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Digital currencies allow for full tracking of every transactions and are a privacy nightmare. They allow applying negative interest rate on everybody and they

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.

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.