the view is biased towards modern world, e.g. in broken economies any order is better than none, some wallet is better than no bank, etc. Eventually, CBDCs in the first roll out are an evolution of the current banking system. There is no fuss about it, but rather finally there is enough momentum to align multiple heavy stakeholders on one strategy. disclaimer: the views are my personal views.
ryukafalz 6y ago
Here's what I'm most interested in here: right now, if I'm using an alternative mobile OS (besides iOS or Android), it's basically impossible for me to implement digital payments through existing payment networks. On the other hand, because cryptocurrencies are FOSS and very well-standardized, it's very possible to implement a cryptocurrency wallet. If central-bank digital currencies are closer to cryptocurrencies in this regard, and the protocol is standardized enough that mobile Linux OSes can have wallets... that'll be very much appreciated. I'd love to have mobile payments but not depend on Apple or Google.
- zadler 6y ago
  I’d wager that only very progressive and liberal countries would have this degree of openness. Think Switzerland and Holland. Most countries will distribute their own apps (which may also spy on you) and/or use preferred technology partners.
  - Tijdreiziger 6y ago
    Point of order: the name of the country is The Netherlands, not Holland.
  - burundi_coffee 6y ago
    Another point of order: Switzerland might be financially liberally oriented but the political landscape is largely conservative and right leaning.
    - chrisco255 6y ago
      What does financially liberal even mean here? When it comes to CBDCs and currency policy I don't even think I have gotten a strong sense of how the different camps split on this issue.
  - dgellow 6y ago
    Switzerland isn't considered progressive in any way, in fact it's a very conservative country compared to its neighbors (source: I'm from there).
silverlake 6y ago
CBDCs are not cryptocurrencies. Central banks are simply running their money transfer servers 24/7. It’s insane they haven’t done this before. Major economies will not offer central bank accounts to individuals because it would raise funding costs for banks. And the central bank doesn’t want to deal with customers directly.
dinglefairy 6y ago
i can't read the entire article, but i can read the comments. it doesn't look like anyone is talking about the real reason for CBDCs. which is to create more liquidity. in other words, to get money out of escrow while international cross border payments are settled. when a large transaction [billions] is made between two countries, there must be that much of each currency in either institutions account. it is there for days or weeks at a time. so that money isn't being put to work, it's just sitting there. a CBDC would settle these transactions within seconds. this is why something like xrp is interesting to many people. specifically, CBDCs are interesting where the IMF is involved. they issue to countries something called special drawing rights, SDRs. these are a basket of currencies used to 'balance' the international monetary system between the developed world and the developing world. [the world bank is where the g7-20 do their banking]. a 'one world currency' might look something like a CBDC SDR. since currency transactions can be immediately settled anywhere in the world, a [diversified package of] SDR would essentially serve as a 'world dollar'. as an aside, the economic reset being promoted, coincidentally by the world economic forum, i think, is an attempt at a peaceful transition away from the US dollar as the worlds reserve currency. and while it might be china's Yuan or reminbi that replaces it, i think it might be something more like an SDR. or, in other words, a basket of currencies lumped into one digital currency; a one world digital currency.
dharma1 6y ago
Do we still need payment processors (or perhaps even retail banks?) once we have central bank digital currencies?
aero- 6y ago
I think the notion that BTC or Ethereum are actually decentralized digital currencies is the biggest farce of the last 5 years. A small concentration of miners (mostly based in china) control the vast majority transactions and will continue to so based on the increased difficulity that only large economies of scale will profit from. Middlemen(brokers and exchanges) charge fees just like banks do to transact and store. The transaction fees on the chains are equivalent to that of just sending a bank wire, and your wallet is no more secure than a bank account (can still be hacked) and not FDIC insured. Where is the benefit now?
- doomroot 6y ago
  Hfsp
- rglullis 6y ago
  The concentration, though undesired, is accidental and not coordinated. That's the difference.
- kharak 6y ago
  Concentration seems to be unavoidable. A direct consequence of the power law respectively Matthew principle. I haven't researched the alternative PoS (prof of stake) concept too deeply, but I'd wager it'll end the same way. This isn't a technological problem, but a fundamental principle of our reality. Still, the ability to fork and just restart the chain from a previous point, with new miners, gives the collective some choice on a fundamental level, should the concentration ever become a problem.
walterbell 6y ago
IMF video clip with BIS director on CBDCs (at 24:00), https://meetings.imf.org/en/2020/Annual/Schedule/2020/10/19/imf-cross-border-payments-a-vision-for-the-future https://meetings.imf.org/en/2020/Annual/Schedule/2020/10/19/... > With cash, we don't know who is using the 100 dollar bill today ... a key difference with CBDC is that the central bank will have absolute control on the rules and regulations that determine the expression of that central bank liability .. also we will have the technology to enforce that ... if an advanced economy issues a CBDC, and someone in a 3rd country wants to use it, it will require the consent of the central bank of the residence of that person, therefore the degree of control will be far bigger.
- WEFwoof 6y ago
  Thank you for the link! Indeed it was Carstens and not Georgieva (as I wasn't clear in my other comment).
Proven 6y ago
> For central banks, digital cash offers a safer, faster and more flexible alternative to notes and coins Who the hell is the customer here? The people or the banks? They say some people might like having the option to keep their money on a trusted official platform. That is exactly a scenario that I want to avoid: I don't want to have any of my savings denominated in state-owned or state-endorsed currency. I mean, they aim to steal 2% per year by way of inflation. Why on earth would anyone want to do business with such thieves?

85 points by known 6y ago

They dont have a public audit trail like other popular digital currencies maybe?

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.

judge2020 6y ago
Sure, BTC and other popular ones work this way, but monero is completely anonymous (as long as senders don’t collude), so it’s not an inherit trait of crypto.
- GoblinSlayer 6y ago
  CBDC is half-transparent, it's a private database: the owner sees everything, people see nothing.
- gruez 6y ago
  >but monero is completely anonymous (as long as senders don’t collude). Not exactly. The decoy inputs/outputs provide anonymity if you look at a transaction in isolation, but doesn't when you look at repeated transactions. This is a problem that any cryptocurrency with a transaction graph will have. There are cryptocurrencies that don't have transaction graphs, but those have other issues (ie. not being able to detect counterfeiting)
nfoz 6y ago
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 eat the cost of this to enable some industries that right now cannot exist because transactions are too expensive.
- dv_dt 6y ago
  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.
  - nigerian-craft 6y ago
    I'd like to introduce you to a man named David Chaum https://en.wikipedia.org/wiki/Blind_signature https://en.wikipedia.org/wiki/Blind_signature https://docs.wasabiwallet.io/building-wasabi/TechnicalOverview.html#iv-bitcoin-privacy-improvements https://docs.wasabiwallet.io/building-wasabi/TechnicalOvervi...
    - Proven 6y ago
      DC's coin is here: https://xx.network https://xx.network
- PurpleFoxy 6y ago
  Cash is doomed to be phased out and Covid has sped this up a lot. Eventually you won’t have the option to use cash.
Barrin92 6y ago
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 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, and I don't really see what privacy or tracking burden applies that existing firms don't already engage in. To me the payment infrastructure consisting of countless of private firms seems more like a relic of the past. Free, instant financial services to me are ideally a public utility in the same way the water or transport infrastructure is.
- vladvasiliu 6y ago
  > 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 Visa card being denominated in dEuros instead of Euros? I may be a pessimist, but the way I see it, the current end-user facing financial system (retail banks and payment processors) are much too big and much too greedy to stand idly by while the central bank takes their pie away.
  - WEFwoof 6y ago
    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.
erentz 6y ago
To the uninitiated some of what you say may sound like conspiracy thinking. But it’s really not. People in ECB have been talking along these lines for over a year. Here is the latest example. [1] The more you follow it the more it really seems like if the people in the ECB had their way they’d force everyone to live paycheck to paycheck and never save. They’ve been running negative interest rates and they don’t work (because they simply, empirically don’t). They won’t accept the empirical evidence and go back to the drawing board. Instead the problem in their minds is always they’ve never gone far enough! They want to keep doubling down and try to gain more and more centralized control of people’s money. [1] https://www.bloomberg.com/news/articles/2021-02-10/ecb-s-panetta-says-digital-euro-may-come-with-a-penalty-clause https://www.bloomberg.com/news/articles/2021-02-10/ecb-s-pan...
- pjc50 6y ago
  Negative rates are only popular because the technocrats can't get expansionary fiscal policy to happen. Because Eurozone governments are boxed in with debt rules. The only way out of this to getting money circulating in the real economy is to go after the giant concentrations of wealth that are distorting the situation so badly.
  - imtringued 6y ago
    Yeah, the central bank only has a hammer (interest rates) but its supposed to do jobs that require screwdrivers. That's why it gets dumber and dumber. At some point you apply so much force on your hammer that it can drive screws. That's the idea behind negative interest rates.
WEFwoof 6y ago
> 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 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.
- danialtz 6y ago
  The mandate is not discsussed yet but could come. CBs are running many pilots since they don‘t know also whether CBDC would work for their incentive, since it has to be accepted by citizens and not create a shock to economy. side note, „inclusive“ here refers to unbanked population. Today they can use cash, but many people specially in poor countries have no access to banking. A no-smartphone no-bank-needed digital cash could enable big part of countries to be included in financial system (some up to 40% of population)
  - WEFwoof 6y ago
    The transition can be done quickly enough, though probably not overnight in Europe (like with India's overnight demonetisation of the 500 and 1,000 Rupee notes). In the current climate, where we're all ever so slightly microbiophobic, it'll even be easier to push through as a good thing, handwaving any concerns with respect to privacy and centralised control as conspiratorial. Indeed I am aware of the intended meaning of "inclusive" in their texts, I just played around with expanding it a bit.
- danialtz 6y ago
  Right on point distinction. There are various models: - almost all CBDC designs are transparent (monitored and stored), since they sit on the ledger and has to be auditable by a third party. So, the only way to allow privacy is to give some „vouchers“ that those transactions are either not stored or stored with a different key. ECB has proposed one such designs, e.g. 300 euro vouchers a day. - there are other models that do not use DLTs so they can provide means not to store specific txns, hence private. If stored, it can be audited.
danialtz 6y ago
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.
- brobdingnagians 6y ago
  "privacy" as defined by the grocery store down the street can't see your history of purchases or privacy as in the government doesn't have every detail of every sexual fetish you've ever paid for? The FBI has been stockpiling that for decades. Those are very different things, and from Europe's approach to the GDPR, I think it is the first.
  - danialtz 6y ago
    Great point. The control of privacy should be in the protocol and not in the hands of the authorities, if there is going to be a trust built around it. Otherwise, we have what is there today, without the anonymous cash element. There are different designs today to address this concern, see e.g. the one from Bank of Canada, as one of the frontiers of privacy for citizen: https://www.bankofcanada.ca/2020/06/staff-analytical-note-2020-9/ https://www.bankofcanada.ca/2020/06/staff-analytical-note-20...
  - WEFwoof 6y ago
    Rather privacy as there can't be a direct connection between you and each one of your transactions, nor can the ECB refuse and cancel transaction of yours or completely exclude you from the system altogether. The former is almost a given that it will in fact be possible. The latter was raised as an added benefit of the system either by BIS's Carstens or IMF's Georgieva -- can't recall with certainty currently. Both are promoted as weapons against black markets, corruption, and terrorism. Yet those who are willing to give up liberty for safety, and all that.
cmdshiftf4 6y ago
>I don't like where we're going. You'll own nothing and you'll be happy.
- jmnicolas 6y ago
  I'm pretty sure for the first part of your sentence but not the second one ;)
  - supercollision 6y ago
    just to footnote the quote since I didn't know what it meant the first couple times I saw it: It's likely in reference to an article and line in a video as part of the World Economic Forum's "Great Reset" concept. The article generated some backlash so they changed the article title and added some notes to bookend it. (edit: WEFwoof posted this below as well) https://www.weforum.org/agenda/2016/11/how-life-could-change-2030/ https://www.weforum.org/agenda/2016/11/how-life-could-change... Video: 8 predictions for the world in 2030 https://www.youtube.com/watch?v=Hx3DhoLFO4s https://www.youtube.com/watch?v=Hx3DhoLFO4s
alkonaut 6y ago
> Digital currencies allow for full tracking of every transaction This is an implementation detail. Merely adding “digital currency” in the sense of “personal accounts at the treasury” isn’t proper cash replacement. It is however possible to make a more anonymous kind of e-cash in which your transactions are not tracked. Chaum E-cash and similar ideas are useful cash-replacements. They aren’t without their on problems so e.g the Swedish central bank appears to be eyeing a double system where you have both types of system: a centralized/non-anonymous store and a token based type which provides anonymity. The latter could be used with a cap on transactions because if it’s properties wrt double spending.
SuoDuanDao 6y ago
I take a more optimistic view. Digital currencies seem to be perfectly suited to transactions where corruption is rampant. Take the construction industry. There is poor chain-of-custody and a lot of counterparty trust involved, so things disappear and the mafia gets richer. I don't want the construction industry to have great privacy standards, I want it to be transparent. So digital currency can absolutely be bad for privacy and a boon in certain spaces, specifically ones where trust is commonly abused. Cash can still exist in industries where we want trust to exist between different parties, those kinds of spaces are small enough that I doubt they'd be worth the effort to eradicate anyway. Not to say that I like where all of this is going myself, but blockchain for large and official transactions + metal currency for local informal transactions is one direction I wouldn't mind at all.
qeternity 6y ago
> (no need to print new bills at great expense) This is not how modern money supply works. The M2 has increased massively, and the number of new bills in circulation will not change materially. Currency is already digital. And sometimes we use physical paper to represent it.
imtringued 6y ago
>They allow applying negative interest rate on everybody and they would facilitate neverending hyperinflation (no need to print new bills at great expense). The central bank doesn't have hyperinflation as a policy goal though. If you are worried about hyperinflation ask yourself this: Will the economy will suddenly have a collapse in production capacity (nimbys cough cough)? If yes, then expect inflation higher than the policy goal.
- jmnicolas 6y ago
  Hyperinflation might be a (not so) sneaky way to pay public debts without defaulting.

fourstar 6y ago

BTC: normies know it; network effect wills it ALGO/XLM/Etc: CBDC hop on and ride the road to riches. ZEC: what Hal Finney was trying to make BTC.

UShouldBWorking 6y ago
BTC: a Ponzi scheme for the rich. BCH: what Bitcoin always was. ETH: decentralized computing. XMR: anonymous Bitcoin.

GoblinSlayer 6y ago

They are inherently dangerous, money as a service, with all associated risks. What's next? Car as a service? House as a service? Government as a service? Life as a service?

WEFwoof 6y ago
"Welcome To 2030: I Own Nothing, Have No Privacy And Life Has Never Been Better" https://www.weforum.org/agenda/2016/11/how-life-could-change-2030/ https://www.weforum.org/agenda/2016/11/how-life-could-change... Some people call that utopia "technocratic collectivism", and others still salivate at the mere thought. In any case, it's part of the "new normal" championed by Schwab's WEF.
- GoblinSlayer 6y ago
  Except that we won't have post-scarcity by 2030.
  - WEFwoof 6y ago
    Exactly, like we didn't have a life of leisure to spend it in cultural pursuits after the 1950s. Ah, well, perhaps when the robots come to serve, and until they revolt.
- ktkoffroth 6y ago
  This world sounds like hell.
- imtringued 6y ago
  I remember this article being posted on HN. My response was basically: What prevents a single individual from taking all the free stuff and using it in a wasteful manner? E.g. you get a car for free, only use it for one trip, scrap it and get another car for the next trip.
  - WEFwoof 6y ago
    In the context of the post/video, I'd say the social credit system (the "calories card"). If you abuse the resources, your card gets zeroed out, and you're effectively banished from society. In the example of the car that you give: cars are pooled anyway, and assigned for a trip, then returned to the pool. So essentially you always get another car for each trip, but you don't own it.

yenwodyah 6y ago

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.

UShouldBWorking 6y ago
The us central bank is NOT an arm of the government any more that Federal Express is an arm of the government.
louloulou 6y ago
A lot of that was due to government "suggestion": https://en.wikipedia.org/wiki/Operation_Choke_Point https://en.wikipedia.org/wiki/Operation_Choke_Point
- vladvasiliu 6y ago
  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".
GoblinSlayer 6y ago
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.
GNU_James 6y ago
>political extremist sites like Parler

rahimnathwani 6y ago

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, due to deposit guarantee schemes, everyone is happy to accept that private money as if it is government money. Central banks are still exploring model of CBDC. They could expand #2, and allow any of us to hold central bank deposit accounts. But some central bankers worry that they are not the best folks to provide consumer services, so maybe private companies should design and operate the apps which will interface with the central bank's ledger.

xorcist 6y ago
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.
- GoblinSlayer 6y ago
  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.
- sanxiyn 6y ago
  I agree. CBDC is super exciting. We could get rid of deposit guarantee scheme, which is an abomination, once CBDC is in place.

neonate 6y ago

https://archive.is/RqeP9 https://archive.is/RqeP9

anm89 6y ago

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 reserve and many other central banks function by buying and selling the debt of their sovereignty to influence interest rates. They pay for these securities by essentially creating money that didn't exist before and trading it to an institution for their debt security. For a long time this money has just been digital, when the Fed creates money to buy a bond from JP Morgan, all they do is to update a line in a database. So they already have a digital currency, but only for dealing with large institutions. The idea of these new CBDCs is to setup a similar system but where the digital currency could be distributed to individual citizens. This would give the Fed a more powerful tool than it has ever had before because giving money directly to people is almost guaranteed to create real economic activity unlike adding to bank reserves(which is why we haven't seen meaningful inflation after 11 years of the Fed spamming reserve creation). Some of this is lightly speculative but a detailed scheme which is almost exactly this was already proposed in a bill to congress, The Banking For All Act: https://www.congress.gov/bill/116th-congress/senate-bill/3571/text https://www.congress.gov/bill/116th-congress/senate-bill/357... I don't think it is hyperbolic to say that CBDCs are the "how" part of MMT. They take most of the logistical difficulties out of direct to citizen cash transfers and this is their primary goal.

erentz 6y ago
If you really just want everyone to have access to banking, create post banking. [1] Then, if you really just want everyone to get monthly checks from the government, deposit them electronically. That’s all you need to do. This already works in many countries. It can even work in the US with a bit of spit and polish (we used to have a post banking service and it’s been proposed to be reinstated). [1] https://en.m.wikipedia.org/wiki/Postal_savings_system https://en.m.wikipedia.org/wiki/Postal_savings_system
- LargoLasskhyfv 6y ago

deleted 6y ago

[deleted]

nexthash 6y ago

I welcome the convenience CBDC provides, but I am absolutely against the abolition of cash. You don't need to be an economist to see that having no cash is a nightmare - every transaction you make across your lifetime is tracked and can be shot down by somebody that is not you. I believe that cash should always exist as an alternative backup to any convenient electronic system. With responsibility comes authority, and taking too much authority from individuals is not healthy for a free society.

imtringued 6y ago
The problem with electronic cash is the dependence on internet and electricity. That's a very complicated foundation to build your society on. At a minimum you would need to provide free internet access to banking apps and free access to banking devices for it to be a solution for literally every citizen.

danialtz 6y ago

The CBDCs started with a great idea: to share the stability and security banks enjoy today with all citizen and retail sector in digital format, as public layer similar to internet, between what we have today (cash) and what the future maybe (web3). At the same time, the way you have right to use cash today (almost) in the way you desire, you should have right and possibility to do so also in the digital world of future. Today, most of the digital money is actually a private sector coin backed by fiat: you send paypal coin to another person, not real euro, and exchange it via another CC provider service. Cross-borders are order of magnitude more messy. They have similar problems like other stablecoins and cryptocurrencies while a few of their main value added are the solution to the challenges of cryptocurrencies: UX, and security among others. The private sector also has an incentivized and risk-averse view towards the basic right, e.g. inclusion and usage. The covid crisis showed that we cannot leave it to the private sector and banks among others to ensure the financial safety of people. Bank-runs happened because people do not have trust toward private sector, and regulatory actions are reactive at best. So enter CBDCs. Central banks wanted to provide the benefits while retaining control of money flow in country. Same incentives of old age into the digital world. But the challenge is that by providing a real CB backed currency one disintermediates the banking system. One reason not to break the economy without understanding the effects and the other reason being CBs themselves are not high tech and prefer to piggy back available distribution channels. So, CBs started offering two-layer approaches, which is almost identical to the today‘s financial model, mostly a technological improvement at best. DLTs replace Swifts of the world. Accounts will stay accounts, KYC stays in place, maybe some tools would be given to not require accounts for e.g. <$1k etc. External sovereignty threats, e.g. e-renminbi, is also a whole different story, taken the topic to the extreme, while still acting as a strong external motivator. One could ask then what‘s the fuss then? So, there is a technological demand to build CBDC, CBs have all incentives for themselves to build it to keep control, banks get to have a modern payment system for themselves, but what would change for the end user? Lower fees? obviously the view is biased towards modern world, e.g. in broken economies any order is better than none, some wallet is better than no bank, etc. Eventually, CBDCs in the first roll out are an evolution of the current banking system. There is no fuss about it, but rather finally there is enough momentum to align multiple heavy stakeholders on one strategy. disclaimer: the views are my personal views.

ryukafalz 6y ago

Here's what I'm most interested in here: right now, if I'm using an alternative mobile OS (besides iOS or Android), it's basically impossible for me to implement digital payments through existing payment networks. On the other hand, because cryptocurrencies are FOSS and very well-standardized, it's very possible to implement a cryptocurrency wallet. If central-bank digital currencies are closer to cryptocurrencies in this regard, and the protocol is standardized enough that mobile Linux OSes can have wallets... that'll be very much appreciated. I'd love to have mobile payments but not depend on Apple or Google.

zadler 6y ago
I’d wager that only very progressive and liberal countries would have this degree of openness. Think Switzerland and Holland. Most countries will distribute their own apps (which may also spy on you) and/or use preferred technology partners.
- Tijdreiziger 6y ago
  Point of order: the name of the country is The Netherlands, not Holland.
- burundi_coffee 6y ago
  Another point of order: Switzerland might be financially liberally oriented but the political landscape is largely conservative and right leaning.
  - chrisco255 6y ago
    What does financially liberal even mean here? When it comes to CBDCs and currency policy I don't even think I have gotten a strong sense of how the different camps split on this issue.
- dgellow 6y ago
  Switzerland isn't considered progressive in any way, in fact it's a very conservative country compared to its neighbors (source: I'm from there).

silverlake 6y ago

CBDCs are not cryptocurrencies. Central banks are simply running their money transfer servers 24/7. It’s insane they haven’t done this before. Major economies will not offer central bank accounts to individuals because it would raise funding costs for banks. And the central bank doesn’t want to deal with customers directly.

dinglefairy 6y ago

i can't read the entire article, but i can read the comments. it doesn't look like anyone is talking about the real reason for CBDCs. which is to create more liquidity. in other words, to get money out of escrow while international cross border payments are settled. when a large transaction [billions] is made between two countries, there must be that much of each currency in either institutions account. it is there for days or weeks at a time. so that money isn't being put to work, it's just sitting there. a CBDC would settle these transactions within seconds. this is why something like xrp is interesting to many people. specifically, CBDCs are interesting where the IMF is involved. they issue to countries something called special drawing rights, SDRs. these are a basket of currencies used to 'balance' the international monetary system between the developed world and the developing world. [the world bank is where the g7-20 do their banking]. a 'one world currency' might look something like a CBDC SDR. since currency transactions can be immediately settled anywhere in the world, a [diversified package of] SDR would essentially serve as a 'world dollar'. as an aside, the economic reset being promoted, coincidentally by the world economic forum, i think, is an attempt at a peaceful transition away from the US dollar as the worlds reserve currency. and while it might be china's Yuan or reminbi that replaces it, i think it might be something more like an SDR. or, in other words, a basket of currencies lumped into one digital currency; a one world digital currency.

dharma1 6y ago

Do we still need payment processors (or perhaps even retail banks?) once we have central bank digital currencies?

aero- 6y ago

I think the notion that BTC or Ethereum are actually decentralized digital currencies is the biggest farce of the last 5 years. A small concentration of miners (mostly based in china) control the vast majority transactions and will continue to so based on the increased difficulity that only large economies of scale will profit from. Middlemen(brokers and exchanges) charge fees just like banks do to transact and store. The transaction fees on the chains are equivalent to that of just sending a bank wire, and your wallet is no more secure than a bank account (can still be hacked) and not FDIC insured. Where is the benefit now?

doomroot 6y ago
Hfsp
rglullis 6y ago
The concentration, though undesired, is accidental and not coordinated. That's the difference.
kharak 6y ago
Concentration seems to be unavoidable. A direct consequence of the power law respectively Matthew principle. I haven't researched the alternative PoS (prof of stake) concept too deeply, but I'd wager it'll end the same way. This isn't a technological problem, but a fundamental principle of our reality. Still, the ability to fork and just restart the chain from a previous point, with new miners, gives the collective some choice on a fundamental level, should the concentration ever become a problem.

walterbell 6y ago

IMF video clip with BIS director on CBDCs (at 24:00), https://meetings.imf.org/en/2020/Annual/Schedule/2020/10/19/imf-cross-border-payments-a-vision-for-the-future https://meetings.imf.org/en/2020/Annual/Schedule/2020/10/19/... > With cash, we don't know who is using the 100 dollar bill today ... a key difference with CBDC is that the central bank will have absolute control on the rules and regulations that determine the expression of that central bank liability .. also we will have the technology to enforce that ... if an advanced economy issues a CBDC, and someone in a 3rd country wants to use it, it will require the consent of the central bank of the residence of that person, therefore the degree of control will be far bigger.

WEFwoof 6y ago
Thank you for the link! Indeed it was Carstens and not Georgieva (as I wasn't clear in my other comment).

Proven 6y ago

> For central banks, digital cash offers a safer, faster and more flexible alternative to notes and coins Who the hell is the customer here? The people or the banks? They say some people might like having the option to keep their money on a trusted official platform. That is exactly a scenario that I want to avoid: I don't want to have any of my savings denominated in state-owned or state-endorsed currency. I mean, they aim to steal 2% per year by way of inflation. Why on earth would anyone want to do business with such thieves?