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I've not really understood the need for a "digital" pound, the pound is pretty digital already. I can already have an entirely digital bank account from at lea

I've not really understood the need for a "digital" pound, the pound is pretty digital already. I can already have an entirely digital bank account from at least three "challenger" banks. There are also now at least two business accounts that also entirely virtual. "Faster Payments" (customer bank transfers) are delivered in seconds. I can see a need for speeding up BACS, and reducing the price of CHAPS, but apart from that, there isn't much wrong with the pound. changing to having an open ledger(bitcoin style) isn't entirely great as a normal citizen. I don't really want my entire financial history to be picked over by advertisers, insurance companies, future employers, and spam/scam bots. A government isn't ever going to allow a normal citizen to have a anonymous payments system so I don't see them allowing a purely private and anonymous currency (ala-monero)

xwolfi 6y ago
A normal citizen is never gonna build a government that allows for anonymous payment systems. To often people speak of their government as completely abstract separated entity they can only submit to. But actually, they elect them and the government even follow them in their craziest follies, like, say, leaving the EU in the UK.
- KaiserPro 6y ago
  > To often people speak of their government as completely abstract separated entity they can only submit to. it is a compromise. I don't want to live in anarchy (sorry, a libertarian world) because like extreme communism it has inherent flaws. Thus I submit to being ruled by the UK government, and actively vote in elections. However as its a compromise, no present party with a chance of winning power reflects my views, thus compromise. However to your main point. Anonymous easy payments are a vector for corruption, crime and general bad stuff. Sure there are good usecases for it, but mostly it'll be used to avoid tax.
  - jokethrowaway 6y ago
    I share your feelings on government but, after reading The Machinery of Freedom, I believe anarchy is worth a shot. I wonder if you would reconsider anarchy if there was a private system of entities providing government-like services and compete with each other. http://daviddfriedman.com/The_Machinery_of_Freedom_.pdf http://daviddfriedman.com/The_Machinery_of_Freedom_.pdf
- thrwyoilarticle 6y ago
  We don't elect the Bank of England. And while it's government as the US likes to use the word, it's not government as the UK likes to.
- jokethrowaway 6y ago
  The influence you get with democracy is very limited. I don't feel represented by any of the parties that have a chance to get into power. Democracy is literally the majority ruling over the minority - the problem being that even that majority can pick between entities they agree with on some issues and not others. Decentralisation of power is the only way to get control back to people and out of an elected oligarchy.
bitcoinmonger 6y ago
This will be good for anyone interested in using modern cryptocurrencies, whilst also allowing governments to control access to accounts and adjust the money supply if necessary. It's a win-win for everyone. Also the energy required to secure the ledger will be dramatically reduced. Proof of work can be replaced by physical security, which is more energy efficient. Anyone wanting to rewrite the ledger would need more power than the government has in protecting it.
- KaiserPro 6y ago
  > Proof of work can be replaced by physical security, which is more energy efficient. I'm not sure you understand how banking works. The BoE already has a ledger, its just private[1] for a number of reason (the banks accounts are published, but not in real time, and not by individual account). All banks have ledgers, and sometimes they even marry up. [1]well kind of.
  - bitcoinmonger 6y ago
    What would happen if you walked in to their server room and tried to update their database to reverse a payment?
    - scrollaway 6y ago
      Simply, "It doesn't work like that". Very similar to how you can't just "hack bitcoin and change your wallet value". At best you can use your web inspector to add zeroes to your balance. Transactions in ledger-based accounting require a source and target account. In double-entry, all transaction legs have to sum to zero. "$10 on Paul; -$10 on Alice." Your "current balance" may be cached, but it's never used. Most financial systems (which I suspect extends to banks, but I could be wrong) will enforce recalculation of at least the tip of the account's ledger whenever a transaction comes out of it. You don't just add/substract from a cached number.
    - KaiserPro 6y ago
      You would be politely asked why you were in a restricted area, and asked to leave. Currency is based on trust. Trust that the ledger is correct, auditable and matches up. but to address your question, its possible to unilaterally reverse a payment, but as you'll then have to tell the clearing house to reverse the transaction, you'll need to get authorization from thirdparty, which is tricky. Moving money around inside a bank though is probably much easier. However you're far better off just running a limited company and offering loans, that's a far easier way commit fraud.
veritascap 6y ago
The reason for a CBDC are new features. Money that can be programmed to only be used in certain ways, with certain groups, or at certain times, e.g. expiring money. It’s more nudging power for our unelected technocrat dear leaders. Imagine the possibilities!
- Broken_Hippo 6y ago
  So, less functional money? More complicated gift card?
  - LatteLazy 6y ago
    I think it's more like making negative interest rates or a wealth tax unavoidable... /TinFoilHat
  - deleted 6y ago
    [deleted]
  - SturgeonsLaw 6y ago
    Just think of it as money-as-a-service
  - enos_feedler 6y ago
    If the reason the government doesn't want to spend money on it's people is because they fear the money will be spent on the wrong things (outside the scope of what they are trying to fix) then making money less functional is actually more functional.
- stunt 6y ago
  The only thing this has in common with Bitcoin is "digital". The rest is pretty much opposite of what Bitcoin was supposed to be. (And I say "was supposed to be" because everyone has a different idea about what Bitcoin is today. But that's not related to this discussion here.)
  - rvense 6y ago
    I don't think anyone could credibly claim that Bitcoin is what it set out to be. The original paper calls it "electronic cash" and in its introduction describes private people using it for small transactions, replacing trust with cryptography. I would hope that a CBDC shares that original goal of replacing cash, though to what extent cryptography will be involved I'm not sure. (I do doubt BoE are just going to fork the Bitcoin code and spin up their own blockchain.)
mytailorisrich 6y ago
Currency is not digital. What they mean by "digital currency" is a for instance a purely digital bank note than you can hold and transfer to someone else (like for instance a crypto token). Clearly that's not how things work now. Edit: See my further comment below as it looks like people don't quite understand what "digital currency" is.
- Broken_Hippo 6y ago
  So, it'll do a thing I can already do with money?
- KaiserPro 6y ago
  That's literally how the BoE works. when you do a bank transfer, do you think they physical cash? When the BoE does quantitative easing, they don't actually print money[1], they just "transfer" money to banks who then do "things" with it. Its literally just numbers in a DB. [1] handling physical cash is expensive, slow and difficult. Not only is the price of movement relatively static regardless of the value, you have to keep on paying to store the stuff. The Federal reserve do things differently I think, because are not quite as all in one as the BoE.
  - mytailorisrich 6y ago
    > That's literally how the BoE works Not, it's not. It seems you and others are confused here and do not understand what is meant by "digital currency". Digital currencies, like what is discussed and e.g. the "digital yuan" in China, it to create real digital bank notes / coins. Not expert by I think similar to a crypto token. It means I can hold a digital bank note and pay you by transferring it to you. This is very different to the current system in which I instruct my bank to do something and to balance with the recipient's bank. Depending how this is implemented it can be anonymous like physical bank notes, or it can be tracked and plenty of other things also become possible. It also does not require me to interact with my bank.
    - SideburnsOfDoom 6y ago
SideburnsOfDoom 6y ago
> the pound is pretty digital already. What you didn't mention is that it's also already pretty digital at point of sale as well; Contactless payment, i.e. "card taps" are very common.
dools 6y ago
The important distinction is that currently all cashless payment systems are privately run for profit which is effectively a regressive transaction tax.
- KaiserPro 6y ago
  I understand your point and sympathise, but Handling cash isn't free. yes, for small traders and personal use, cash is effectively free. but as soon as you start to put it into the bank, it incurs a cost. Depending on where you are, this cost might be hidden from you. (banking in the USA for example is expensive compared to the UK) However as you point out, those companies that provide PoS terminals take either a monthly fee, or a percentage cut.
  - rvense 6y ago
    > I understand your point and sympathise, but Handling cash isn't free. Neither are roads, railways, wastewater treatment, communication lines or electricity. Money is infrastructure, and it makes sense for government to control and subsidize these to secure free and equal access, as well as ensure that developments of them occur in ways that benefit all members of society.
- captn3m0 6y ago
  So would switching it to a non-profit government body? NPCI (India's quasi-government retail payments infrastructure company) is a non-profit and they're looking to switch to a for-profit. It worked quite well, I'd say.
- rvense 6y ago
  It's also just a control thing. When private enterprises control (and create) money, they will do so based on their own interests. These might not align with the best interests of society at large.
  - lainga 6y ago
    Well, in Keynesian analysis, the private enterprises are supposed to create money. The gov't manages how much they create though reserve requirements.
jfjfntntkt 6y ago
Please tell me how I can transfer one pound from me to you using a 20 line Python script? That's what people mean by digital currency. If you are going to mention the open banking API initiative, then what are the requirements to get access to that? You can't as an individual. Also, this was the easy case, inter-UK. Now tell me how to transfer using Python and without applying to all kinds of regulators for API access a pound from a UK account to a US/EU/Japan account.
- 300bps 6y ago
  What happens if the person you send the money to doesn’t deliver? What happens if someone compromises your account and sends all of your money away fraudulently? These are just two basic things that the current financial system deals with thousands of times per day. And what about fees? BTC, ETH and many other coins are essentially unusable for smaller transactions. Sending .02 ETH (about $45) from my MEW wallet costs .00292 ETH (about $6.75).
  - jfjfntntkt 6y ago
    The fact that there are problems to solve doesn't meant that we should just not have the thing. What happens if I give a street artist 5 pounds to draw my picture and then he flatly refuses? What happens if someone mugs me on the street and steals 100 pounds from me? Should we not have cash at all because of these two problems, and others?
    - lottin 6y ago
      The problems are already solved with the current financial system. That's the point.
      - megameter 6y ago
        They're addressed, not solved. The problems still exist.
  - pessimizer 6y ago
rvense 6y ago
Money is infrastructure, and the digitization of money has resulted in the privatization of that infrastructure. I don't think that was ever part of the plan, really, as far as the government goes.
- timelincoln 6y ago
  its a good point but more interesting to consider the history of money as a private enterprise, aka fractional reserve banking and independence of the fed, -> private financiers of governments going back through the ages. Modern gov fiat has been the best form of money yet but is still backed by private 'lending' . Whats SUPER interesting is how the proof of work -> proof of stake models continue to provide a monetary system in which the money holders control the system, it seems for now an unavoidable component -> good incentives for value allocators
- deleted 6y ago
  [deleted]
zzzzzzzza 6y ago
uhm... physical cash is an anonymous payment system?
- SturgeonsLaw 6y ago
  Which is why it's under attack. Here in Australia the government considered (though later dropped) a bill criminalising cash transactions of over AUD$10,000 between businesses and an individual. Covid was also used in government PR to try and sell the idea of a cashless society.
- xyzzy123 6y ago
  It looks that way until you try to put a lot of it in a bank or turn it into "big people money" aka capital. Roughly at that point governments would like to have some idea of who you are.
throw1234651234 6y ago
Someone explained this to me last year with an example, and it 'clicked'. The idea is to let the government control the 'velocity of money'. For example, the US is giving out stimulus checks for COVID - the clear goal is to keep business afloat and people spending, but what if they just put the money into savings or crypto? The government did not achieve their goal. To achieve their goal, they program the money with "must be spent on consumer goods and/or rent in the next 6 months." Then they put a "smart contract" on the money and say "can only be spent if you are drug free and looked for a job in the last 6 months." It's scary and I am against it, but above is the upside, from a certain perspective.
- ObserverNeutral 6y ago
  Japan tried this in the 90s with expiring vouchers, results were subpar. The bailwick of Jersey sent citizens a prepaid card with £100 expiring in 6 monhts which was also disabled for ATM withdrawls during 2020. Again moderate results. Money is a unit of account, if you mess with it people adjust quickly, there is no free lunch. It's not the same as giving Wellbutrin+Ritalin to somebody who is depressed.
  - synnejye 6y ago
    Then they must have be doing something wrong? Obviously people would not be foregoing free money if it was easy to get. You are arguing that people would not spend "free" 100 usd on their rent if the money/voucher was directed towards rent.
    - ObserverNeutral 6y ago
      "How bad things must be if the government resorts to giving us free money with an expiration date to force us to spend? I'll spend my 100$ card before it expires but I'll save extra 200$ of my salary compared to before. I have to brace for the worst that it's yet to come, it's going to be really bad before it gets better, especially given that the Government is resorting to giving us free money " The more you use extreme measures to force people to do what they don't want, the more they'd refuse to do so. When people are scared and paralyzed by fear, messing with the unit of account won't calm their worries, if anything given how out of the ordinary it is, it could be argued that it makes things worse. Money is external, people pick the scheme apart rather quickly and you end up worse than before because now you look desperate to force them to do what you want
tumetab1 6y ago
A good example why current currencies are not digital, like Bitcoin, is the settlement process of a public trade stock which takes 2 days because of the current financial system. A digital currency would make possible to settle a trade stock in minutes or even seconds. A digital currency would remove a lot of transactions costs associated with buying/selling stocks.
- misja111 6y ago
  The stock trade settlement time has little to do with the financial system, but more with how stock trading is organised. There are quite a few steps before actual stocks can change hands. For instance the seller could have sold without actually owning the stocks, it might be he even can't deliver them, in which case the clearing will have to take care of that, etc. All these steps could have been automated long ago if the will was there, the reason they haven't is not because of the currency used but because of traditional common practice and legacy reasons.
- betterunix2 6y ago
  Actually, no. Stock trading is settled over a period of two days only because of how the system is currently organized; it is technically possible to settle trades at the end of the day, or even in real time, and there are exchanges in the world that settle trades rapidly. The reason the US exchanges have not changed is inertia, and settlement periods have actually decreased just in my lifetime. One real reason why digital currencies are not widely deployed is crime. Already there is a growing problem of ransomware demanding Bitcoin payments; a "true" digital currency that was as convenient as Bitcoin and allowed offline (peer-to-peer) payments (which Bitcoin does not and cannot support) would enable "perfect crimes." This was a concern raised in the 90s when digital cash was being proposed: https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.465.9796&rep=rep1&type=pdf https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.46... This was one of the concerns that prevented banks from adopting e-cash (as the term is understood by cryptographers), though I have been told by people who worked on this that law enforcement agencies were satisfied that they could still "follow the money" since the anonymity property was narrowly defined (banks could not link deposits to withdrawals, but banks would still know who had made a particular deposit, merchants would still be able to identify customers, etc.).
globular-toast 6y ago
Yes, it is digital, but it's minted by private banks, not the government. It's been a huge problem. Private banks cannot be trusted with our money supply as they have repeatedly shown.
Angostura 6y ago
> A government isn't ever going to allow a normal citizen to have a anonymous payments system so I don't see them allowing a purely private and anonymous currency (ala-monero) Actually, the UK got pretty close to it in the 1990s https://en.wikipedia.org/wiki/Mondex https://en.wikipedia.org/wiki/Mondex
- BitwiseFool 6y ago
  I don't know much about UK politics, but the government over there seems to adore surveillance and has no qualms with recording as much information as they possibly can. I simply don't see them accepting the idea of an anonymous payments system.
  - mywittyname 6y ago
    They also have an economy built upon money laundering, tax avoidance, and other related activities. I've heard many people say that the real reason behind Brexit was to avoid new EU regulations being imposed on British banks.
TheBlight 6y ago
>I've not really understood the need for a "digital" pound, the pound is pretty digital already. The need isn't for the consumer. It's advantageous for the central bankers. With it they can more easily control demurrage/inflation/deflation/confiscation (like the Chinese government plans to do with the e-RMB).
- bobthepanda 6y ago
  How is it different from what we currently have, assuming that digital pounds/dollars/whatevers are convertible with existing currency? Is existing currency not issued digitally? When central banks issue cash now are they literally sending billions of dollars to the mint, trucking it off to a bank, and then the bank records it on a digital ledger? Seems wasteful.
  - JumpCrisscross 6y ago
    > Is existing currency not issued digitally? It is, but it's restricted. M0 is central bank money [1]. Currently, only financial institutions have it. If the public could open accounts at the BoE, they too could own M0. CBDCs are a way to give the public M0 without putting the central bank into the retail banking business. That gives central banks powerful new levers. For example, cash limits how negative rates can go. If cash were to become scarce and most money were held as M0, the central bank could enforce negative interest rates by clawing back M0. Negative rates are feasible today. But were they to go sharply negative, they'd hit bank capital. Having the public directly hold M0 removes that side effect. [1] https://www.investopedia.com/terms/m/moneysupply.asp https://www.investopedia.com/terms/m/moneysupply.asp
    - neilwilson 6y ago
      Monetarist concepts have little place in a modern way world. Bank deposits are insured up to £85k, which means they are as solid and as good as cash. It’s well known that negative rates only bind on commercial bank deposits - if at all. Negative rates are just a tax on banks - which they recover by charging more for loans, and paying less for deposits like any other costs.
swiley 6y ago
Can I have that? I'm not a briton (perhaps I'm even from a country you're at war with.) This is why digital replacements for cash hasn't (and likely won't) succeed.
Trias11 6y ago
Absolutely. Switching into their own digital currency (or watever technology) government picks doesn't automatically make them and their fiscal policy more trustworthy among businesses, investors or citizens. They can't hide abusive tax policies, irresponsible spending and desire to control their citizens wealth and financial lives behind their "digital" version of fiat.

xwolfi 6y ago

A normal citizen is never gonna build a government that allows for anonymous payment systems. To often people speak of their government as completely abstract separated entity they can only submit to. But actually, they elect them and the government even follow them in their craziest follies, like, say, leaving the EU in the UK.

KaiserPro 6y ago
> To often people speak of their government as completely abstract separated entity they can only submit to. it is a compromise. I don't want to live in anarchy (sorry, a libertarian world) because like extreme communism it has inherent flaws. Thus I submit to being ruled by the UK government, and actively vote in elections. However as its a compromise, no present party with a chance of winning power reflects my views, thus compromise. However to your main point. Anonymous easy payments are a vector for corruption, crime and general bad stuff. Sure there are good usecases for it, but mostly it'll be used to avoid tax.
- jokethrowaway 6y ago
  I share your feelings on government but, after reading The Machinery of Freedom, I believe anarchy is worth a shot. I wonder if you would reconsider anarchy if there was a private system of entities providing government-like services and compete with each other. http://daviddfriedman.com/The_Machinery_of_Freedom_.pdf http://daviddfriedman.com/The_Machinery_of_Freedom_.pdf
thrwyoilarticle 6y ago
We don't elect the Bank of England. And while it's government as the US likes to use the word, it's not government as the UK likes to.
jokethrowaway 6y ago
The influence you get with democracy is very limited. I don't feel represented by any of the parties that have a chance to get into power. Democracy is literally the majority ruling over the minority - the problem being that even that majority can pick between entities they agree with on some issues and not others. Decentralisation of power is the only way to get control back to people and out of an elected oligarchy.

bitcoinmonger 6y ago

This will be good for anyone interested in using modern cryptocurrencies, whilst also allowing governments to control access to accounts and adjust the money supply if necessary. It's a win-win for everyone. Also the energy required to secure the ledger will be dramatically reduced. Proof of work can be replaced by physical security, which is more energy efficient. Anyone wanting to rewrite the ledger would need more power than the government has in protecting it.

KaiserPro 6y ago
> Proof of work can be replaced by physical security, which is more energy efficient. I'm not sure you understand how banking works. The BoE already has a ledger, its just private[1] for a number of reason (the banks accounts are published, but not in real time, and not by individual account). All banks have ledgers, and sometimes they even marry up. [1]well kind of.
- bitcoinmonger 6y ago
  What would happen if you walked in to their server room and tried to update their database to reverse a payment?
  - scrollaway 6y ago
    Simply, "It doesn't work like that". Very similar to how you can't just "hack bitcoin and change your wallet value". At best you can use your web inspector to add zeroes to your balance. Transactions in ledger-based accounting require a source and target account. In double-entry, all transaction legs have to sum to zero. "$10 on Paul; -$10 on Alice." Your "current balance" may be cached, but it's never used. Most financial systems (which I suspect extends to banks, but I could be wrong) will enforce recalculation of at least the tip of the account's ledger whenever a transaction comes out of it. You don't just add/substract from a cached number.
  - KaiserPro 6y ago
    You would be politely asked why you were in a restricted area, and asked to leave. Currency is based on trust. Trust that the ledger is correct, auditable and matches up. but to address your question, its possible to unilaterally reverse a payment, but as you'll then have to tell the clearing house to reverse the transaction, you'll need to get authorization from thirdparty, which is tricky. Moving money around inside a bank though is probably much easier. However you're far better off just running a limited company and offering loans, that's a far easier way commit fraud.

veritascap 6y ago

The reason for a CBDC are new features. Money that can be programmed to only be used in certain ways, with certain groups, or at certain times, e.g. expiring money. It’s more nudging power for our unelected technocrat dear leaders. Imagine the possibilities!

Broken_Hippo 6y ago
So, less functional money? More complicated gift card?
- LatteLazy 6y ago
  I think it's more like making negative interest rates or a wealth tax unavoidable... /TinFoilHat
- deleted 6y ago
  [deleted]
- SturgeonsLaw 6y ago
  Just think of it as money-as-a-service
- enos_feedler 6y ago
  If the reason the government doesn't want to spend money on it's people is because they fear the money will be spent on the wrong things (outside the scope of what they are trying to fix) then making money less functional is actually more functional.
stunt 6y ago
The only thing this has in common with Bitcoin is "digital". The rest is pretty much opposite of what Bitcoin was supposed to be. (And I say "was supposed to be" because everyone has a different idea about what Bitcoin is today. But that's not related to this discussion here.)
- rvense 6y ago
  I don't think anyone could credibly claim that Bitcoin is what it set out to be. The original paper calls it "electronic cash" and in its introduction describes private people using it for small transactions, replacing trust with cryptography. I would hope that a CBDC shares that original goal of replacing cash, though to what extent cryptography will be involved I'm not sure. (I do doubt BoE are just going to fork the Bitcoin code and spin up their own blockchain.)

mytailorisrich 6y ago

Currency is not digital. What they mean by "digital currency" is a for instance a purely digital bank note than you can hold and transfer to someone else (like for instance a crypto token). Clearly that's not how things work now. Edit: See my further comment below as it looks like people don't quite understand what "digital currency" is.

Broken_Hippo 6y ago
So, it'll do a thing I can already do with money?
KaiserPro 6y ago
That's literally how the BoE works. when you do a bank transfer, do you think they physical cash? When the BoE does quantitative easing, they don't actually print money[1], they just "transfer" money to banks who then do "things" with it. Its literally just numbers in a DB. [1] handling physical cash is expensive, slow and difficult. Not only is the price of movement relatively static regardless of the value, you have to keep on paying to store the stuff. The Federal reserve do things differently I think, because are not quite as all in one as the BoE.
- mytailorisrich 6y ago
  > That's literally how the BoE works Not, it's not. It seems you and others are confused here and do not understand what is meant by "digital currency". Digital currencies, like what is discussed and e.g. the "digital yuan" in China, it to create real digital bank notes / coins. Not expert by I think similar to a crypto token. It means I can hold a digital bank note and pay you by transferring it to you. This is very different to the current system in which I instruct my bank to do something and to balance with the recipient's bank. Depending how this is implemented it can be anonymous like physical bank notes, or it can be tracked and plenty of other things also become possible. It also does not require me to interact with my bank.
  - SideburnsOfDoom 6y ago

SideburnsOfDoom 6y ago

> the pound is pretty digital already. What you didn't mention is that it's also already pretty digital at point of sale as well; Contactless payment, i.e. "card taps" are very common.

dools 6y ago

The important distinction is that currently all cashless payment systems are privately run for profit which is effectively a regressive transaction tax.

KaiserPro 6y ago
I understand your point and sympathise, but Handling cash isn't free. yes, for small traders and personal use, cash is effectively free. but as soon as you start to put it into the bank, it incurs a cost. Depending on where you are, this cost might be hidden from you. (banking in the USA for example is expensive compared to the UK) However as you point out, those companies that provide PoS terminals take either a monthly fee, or a percentage cut.
- rvense 6y ago
  > I understand your point and sympathise, but Handling cash isn't free. Neither are roads, railways, wastewater treatment, communication lines or electricity. Money is infrastructure, and it makes sense for government to control and subsidize these to secure free and equal access, as well as ensure that developments of them occur in ways that benefit all members of society.
captn3m0 6y ago
So would switching it to a non-profit government body? NPCI (India's quasi-government retail payments infrastructure company) is a non-profit and they're looking to switch to a for-profit. It worked quite well, I'd say.
rvense 6y ago
It's also just a control thing. When private enterprises control (and create) money, they will do so based on their own interests. These might not align with the best interests of society at large.
- lainga 6y ago
  Well, in Keynesian analysis, the private enterprises are supposed to create money. The gov't manages how much they create though reserve requirements.

jfjfntntkt 6y ago

Please tell me how I can transfer one pound from me to you using a 20 line Python script? That's what people mean by digital currency. If you are going to mention the open banking API initiative, then what are the requirements to get access to that? You can't as an individual. Also, this was the easy case, inter-UK. Now tell me how to transfer using Python and without applying to all kinds of regulators for API access a pound from a UK account to a US/EU/Japan account.

300bps 6y ago
What happens if the person you send the money to doesn’t deliver? What happens if someone compromises your account and sends all of your money away fraudulently? These are just two basic things that the current financial system deals with thousands of times per day. And what about fees? BTC, ETH and many other coins are essentially unusable for smaller transactions. Sending .02 ETH (about $45) from my MEW wallet costs .00292 ETH (about $6.75).
- jfjfntntkt 6y ago
  The fact that there are problems to solve doesn't meant that we should just not have the thing. What happens if I give a street artist 5 pounds to draw my picture and then he flatly refuses? What happens if someone mugs me on the street and steals 100 pounds from me? Should we not have cash at all because of these two problems, and others?
  - lottin 6y ago
    The problems are already solved with the current financial system. That's the point.
    - megameter 6y ago
      They're addressed, not solved. The problems still exist.
- pessimizer 6y ago

rvense 6y ago

Money is infrastructure, and the digitization of money has resulted in the privatization of that infrastructure. I don't think that was ever part of the plan, really, as far as the government goes.

timelincoln 6y ago
its a good point but more interesting to consider the history of money as a private enterprise, aka fractional reserve banking and independence of the fed, -> private financiers of governments going back through the ages. Modern gov fiat has been the best form of money yet but is still backed by private 'lending' . Whats SUPER interesting is how the proof of work -> proof of stake models continue to provide a monetary system in which the money holders control the system, it seems for now an unavoidable component -> good incentives for value allocators
deleted 6y ago
[deleted]

zzzzzzzza 6y ago

uhm... physical cash is an anonymous payment system?

SturgeonsLaw 6y ago
Which is why it's under attack. Here in Australia the government considered (though later dropped) a bill criminalising cash transactions of over AUD$10,000 between businesses and an individual. Covid was also used in government PR to try and sell the idea of a cashless society.
xyzzy123 6y ago
It looks that way until you try to put a lot of it in a bank or turn it into "big people money" aka capital. Roughly at that point governments would like to have some idea of who you are.

throw1234651234 6y ago

Someone explained this to me last year with an example, and it 'clicked'. The idea is to let the government control the 'velocity of money'. For example, the US is giving out stimulus checks for COVID - the clear goal is to keep business afloat and people spending, but what if they just put the money into savings or crypto? The government did not achieve their goal. To achieve their goal, they program the money with "must be spent on consumer goods and/or rent in the next 6 months." Then they put a "smart contract" on the money and say "can only be spent if you are drug free and looked for a job in the last 6 months." It's scary and I am against it, but above is the upside, from a certain perspective.

ObserverNeutral 6y ago
Japan tried this in the 90s with expiring vouchers, results were subpar. The bailwick of Jersey sent citizens a prepaid card with £100 expiring in 6 monhts which was also disabled for ATM withdrawls during 2020. Again moderate results. Money is a unit of account, if you mess with it people adjust quickly, there is no free lunch. It's not the same as giving Wellbutrin+Ritalin to somebody who is depressed.
- synnejye 6y ago
  Then they must have be doing something wrong? Obviously people would not be foregoing free money if it was easy to get. You are arguing that people would not spend "free" 100 usd on their rent if the money/voucher was directed towards rent.
  - ObserverNeutral 6y ago
    "How bad things must be if the government resorts to giving us free money with an expiration date to force us to spend? I'll spend my 100$ card before it expires but I'll save extra 200$ of my salary compared to before. I have to brace for the worst that it's yet to come, it's going to be really bad before it gets better, especially given that the Government is resorting to giving us free money " The more you use extreme measures to force people to do what they don't want, the more they'd refuse to do so. When people are scared and paralyzed by fear, messing with the unit of account won't calm their worries, if anything given how out of the ordinary it is, it could be argued that it makes things worse. Money is external, people pick the scheme apart rather quickly and you end up worse than before because now you look desperate to force them to do what you want

tumetab1 6y ago

A good example why current currencies are not digital, like Bitcoin, is the settlement process of a public trade stock which takes 2 days because of the current financial system. A digital currency would make possible to settle a trade stock in minutes or even seconds. A digital currency would remove a lot of transactions costs associated with buying/selling stocks.

misja111 6y ago
The stock trade settlement time has little to do with the financial system, but more with how stock trading is organised. There are quite a few steps before actual stocks can change hands. For instance the seller could have sold without actually owning the stocks, it might be he even can't deliver them, in which case the clearing will have to take care of that, etc. All these steps could have been automated long ago if the will was there, the reason they haven't is not because of the currency used but because of traditional common practice and legacy reasons.
betterunix2 6y ago
Actually, no. Stock trading is settled over a period of two days only because of how the system is currently organized; it is technically possible to settle trades at the end of the day, or even in real time, and there are exchanges in the world that settle trades rapidly. The reason the US exchanges have not changed is inertia, and settlement periods have actually decreased just in my lifetime. One real reason why digital currencies are not widely deployed is crime. Already there is a growing problem of ransomware demanding Bitcoin payments; a "true" digital currency that was as convenient as Bitcoin and allowed offline (peer-to-peer) payments (which Bitcoin does not and cannot support) would enable "perfect crimes." This was a concern raised in the 90s when digital cash was being proposed: https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.465.9796&rep=rep1&type=pdf https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.46... This was one of the concerns that prevented banks from adopting e-cash (as the term is understood by cryptographers), though I have been told by people who worked on this that law enforcement agencies were satisfied that they could still "follow the money" since the anonymity property was narrowly defined (banks could not link deposits to withdrawals, but banks would still know who had made a particular deposit, merchants would still be able to identify customers, etc.).

globular-toast 6y ago

Yes, it is digital, but it's minted by private banks, not the government. It's been a huge problem. Private banks cannot be trusted with our money supply as they have repeatedly shown.

Angostura 6y ago

> A government isn't ever going to allow a normal citizen to have a anonymous payments system so I don't see them allowing a purely private and anonymous currency (ala-monero) Actually, the UK got pretty close to it in the 1990s https://en.wikipedia.org/wiki/Mondex https://en.wikipedia.org/wiki/Mondex

BitwiseFool 6y ago
I don't know much about UK politics, but the government over there seems to adore surveillance and has no qualms with recording as much information as they possibly can. I simply don't see them accepting the idea of an anonymous payments system.
- mywittyname 6y ago
  They also have an economy built upon money laundering, tax avoidance, and other related activities. I've heard many people say that the real reason behind Brexit was to avoid new EU regulations being imposed on British banks.

TheBlight 6y ago

>I've not really understood the need for a "digital" pound, the pound is pretty digital already. The need isn't for the consumer. It's advantageous for the central bankers. With it they can more easily control demurrage/inflation/deflation/confiscation (like the Chinese government plans to do with the e-RMB).

bobthepanda 6y ago
How is it different from what we currently have, assuming that digital pounds/dollars/whatevers are convertible with existing currency? Is existing currency not issued digitally? When central banks issue cash now are they literally sending billions of dollars to the mint, trucking it off to a bank, and then the bank records it on a digital ledger? Seems wasteful.
- JumpCrisscross 6y ago
  > Is existing currency not issued digitally? It is, but it's restricted. M0 is central bank money [1]. Currently, only financial institutions have it. If the public could open accounts at the BoE, they too could own M0. CBDCs are a way to give the public M0 without putting the central bank into the retail banking business. That gives central banks powerful new levers. For example, cash limits how negative rates can go. If cash were to become scarce and most money were held as M0, the central bank could enforce negative interest rates by clawing back M0. Negative rates are feasible today. But were they to go sharply negative, they'd hit bank capital. Having the public directly hold M0 removes that side effect. [1] https://www.investopedia.com/terms/m/moneysupply.asp https://www.investopedia.com/terms/m/moneysupply.asp
  - neilwilson 6y ago
    Monetarist concepts have little place in a modern way world. Bank deposits are insured up to £85k, which means they are as solid and as good as cash. It’s well known that negative rates only bind on commercial bank deposits - if at all. Negative rates are just a tax on banks - which they recover by charging more for loans, and paying less for deposits like any other costs.

swiley 6y ago

Can I have that? I'm not a briton (perhaps I'm even from a country you're at war with.) This is why digital replacements for cash hasn't (and likely won't) succeed.

Trias11 6y ago

Absolutely. Switching into their own digital currency (or watever technology) government picks doesn't automatically make them and their fiscal policy more trustworthy among businesses, investors or citizens. They can't hide abusive tax policies, irresponsible spending and desire to control their citizens wealth and financial lives behind their "digital" version of fiat.