31 ms·

The digital currencies that matter

150 points by axiomdata316 5y ago

SCUSKU 5y ago
Anyone have a non paywalled version?
- 1cvmask 5y ago
  Why would they downvote your fair comment??
  - dan-robertson 5y ago
    Complaining about paywalls goes against the site guidelines.
    - wgjordan 5y ago
      "In comments, it's ok to ask how to read an article and to help others do so." https://news.ycombinator.com/newsfaq.html https://news.ycombinator.com/newsfaq.html
    - 1cvmask 5y ago
      And duly they downvoted my "fair" question....
    - elliekelly 5y ago
      Asking for a non-paywalled link isn’t complaining.
      - 1cvmask 5y ago
        And now they downvote you. The russian nesting dolls of downvotes by the increase of post-covid 19 HN crowd. When it comes to communities I suppose too much success brings its own form of failure. This is just an observation of downvotes over the last couple of months for what was once normal commentary, observations or stating facts.
        samatman 5y ago
        "Please don't comment about the voting on comments. It never does any good, and it makes boring reading." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html Especially don't do it three times. An account from April 2020 shouldn't be making trenchant observations about changes in the nature of the community, either. You just got here.
- statenjason 5y ago
  https://outline.com/qNDss4 https://outline.com/qNDss4
eyeball 5y ago
“ They promise to make finance work better but also to shift power from individuals to the state…” Just what we need. More power given to the state and taken from individuals.
- y04nn 5y ago
  I don't like it too, the possible consequences are way worst than the current situation. Digital government issued currencies are the foundation of mass surveillance, control of the people and dictatorship. It gives way too much power to governments: dynamic global tax rates, individual behavior related tax/interest rates, allowed/disallowed spending (smoke too much, dink too much, eat too much, play too much video games, spend too much on imported products...).
  - joe_momma 5y ago
    They just shut down the world for a year and could already do everything in your list without crypto. Not sure what fear your trying spill but crypto can unlock trillions of dollars and shift power back to people who can't control the current inflation. Look at Monero or ARRR for privacy if you need that thing. What are you buying that is so private anyway, most needs for privacy is when it's for something nefarious.
    - y04nn 5y ago
      > What are you buying that is so private anyway, most needs for privacy is when it's for something nefarious. Nothing, I think we are tracked enough with private companies, but they are restricted in their actions by the law. Governments are able to change the law and have all the power they want to make you respect them. People are free as long as they can decide how they allocate their purchasing power. I think democracies are fragile, and if people don't defend their liberties, when those liberties are removed, they won't be able to get them back that easily. And as you said, it can ha pend very fast. With the current situation, it is possible to trace your history if you are suspected of something, I think this is fine. But tracing everybody permanently open the doors to tyranny. Also I don't think crypto is a solution if only a extremely low percentage of the population is using it, specially if it becomes outlawed.
inshadows 5y ago
> This metamorphosis of central banks from the aristocrats of finance to its labourers sounds far-fetched, but it is under way. Over 50 monetary authorities, representing the bulk of global GDP, are exploring digital currencies. The article goes on from the premise that digital currencies are something new, but aren't almost all currencies already digital? I mean when a central bank decides to lend to retail banks (last resort) it just updates a column in its system. It doesn't actually print and ship physical currency. What am I missing? Is this just new hot buzz? EDIT: I'm not too familiar with the process of "printing money", but I assume that Fed/central bank just buys some assets, and credits seller's account in its system. That all sounds pretty digital to me.
- rawtxapp 5y ago
  This brings central bank's control to a whole other level. For example, right now, central bank could loan lots of money to retail banks, but there's no guarantee that those retail banks will in turn loan it to average consumer. With this, they can bypass them alltogether and put it directly in retail's digital wallets. Imagine things like money that self-destroys if you don't spend within certain amount of time or money that you can only spend at a certain place or for a certain purpose. The control that central bank will be able to exert is increasing by like 10 fold.
  - inshadows 5y ago
    Eh, that just sounds like central bank going into retail business, nothing more. They'll upgrade their systems to match that of retail banks to manage retail customer money. I still don't see any actual innovation, just monopolization of lending industry. I don't understand your example about money self-destruction. What's the actual innovation that will make this possible and why it's not possible now?
    - hogFeast 5y ago
      Central banks can only create high powered money. How high powered money gets intermediated into actual economic activity is probably one of the largest unknown factors in central banking/monetary policy. This would, in theory, remove that discussion. That being said, if you are familiar with the history of monetary policy across countries, there is already quite a significant spectrum of central banks adopting new approaches to this problem. And it is not particularly evident that removing banks from the equation improves outcomes (although this is one of those lessons that falls in the blind spot of certain popular ideologies today). Simply: when you talk about disintermediation of banks, you get into the discussion of whether central banks are able to make lending decisions better than banks. When this works, as in Japan pre-1991, it works very well...Japan post-1991 demonstrates that it doesn't always work well. Also, this would change the politics of monetary policy. Most monetary systems that disintermediate banks are usually one-party states with extremely high levels of centralization of economic authority (you also tend to see heavily monopolized banking sectors, the US is the polar opposite of this, although this may not apply in this case). I am 95% sure that if you attempt to do this in a democracy, you will Zimbabwe your currency quickly and trigger a move away from democracy (unf, this also falls into a blindspot of lots of people today...economics PHds don't learn this stuff). It is very hard to have stable politics when the winner of an election will gain the power to make their family/their associates/all political allies permanently wealthy. EDIT: because I cannot reply, if you are asking how this fails to change anything...read a monetary policy textbook. There is a deep lack of understanding about basic elements of the financial system here (as ever). This isn't a facetious comment...srs, read a book.
ViVr 5y ago
In a world where the Fedcoin and e-euro are commonplace, having access to a decentralized money system not tied to the whims of politics would really matter to me.
- throwaway_kufu 5y ago
  Not disagreeing but from Bitcoin, ethereum to DogeCoin they are all tied to the whims of non trust worthy persons. What if satoshi (unlikely but maybe the Fed itself) decides to liquidate its position of at least 1M Bitcoin. Ethereum foundation forks ethereum again to roll back transactions. Or Doge is uncontrollably minted (I don’t think it has a supply cap) or Elon decides to stop pumping it and decides to dump it. Everything else in between is just a bunch of discord/telegram armies pumping for their own interests. I just that’s great so long as you have the social credit to be on the inside.
  - briefcomment 5y ago
    Fortunately, there’s a competitive crypto landscape. If none of these are actually decentralized, people will move to different currencies. Sure it will be turbulent, but we’ll probably get to something effectively decentralized eventually.
    - lottin 5y ago
      Why would people move to decentralized currencies? They are clearly moving from decentralized currencies to centralized exchanges.
      - briefcomment 5y ago
        There's definitely a market for a currency that avoids monetary policy. I think exchanges are an intermediary until P2P becomes the norm. That's why I'm bullish on BCH. They make P2P cheap and fast, while retaining most of the other signature aspects of BTC.
  - bpodgursky 5y ago
didericis 5y ago
> It is revealing that China’s autocrats, who value control above all else, are limiting the size of the e-yuan and clamping down on private platforms such as Ant. Open societies should also proceed cautiously by, say, capping digital-currency accounts. Copying “autocrats who value control above all else” doesn’t seem particularly open.
darkteflon 5y ago
No thanks.
migsvult 5y ago
As other have pointed out, most money is already digital. This is really about retail bank accounts at central banks, and how how this gives policy makers additional tools. Which..... seems fine? As long as companies can build products on top of this system, and as long as people can diversify across various types of e-dollars and the existing set of securities, it sounds pretty good. And for the parts of the world where few people have bank accounts, it sounds like an obvious big win.
fumblebee 5y ago
So, the next generation of fintech companies will just be interfaces on top of our central banks' financial plumbing? This really would crash the utility of transfer apps like Venmo to zero.
- pessimizer 5y ago
  This is its best feature. It would simply end banking as storage of money also - banks would have to pay more interest if they wanted to compete against zero-interest but absolutely safe government money market checking accounts. There'd be no public interest in the government insuring them anymore, either. Instead of choosing a bank, most people would be looking for access to the widest network of broker ATMs. We could solve this stuff with very centralized postal banking also, so the crypto part ultimately isn't super interesting for me unless it solves some scale problem relating to speed of settlement, costs and/or allowing untrusted middlemen.
shkkmo 5y ago
The entire time I was reading the article, I kept waiting to an explanation of how "digital currencies" enable all these new fancy tools and powers. It never came. The article is nothing but hype with no content of value I could find. Most of what the article talks about seems much more related to having a central bank provide retail banking services and modernizing our transactiok settlement network. All of that seems easily doable with creating a serparate currency. The concerns listed also don't seem new. Worried about people buying foriegn currency and tanking the value of the local currency? So is Argentina and that has nothing to do with any digital currency.
asah 5y ago
Can someone recommend a better forum for discussing articles like this? HN is wonderful but it's too many engineers (incl me!) who haven't a clue about economics, digital currency, monetary policy, etc.
- baby 5y ago
  The problem is that a lot of economists have no clue about the tech as well. I think it’s on us to learn more about that side.
  - imtringued 5y ago
    A lot of them grew up in an era of scarcity. If everything is scarce, then some things must be obviously true. Printing money causes inflation. Cutting taxes increases production. Right now there is still scarcity, but other than housing all the essentials needed for life are not scarce at all.
    - swagasaurus-rex 5y ago
      and education, and health care, and child care in the USA.... edit: All these things you can't import from overseas.
- max_ 5y ago
  Come join us at Ether Research[0] :) [0]: https://ethresear.ch https://ethresear.ch
atweiden 5y ago
This article portends ordinary people would never prefer to transact in cash when they could instead use “govcoin”. I’m seeing parallels with this idea and the early days of Healthcare.gov — a tech “upgrade” which to this very day fails to deliver affordable access to reasonably decent health insurance for Americans. Govcoin: Digital, so you have no privacy. Centralized, so your money is subject to inflation and confiscation and can be arbitrarily frozen. Government, because let’s limit this to a region or nationality. Pitting these clearly inferior govcoins against existing cash instruments let alone fixed-supply global cryptocurrencies like Bitcoin is going to be a good old fashioned boondoggle. FWIW, real world data suggests end users avoid adopting inflationary monies on an open market: “Freicoin”, a cryptocurrency which taxed its holders a small percentage annually via demurrage “for the greater good”, failed to see any level of user adoption, despite having a sufficiently high profile in the cryptocurrency world at the time (c. a decade ago). In spite of what many people claim, it turns out no one actually wants inflatable money assuming they can easily opt out of it.
- Aunche 5y ago
  > it turns out no one actually wants inflatable money You aren't supposed to want money. It's a medium for exchanging goods and services. Generally speaking, people's lives get better the more goods and services they exchange. If you have all the goods and services you need, you're supposed to loan or invest your money to someone who has an immediate productive use for these goods and services. Deflation disincentivizes these exchanges, and a fixed supply is even worse. That's why people aren't using Bitcoins any more for commercial transactions than they were 5 years ago.
  - atweiden 5y ago
    > Generally speaking, people's lives get better the more goods and services they exchange. “Goods and services” strikes me as being overly broad. Self-education is increasingly obtainable online, and has had an outsized impact on my quality of life compared to other things I’ve spent money on. Regardless, it’d be putting it mildly to say there’s ample room for interpretation here. (And this is without getting into all the abstract philosophical concepts that creep their way into any discussion about “life betterment”.) > If you have all the goods and services you need, you're supposed to loan or invest your money to someone Particularly if we take an “infinite growth at all costs despite finite physical resources” world view. But if not... > Deflation disincentivizes these exchanges, and a fixed supply is even worse. Worse for who? Humans? Humans are already vastly overpopulating this planet. To someone like myself who’d be pleasantly surprised if humankind lasted another three decades here on Earth, I think your system of value is of questionable merit. We need to curb growth, starting today, to avoid an ecological collapse. A deflationary economic system like Bitcoin can help avoid calamity for billions.
y04nn 5y ago
For people interested in the digital euro, there is a report from October 2020: https://www.ecb.europa.eu/pub/pdf/other/Report_on_a_digital_euro~4d7268b458.en.pdf https://www.ecb.europa.eu/pub/pdf/other/Report_on_a_digital_...
sharklazer 5y ago
Let me put it another way. They will be able to control everything about your life. Economy not burning enough money... okay! 20% of everyone’s money will expire in 3 weeks, if they don’t mean the usage quota. Savings too high? Poof! their gone. The only money I want is money I can hold.
neonate 5y ago
https://archive.is/F5IMK https://archive.is/F5IMK
SturgeonsLaw 5y ago
> These “govcoins” are a new incarnation of money. They promise to make finance work better but also to shift power from individuals to the state, alter geopolitics and change how capital is allocated. They are to be treated with optimism, and humility. Not sure I would describe a power transfer from individuals to the state as a cause for optimisim, but hey, this is The Economist.
- noxer 5y ago
  These CBDS dont shift power it just makes things faster on a technical level because they can be moved p2p. Its central controlled but it doesn't need the centralized technical infrastructure. The money private person uses is unlikely to be replaced by CBDCs and also that money is already digital for the most part.
  - reedjosh 5y ago
    It completely removes privacy that physical cash allows. It also allows for a true negative inflation rate. Imagine being unable to remove your cash from an account that earns negative interest. Digital currency enables this. And _does_ massively shift power away from the individual.
    - kqr 5y ago
      Wait, why would digital currency remove physical bank notes? They could still exists, just be liabilities of the central bank rather than private banks, right?
      - headmelted 5y ago
        The thinking is that as we’re rapidly going cashless anyway, the existing inventory of cash will diminish as it’s banked and removed from circulation. This is happening already, but is expected to accelerate over the next few years.
        5y ago
627467 5y ago
> Government or central-bank digital currencies are the next step but they come with a twist, because they would centralise power in the state rather than spread it through networks or give it to private monopolies. Each economic block will have it's own monopoly money, with little distribution beyond block's borders (unlike cash today). For all the failings of "traditional" cryptocurrencies, at least these are available to anyone in the world.
netheril96 5y ago
These "govcoins" and Bitcoins (or ETH, Doge, etc) are completely different things. People use the latter to evade central governments, or to escape from uncontrollable inflation. Govcoins can never provide those benefits.
mikewarot 5y ago
We've got other threads going about the dangers of making civilization dependent on single sources, and here we want to take all the individual decision making of people with cash, and put it all in one centrally controlled basket? What dictator wouldn't absolutely love that kind of power?
- noxer 5y ago
  CBDCs are not for private people buying grocery. But you normal fiat is already digital and tracked and in most cases the gov has or could gain access to that data. This however is not the goal of such a "govcoin". CBDCs is to remove clearing (settlement) and make it real-time.
  - baby 5y ago
    Not true, some CBDCs are retail CBDCs that target end consumers. Settlements can already be real time with RTGS systems (real time gross settlements) but 1. Not all central banks have that 2. Not every country has a central bank and not every central bank has an account with the central bank of central banks (BIS) 3. Even then, not every bank has an account with your central bank A CBDC is a thus a more modern protocol that is easier to integrate (and that has nothing to do with cryptocurrencies) and a more secure system where no single point of failure exists due to some degree of decentralization (that’s the part inspired by cryptocurrencies).
    - noxer 5y ago
      You just find the exception everything I said so you can disagree with the overall statement. not useful.
- estaseuropano 5y ago
  I would argue its a tool that can be used for good or bad. Yes a dictator would love it, but a democrat (not the party) might too: e.g. it becomes much easier to develop and implement balanced tax systems and catch evaders.
- 5y ago
RichardHeart 5y ago
The primary feature of cryptocurrency is that it is not controlled by the government. If they were doing their job well, cryptocurrency may never have been invented. A government digital currency is like a plastic painted fruit at a furniture shop. Doesn't taste as good as it looks.
idclip 5y ago
Well thats a well written piece of propaganda.
randomhodler84 5y ago
Every central bank digital currency will fail. Only a fool would play with such dystopia. Buy bitcoin (before it is too late).
- lottin 5y ago
  By buying bitcoin all you do is give a financial reward to those who have bought bitcoin before you. Do you want to reward these people? If you don't, don't buy bitcoin.
  - randomhodler84 5y ago
    This is a vastly simple way to look at it. You need to buy a thing from someone who has some? Yes checks out, object must already exist before it can be sold to someone else. Goes for houses, booze or racehorses too. Yes, in fact every thing ever sold ever is simply enriching the person that is selling it to you. And we can’t have that can we? I’d also add that I do not regret it. I’m sure the person that sold me my coin does regret it ;-)
    - lottin 5y ago
      You're missing the point completely. A product needs to be produced. When somebody buys a product, the money pays for the production costs, so the producer is compensated for the expenses as well as the invested capital, so that they can continue to produce more products. This incentivises the production of goods that the public wants. That's distinctively different from what happens when somebody buys a bitcoin. The supply of bitcoins is fixed which means buying a bitcoin can't possibly incentivise the production of more bitcoins. The money doesn't pay for production costs, it doesn't pay for taking the risk to produce something, or for having contributed anything to society. It's purely and simply giving money to somebody for having bought bitcoin earlier than you. If you're fine with that, sure, buy bitcoin. If you don't, or if you want to penalise people who own bitcoins, steer clear of it (this is what I recommend).
      - randomhodler84 5y ago
tofukid 5y ago
The more governments print, the more valuable Bitcoin becomes. The more financial surveillance, the more valuable Monero becomes. Cash is King, and Monero is Queen.
- reedjosh 5y ago
  And ARRR is that fun court jester that might be a Rothschild someday.
- tofukid 5y ago
  It’s interesting to me that so many on HN insist on the value of privacy, but are hostile to financial privacy. To quote Edward Snowden: ”The central property of cash is fungibility—meaning a dollar spent by a plumber is honored equally to one spent by a sex worker: they are indiscriminable. Adversarial chain analysis of Bitcoin's public ledger reduces its fungibility over time. Only privacy guarantees fungibility.”
dragonelite 5y ago
Care, its not like they don't monitor our spending patterns already or censor transactions I just see fiat as sort of unit of accounting and not as a store as wealth.
baby 5y ago
Flagged due to paywall.
swader999 5y ago
Government digital currencies would end the war on drugs and money laundering instantly. It'll never happen.
mellosouls 5y ago
Paywalled (hi downvotes). Please stop posting articles without also posting the required workaround (thanks @neonate).
TheGigaChad 5y ago
The govcoins are going to be the modern day techno-slavery. You would not be able to buy a loaf of bread without Big Brothers. It is sickening that people say how good of an idea it is. SHAME ON YOU!
- randomhodler84 5y ago
  Technoserfdom. Neofudalism under the traditional institutions. Slavery is something else quite terrible and not an image that one wishes to conjure. But yeah, bad idea for freedoms.
  - TheGigaChad 5y ago
    The lowliest slave could hope to escape to the North and be free, if we talk about US style slavery. Or have their owner grant them freedom if we talk ancient Greece, Rome, etc...here not only the owner BUT the state has to agree as well.
- joe_momma 5y ago
  Big brother controls loaf of bread... With crypto... Got it ... Didn't they control the wheat production and shipping lines before that though?
  - TheGigaChad 5y ago
    If all the payments go trough the BB - you cannot pay for anything Now even if I'm the lowest of the low I can scrape by a few coins and buy myself a loaf.
vishnugupta 5y ago
I got interested in CBDC a year ago and since then have been reading up. Over last month or so there's been a flurry of these articles in Economist, Bloomberg. Economist's current weekly edition's[1] focus is CBDC. I get a feeling that through these media outlets policy makers are sensitizing people to an impending launch sometime around 2024. China was going full steam ahead with different phases of public trials since at least as early as March 2020. China has announced they plan to public launch it next year's winter Olympics. It was largely ignored by the western media. I guess now that they see Chinese launch as being a success the West will want get on the bandwagon. [1] https://www.economist.com/weeklyedition/2021-05-08 https://www.economist.com/weeklyedition/2021-05-08
bitcoinmonger 5y ago
This is a big win for the environment. Government currency dramatically reduces the amount of energy wasted in running a cryptocurrency, so this should replace them. Anyone advocating for Bitcoin et al at this point clearly cares more about financial gain than they do about the environment. I hope this brings an end to the madness. These govcoins are better for everyone.
248ff 5y ago
"Shift the power from individuals..." I believe they missed the core reason for crypto-currency initial traction. After the 2008 govt-bank bailout orgy, people lost trust in both banks and governments. There are other reasons too, sanctions that restrict individuals from doing business with people in other countries.
martin_drapeau 5y ago
CBDCs allow governments to remain competitive and for a bit longer monetary sovereign in a digital age. They can continue to control inflation in their own country. It does not solve the debasement problem though. Only a unified currency like Bitcoin can offer that. Globalization will push for a unified currency one day. The internet has no borders and trade neither. Currency conversion and debasement is suboptimal and a constraint that will eventually get removed. As for the Fed and US, I believe they will continue to nurture fintech and start to open up to crypto companies with an end goal of keeping their currency as the global reserve as long as possible. They see the value of the private sector. There will be a transformation of the banking system and they want in.
Havoc 5y ago
I don't quite see the point? Central banks want to be in control. So that rules out decentralized tech. ...so you're basically sending digital money around. Barely different from me sending you money on paypal. Yeah they can do this but unlike actual crypto it doesn't seem like news. Nor will it fix the problems currently being experienced in the economy
gspr 5y ago
(Caveat: I have not read the paywalled article. What follows is a response to the general sentiment of the comments in here.) I'm all for decentralized systems and not having to trust a central authority in most regards. I think that technologies that allow distributed, uncensorable, untamperable communication, for example, are great. I, too, desire decentralized means of conducting monetary transactions. But I cannot for the life of me fathom why people also wanna throw out centralized government control of the money supply with the bathwater in this way. To me, it seems to be a good for most people when a competent central bank in a well-functioning democracy can regulate money supply in order to keep inflation present and moderate. Why would we want to give that up? Taking the hands off the leavers of money supply seems like a disaster waiting to happen: no more increased money supply to help weather crises, no more increased money supply to stave of the horrors of deflation, no more constricting money supply to cool inflation. No tools to combat whole damn currencies turning into investment objects. Sure, with it you get decentralized transactions, but it just doesn't seem worth it to me. Is an embrace of Bitcoin-like cryptocurencies not just a return to a barter economy? A digital, decentralized such, but a barter economy nonetheless? These "govcoin" systems seem a lot more attractive to me. Sure, they're not perfect, but they do leave central banks with the aforementioned control and offer some levels of decentralization. I found the Swiss National Bank's writeup on the GNU Taler cryptocurrency very very interesting and promising: https://www.snb.ch/en/mmr/papers/id/working_paper_2021_03 https://www.snb.ch/en/mmr/papers/id/working_paper_2021_03
- febeling 5y ago
  > To me, it seems to be a good for most people when a competent central bank in a well-functioning democracy can regulate money supply in order to keep inflation present and moderate. Why would we want to give that up? If money is supposed to work like everything else in the universe, it should expand and contract. Hardly any politician or government every had the heart to let contraction happen, so outsized balloons of financial instruments grow, and then burst in an outsized bust. I think that's the argument for a money without political control. The idea is that political control can only buy time, or is sort of an illusion anyway. Consider that convertability to bullion or the mathematical algorithms of cryptos are attempts to achieve this same goal, in a way. So it's not new. Many users of a currency want this propertiy, or maybe more specifically, the lenders. Borrowers have to accept these terms. Unless the borrower has a lot of power, like a government, and can consequently change the rules.
kaliali 5y ago
Why would I invest in a failing financial system? Fuck it let the system that survives on a growing debt population burn down
johndoe42377 5y ago
Digital currencies is just a new age of surveillance and potentially control. Otherwise there is literally no point in them. And, of course, all crypto shitcoins failed at being "currency". They are just an asset. Doge made it obvious even for a brain-dead.

150 points by axiomdata316 5y ago

SCUSKU 5y ago

Anyone have a non paywalled version?

1cvmask 5y ago
Why would they downvote your fair comment??
- dan-robertson 5y ago
  Complaining about paywalls goes against the site guidelines.
  - wgjordan 5y ago
    "In comments, it's ok to ask how to read an article and to help others do so." https://news.ycombinator.com/newsfaq.html https://news.ycombinator.com/newsfaq.html
  - 1cvmask 5y ago
    And duly they downvoted my "fair" question....
  - elliekelly 5y ago
    Asking for a non-paywalled link isn’t complaining.
    - 1cvmask 5y ago
      And now they downvote you. The russian nesting dolls of downvotes by the increase of post-covid 19 HN crowd. When it comes to communities I suppose too much success brings its own form of failure. This is just an observation of downvotes over the last couple of months for what was once normal commentary, observations or stating facts.
      - samatman 5y ago
        "Please don't comment about the voting on comments. It never does any good, and it makes boring reading." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html Especially don't do it three times. An account from April 2020 shouldn't be making trenchant observations about changes in the nature of the community, either. You just got here.
statenjason 5y ago
https://outline.com/qNDss4 https://outline.com/qNDss4

eyeball 5y ago

“ They promise to make finance work better but also to shift power from individuals to the state…” Just what we need. More power given to the state and taken from individuals.

y04nn 5y ago
I don't like it too, the possible consequences are way worst than the current situation. Digital government issued currencies are the foundation of mass surveillance, control of the people and dictatorship. It gives way too much power to governments: dynamic global tax rates, individual behavior related tax/interest rates, allowed/disallowed spending (smoke too much, dink too much, eat too much, play too much video games, spend too much on imported products...).
- joe_momma 5y ago
  They just shut down the world for a year and could already do everything in your list without crypto. Not sure what fear your trying spill but crypto can unlock trillions of dollars and shift power back to people who can't control the current inflation. Look at Monero or ARRR for privacy if you need that thing. What are you buying that is so private anyway, most needs for privacy is when it's for something nefarious.
  - y04nn 5y ago
    > What are you buying that is so private anyway, most needs for privacy is when it's for something nefarious. Nothing, I think we are tracked enough with private companies, but they are restricted in their actions by the law. Governments are able to change the law and have all the power they want to make you respect them. People are free as long as they can decide how they allocate their purchasing power. I think democracies are fragile, and if people don't defend their liberties, when those liberties are removed, they won't be able to get them back that easily. And as you said, it can ha pend very fast. With the current situation, it is possible to trace your history if you are suspected of something, I think this is fine. But tracing everybody permanently open the doors to tyranny. Also I don't think crypto is a solution if only a extremely low percentage of the population is using it, specially if it becomes outlawed.

inshadows 5y ago

> This metamorphosis of central banks from the aristocrats of finance to its labourers sounds far-fetched, but it is under way. Over 50 monetary authorities, representing the bulk of global GDP, are exploring digital currencies. The article goes on from the premise that digital currencies are something new, but aren't almost all currencies already digital? I mean when a central bank decides to lend to retail banks (last resort) it just updates a column in its system. It doesn't actually print and ship physical currency. What am I missing? Is this just new hot buzz? EDIT: I'm not too familiar with the process of "printing money", but I assume that Fed/central bank just buys some assets, and credits seller's account in its system. That all sounds pretty digital to me.

rawtxapp 5y ago
This brings central bank's control to a whole other level. For example, right now, central bank could loan lots of money to retail banks, but there's no guarantee that those retail banks will in turn loan it to average consumer. With this, they can bypass them alltogether and put it directly in retail's digital wallets. Imagine things like money that self-destroys if you don't spend within certain amount of time or money that you can only spend at a certain place or for a certain purpose. The control that central bank will be able to exert is increasing by like 10 fold.
- inshadows 5y ago
  Eh, that just sounds like central bank going into retail business, nothing more. They'll upgrade their systems to match that of retail banks to manage retail customer money. I still don't see any actual innovation, just monopolization of lending industry. I don't understand your example about money self-destruction. What's the actual innovation that will make this possible and why it's not possible now?
  - hogFeast 5y ago
    Central banks can only create high powered money. How high powered money gets intermediated into actual economic activity is probably one of the largest unknown factors in central banking/monetary policy. This would, in theory, remove that discussion. That being said, if you are familiar with the history of monetary policy across countries, there is already quite a significant spectrum of central banks adopting new approaches to this problem. And it is not particularly evident that removing banks from the equation improves outcomes (although this is one of those lessons that falls in the blind spot of certain popular ideologies today). Simply: when you talk about disintermediation of banks, you get into the discussion of whether central banks are able to make lending decisions better than banks. When this works, as in Japan pre-1991, it works very well...Japan post-1991 demonstrates that it doesn't always work well. Also, this would change the politics of monetary policy. Most monetary systems that disintermediate banks are usually one-party states with extremely high levels of centralization of economic authority (you also tend to see heavily monopolized banking sectors, the US is the polar opposite of this, although this may not apply in this case). I am 95% sure that if you attempt to do this in a democracy, you will Zimbabwe your currency quickly and trigger a move away from democracy (unf, this also falls into a blindspot of lots of people today...economics PHds don't learn this stuff). It is very hard to have stable politics when the winner of an election will gain the power to make their family/their associates/all political allies permanently wealthy. EDIT: because I cannot reply, if you are asking how this fails to change anything...read a monetary policy textbook. There is a deep lack of understanding about basic elements of the financial system here (as ever). This isn't a facetious comment...srs, read a book.

ViVr 5y ago

In a world where the Fedcoin and e-euro are commonplace, having access to a decentralized money system not tied to the whims of politics would really matter to me.

throwaway_kufu 5y ago
Not disagreeing but from Bitcoin, ethereum to DogeCoin they are all tied to the whims of non trust worthy persons. What if satoshi (unlikely but maybe the Fed itself) decides to liquidate its position of at least 1M Bitcoin. Ethereum foundation forks ethereum again to roll back transactions. Or Doge is uncontrollably minted (I don’t think it has a supply cap) or Elon decides to stop pumping it and decides to dump it. Everything else in between is just a bunch of discord/telegram armies pumping for their own interests. I just that’s great so long as you have the social credit to be on the inside.
- briefcomment 5y ago
  Fortunately, there’s a competitive crypto landscape. If none of these are actually decentralized, people will move to different currencies. Sure it will be turbulent, but we’ll probably get to something effectively decentralized eventually.
  - lottin 5y ago
    Why would people move to decentralized currencies? They are clearly moving from decentralized currencies to centralized exchanges.
    - briefcomment 5y ago
      There's definitely a market for a currency that avoids monetary policy. I think exchanges are an intermediary until P2P becomes the norm. That's why I'm bullish on BCH. They make P2P cheap and fast, while retaining most of the other signature aspects of BTC.
- bpodgursky 5y ago

didericis 5y ago

> It is revealing that China’s autocrats, who value control above all else, are limiting the size of the e-yuan and clamping down on private platforms such as Ant. Open societies should also proceed cautiously by, say, capping digital-currency accounts. Copying “autocrats who value control above all else” doesn’t seem particularly open.

darkteflon 5y ago

No thanks.

migsvult 5y ago

As other have pointed out, most money is already digital. This is really about retail bank accounts at central banks, and how how this gives policy makers additional tools. Which..... seems fine? As long as companies can build products on top of this system, and as long as people can diversify across various types of e-dollars and the existing set of securities, it sounds pretty good. And for the parts of the world where few people have bank accounts, it sounds like an obvious big win.

fumblebee 5y ago

So, the next generation of fintech companies will just be interfaces on top of our central banks' financial plumbing? This really would crash the utility of transfer apps like Venmo to zero.

pessimizer 5y ago
This is its best feature. It would simply end banking as storage of money also - banks would have to pay more interest if they wanted to compete against zero-interest but absolutely safe government money market checking accounts. There'd be no public interest in the government insuring them anymore, either. Instead of choosing a bank, most people would be looking for access to the widest network of broker ATMs. We could solve this stuff with very centralized postal banking also, so the crypto part ultimately isn't super interesting for me unless it solves some scale problem relating to speed of settlement, costs and/or allowing untrusted middlemen.

shkkmo 5y ago

The entire time I was reading the article, I kept waiting to an explanation of how "digital currencies" enable all these new fancy tools and powers. It never came. The article is nothing but hype with no content of value I could find. Most of what the article talks about seems much more related to having a central bank provide retail banking services and modernizing our transactiok settlement network. All of that seems easily doable with creating a serparate currency. The concerns listed also don't seem new. Worried about people buying foriegn currency and tanking the value of the local currency? So is Argentina and that has nothing to do with any digital currency.

asah 5y ago

Can someone recommend a better forum for discussing articles like this? HN is wonderful but it's too many engineers (incl me!) who haven't a clue about economics, digital currency, monetary policy, etc.

baby 5y ago
The problem is that a lot of economists have no clue about the tech as well. I think it’s on us to learn more about that side.
- imtringued 5y ago
  A lot of them grew up in an era of scarcity. If everything is scarce, then some things must be obviously true. Printing money causes inflation. Cutting taxes increases production. Right now there is still scarcity, but other than housing all the essentials needed for life are not scarce at all.
  - swagasaurus-rex 5y ago
    and education, and health care, and child care in the USA.... edit: All these things you can't import from overseas.
max_ 5y ago
Come join us at Ether Research[0] :) [0]: https://ethresear.ch https://ethresear.ch

atweiden 5y ago

This article portends ordinary people would never prefer to transact in cash when they could instead use “govcoin”. I’m seeing parallels with this idea and the early days of Healthcare.gov — a tech “upgrade” which to this very day fails to deliver affordable access to reasonably decent health insurance for Americans. Govcoin: Digital, so you have no privacy. Centralized, so your money is subject to inflation and confiscation and can be arbitrarily frozen. Government, because let’s limit this to a region or nationality. Pitting these clearly inferior govcoins against existing cash instruments let alone fixed-supply global cryptocurrencies like Bitcoin is going to be a good old fashioned boondoggle. FWIW, real world data suggests end users avoid adopting inflationary monies on an open market: “Freicoin”, a cryptocurrency which taxed its holders a small percentage annually via demurrage “for the greater good”, failed to see any level of user adoption, despite having a sufficiently high profile in the cryptocurrency world at the time (c. a decade ago). In spite of what many people claim, it turns out no one actually wants inflatable money assuming they can easily opt out of it.

Aunche 5y ago
> it turns out no one actually wants inflatable money You aren't supposed to want money. It's a medium for exchanging goods and services. Generally speaking, people's lives get better the more goods and services they exchange. If you have all the goods and services you need, you're supposed to loan or invest your money to someone who has an immediate productive use for these goods and services. Deflation disincentivizes these exchanges, and a fixed supply is even worse. That's why people aren't using Bitcoins any more for commercial transactions than they were 5 years ago.
- atweiden 5y ago
  > Generally speaking, people's lives get better the more goods and services they exchange. “Goods and services” strikes me as being overly broad. Self-education is increasingly obtainable online, and has had an outsized impact on my quality of life compared to other things I’ve spent money on. Regardless, it’d be putting it mildly to say there’s ample room for interpretation here. (And this is without getting into all the abstract philosophical concepts that creep their way into any discussion about “life betterment”.) > If you have all the goods and services you need, you're supposed to loan or invest your money to someone Particularly if we take an “infinite growth at all costs despite finite physical resources” world view. But if not... > Deflation disincentivizes these exchanges, and a fixed supply is even worse. Worse for who? Humans? Humans are already vastly overpopulating this planet. To someone like myself who’d be pleasantly surprised if humankind lasted another three decades here on Earth, I think your system of value is of questionable merit. We need to curb growth, starting today, to avoid an ecological collapse. A deflationary economic system like Bitcoin can help avoid calamity for billions.

y04nn 5y ago

For people interested in the digital euro, there is a report from October 2020: https://www.ecb.europa.eu/pub/pdf/other/Report_on_a_digital_euro~4d7268b458.en.pdf https://www.ecb.europa.eu/pub/pdf/other/Report_on_a_digital_...

sharklazer 5y ago

Let me put it another way. They will be able to control everything about your life. Economy not burning enough money... okay! 20% of everyone’s money will expire in 3 weeks, if they don’t mean the usage quota. Savings too high? Poof! their gone. The only money I want is money I can hold.

neonate 5y ago

https://archive.is/F5IMK https://archive.is/F5IMK

SturgeonsLaw 5y ago

> These “govcoins” are a new incarnation of money. They promise to make finance work better but also to shift power from individuals to the state, alter geopolitics and change how capital is allocated. They are to be treated with optimism, and humility. Not sure I would describe a power transfer from individuals to the state as a cause for optimisim, but hey, this is The Economist.

noxer 5y ago
These CBDS dont shift power it just makes things faster on a technical level because they can be moved p2p. Its central controlled but it doesn't need the centralized technical infrastructure. The money private person uses is unlikely to be replaced by CBDCs and also that money is already digital for the most part.
- reedjosh 5y ago
  It completely removes privacy that physical cash allows. It also allows for a true negative inflation rate. Imagine being unable to remove your cash from an account that earns negative interest. Digital currency enables this. And _does_ massively shift power away from the individual.
  - kqr 5y ago
    Wait, why would digital currency remove physical bank notes? They could still exists, just be liabilities of the central bank rather than private banks, right?
    - headmelted 5y ago
      The thinking is that as we’re rapidly going cashless anyway, the existing inventory of cash will diminish as it’s banked and removed from circulation. This is happening already, but is expected to accelerate over the next few years.
      - 5y ago

627467 5y ago

> Government or central-bank digital currencies are the next step but they come with a twist, because they would centralise power in the state rather than spread it through networks or give it to private monopolies. Each economic block will have it's own monopoly money, with little distribution beyond block's borders (unlike cash today). For all the failings of "traditional" cryptocurrencies, at least these are available to anyone in the world.

netheril96 5y ago

These "govcoins" and Bitcoins (or ETH, Doge, etc) are completely different things. People use the latter to evade central governments, or to escape from uncontrollable inflation. Govcoins can never provide those benefits.

mikewarot 5y ago

We've got other threads going about the dangers of making civilization dependent on single sources, and here we want to take all the individual decision making of people with cash, and put it all in one centrally controlled basket? What dictator wouldn't absolutely love that kind of power?

noxer 5y ago
CBDCs are not for private people buying grocery. But you normal fiat is already digital and tracked and in most cases the gov has or could gain access to that data. This however is not the goal of such a "govcoin". CBDCs is to remove clearing (settlement) and make it real-time.
- baby 5y ago
  Not true, some CBDCs are retail CBDCs that target end consumers. Settlements can already be real time with RTGS systems (real time gross settlements) but 1. Not all central banks have that 2. Not every country has a central bank and not every central bank has an account with the central bank of central banks (BIS) 3. Even then, not every bank has an account with your central bank A CBDC is a thus a more modern protocol that is easier to integrate (and that has nothing to do with cryptocurrencies) and a more secure system where no single point of failure exists due to some degree of decentralization (that’s the part inspired by cryptocurrencies).
  - noxer 5y ago
    You just find the exception everything I said so you can disagree with the overall statement. not useful.
estaseuropano 5y ago
I would argue its a tool that can be used for good or bad. Yes a dictator would love it, but a democrat (not the party) might too: e.g. it becomes much easier to develop and implement balanced tax systems and catch evaders.
5y ago

RichardHeart 5y ago

The primary feature of cryptocurrency is that it is not controlled by the government. If they were doing their job well, cryptocurrency may never have been invented. A government digital currency is like a plastic painted fruit at a furniture shop. Doesn't taste as good as it looks.

idclip 5y ago

Well thats a well written piece of propaganda.

randomhodler84 5y ago

Every central bank digital currency will fail. Only a fool would play with such dystopia. Buy bitcoin (before it is too late).

lottin 5y ago
By buying bitcoin all you do is give a financial reward to those who have bought bitcoin before you. Do you want to reward these people? If you don't, don't buy bitcoin.
- randomhodler84 5y ago
  This is a vastly simple way to look at it. You need to buy a thing from someone who has some? Yes checks out, object must already exist before it can be sold to someone else. Goes for houses, booze or racehorses too. Yes, in fact every thing ever sold ever is simply enriching the person that is selling it to you. And we can’t have that can we? I’d also add that I do not regret it. I’m sure the person that sold me my coin does regret it ;-)
  - lottin 5y ago
    You're missing the point completely. A product needs to be produced. When somebody buys a product, the money pays for the production costs, so the producer is compensated for the expenses as well as the invested capital, so that they can continue to produce more products. This incentivises the production of goods that the public wants. That's distinctively different from what happens when somebody buys a bitcoin. The supply of bitcoins is fixed which means buying a bitcoin can't possibly incentivise the production of more bitcoins. The money doesn't pay for production costs, it doesn't pay for taking the risk to produce something, or for having contributed anything to society. It's purely and simply giving money to somebody for having bought bitcoin earlier than you. If you're fine with that, sure, buy bitcoin. If you don't, or if you want to penalise people who own bitcoins, steer clear of it (this is what I recommend).
    - randomhodler84 5y ago

tofukid 5y ago

The more governments print, the more valuable Bitcoin becomes. The more financial surveillance, the more valuable Monero becomes. Cash is King, and Monero is Queen.

reedjosh 5y ago
And ARRR is that fun court jester that might be a Rothschild someday.
tofukid 5y ago
It’s interesting to me that so many on HN insist on the value of privacy, but are hostile to financial privacy. To quote Edward Snowden: ”The central property of cash is fungibility—meaning a dollar spent by a plumber is honored equally to one spent by a sex worker: they are indiscriminable. Adversarial chain analysis of Bitcoin's public ledger reduces its fungibility over time. Only privacy guarantees fungibility.”

dragonelite 5y ago

Care, its not like they don't monitor our spending patterns already or censor transactions I just see fiat as sort of unit of accounting and not as a store as wealth.

baby 5y ago

Flagged due to paywall.

swader999 5y ago

Government digital currencies would end the war on drugs and money laundering instantly. It'll never happen.

mellosouls 5y ago

Paywalled (hi downvotes). Please stop posting articles without also posting the required workaround (thanks @neonate).

TheGigaChad 5y ago

The govcoins are going to be the modern day techno-slavery. You would not be able to buy a loaf of bread without Big Brothers. It is sickening that people say how good of an idea it is. SHAME ON YOU!

randomhodler84 5y ago
Technoserfdom. Neofudalism under the traditional institutions. Slavery is something else quite terrible and not an image that one wishes to conjure. But yeah, bad idea for freedoms.
- TheGigaChad 5y ago
  The lowliest slave could hope to escape to the North and be free, if we talk about US style slavery. Or have their owner grant them freedom if we talk ancient Greece, Rome, etc...here not only the owner BUT the state has to agree as well.
joe_momma 5y ago
Big brother controls loaf of bread... With crypto... Got it ... Didn't they control the wheat production and shipping lines before that though?
- TheGigaChad 5y ago
  If all the payments go trough the BB - you cannot pay for anything Now even if I'm the lowest of the low I can scrape by a few coins and buy myself a loaf.

vishnugupta 5y ago

I got interested in CBDC a year ago and since then have been reading up. Over last month or so there's been a flurry of these articles in Economist, Bloomberg. Economist's current weekly edition's[1] focus is CBDC. I get a feeling that through these media outlets policy makers are sensitizing people to an impending launch sometime around 2024. China was going full steam ahead with different phases of public trials since at least as early as March 2020. China has announced they plan to public launch it next year's winter Olympics. It was largely ignored by the western media. I guess now that they see Chinese launch as being a success the West will want get on the bandwagon. [1] https://www.economist.com/weeklyedition/2021-05-08 https://www.economist.com/weeklyedition/2021-05-08

bitcoinmonger 5y ago

This is a big win for the environment. Government currency dramatically reduces the amount of energy wasted in running a cryptocurrency, so this should replace them. Anyone advocating for Bitcoin et al at this point clearly cares more about financial gain than they do about the environment. I hope this brings an end to the madness. These govcoins are better for everyone.

248ff 5y ago

"Shift the power from individuals..." I believe they missed the core reason for crypto-currency initial traction. After the 2008 govt-bank bailout orgy, people lost trust in both banks and governments. There are other reasons too, sanctions that restrict individuals from doing business with people in other countries.

martin_drapeau 5y ago

CBDCs allow governments to remain competitive and for a bit longer monetary sovereign in a digital age. They can continue to control inflation in their own country. It does not solve the debasement problem though. Only a unified currency like Bitcoin can offer that. Globalization will push for a unified currency one day. The internet has no borders and trade neither. Currency conversion and debasement is suboptimal and a constraint that will eventually get removed. As for the Fed and US, I believe they will continue to nurture fintech and start to open up to crypto companies with an end goal of keeping their currency as the global reserve as long as possible. They see the value of the private sector. There will be a transformation of the banking system and they want in.

Havoc 5y ago

I don't quite see the point? Central banks want to be in control. So that rules out decentralized tech. ...so you're basically sending digital money around. Barely different from me sending you money on paypal. Yeah they can do this but unlike actual crypto it doesn't seem like news. Nor will it fix the problems currently being experienced in the economy

gspr 5y ago

(Caveat: I have not read the paywalled article. What follows is a response to the general sentiment of the comments in here.) I'm all for decentralized systems and not having to trust a central authority in most regards. I think that technologies that allow distributed, uncensorable, untamperable communication, for example, are great. I, too, desire decentralized means of conducting monetary transactions. But I cannot for the life of me fathom why people also wanna throw out centralized government control of the money supply with the bathwater in this way. To me, it seems to be a good for most people when a competent central bank in a well-functioning democracy can regulate money supply in order to keep inflation present and moderate. Why would we want to give that up? Taking the hands off the leavers of money supply seems like a disaster waiting to happen: no more increased money supply to help weather crises, no more increased money supply to stave of the horrors of deflation, no more constricting money supply to cool inflation. No tools to combat whole damn currencies turning into investment objects. Sure, with it you get decentralized transactions, but it just doesn't seem worth it to me. Is an embrace of Bitcoin-like cryptocurencies not just a return to a barter economy? A digital, decentralized such, but a barter economy nonetheless? These "govcoin" systems seem a lot more attractive to me. Sure, they're not perfect, but they do leave central banks with the aforementioned control and offer some levels of decentralization. I found the Swiss National Bank's writeup on the GNU Taler cryptocurrency very very interesting and promising: https://www.snb.ch/en/mmr/papers/id/working_paper_2021_03 https://www.snb.ch/en/mmr/papers/id/working_paper_2021_03

febeling 5y ago
> To me, it seems to be a good for most people when a competent central bank in a well-functioning democracy can regulate money supply in order to keep inflation present and moderate. Why would we want to give that up? If money is supposed to work like everything else in the universe, it should expand and contract. Hardly any politician or government every had the heart to let contraction happen, so outsized balloons of financial instruments grow, and then burst in an outsized bust. I think that's the argument for a money without political control. The idea is that political control can only buy time, or is sort of an illusion anyway. Consider that convertability to bullion or the mathematical algorithms of cryptos are attempts to achieve this same goal, in a way. So it's not new. Many users of a currency want this propertiy, or maybe more specifically, the lenders. Borrowers have to accept these terms. Unless the borrower has a lot of power, like a government, and can consequently change the rules.

kaliali 5y ago

Why would I invest in a failing financial system? Fuck it let the system that survives on a growing debt population burn down

johndoe42377 5y ago

Digital currencies is just a new age of surveillance and potentially control. Otherwise there is literally no point in them. And, of course, all crypto shitcoins failed at being "currency". They are just an asset. Doge made it obvious even for a brain-dead.