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Just Say No to Central Bank Digital Currencies

390 points by mortenjorck 5y ago

gspr 5y ago
I see insightful comments from both sides of this issue, but what worries me is that most solutions seem to rely on technical solutions. I'm a technology-optimist and materialist at heart, but I don't think technological solutions are the best way to safeguard liberty. Even if they are, there's no reason that we should accept to live in an antagonistic relationship with the authorities. In liberal democracies, the authorities should be on our side, and legal safety nets should be in place to prevent them from straying too far from this if they're acting in bad faith. (Purely) technological solutions to the problems in this thread remind me a bit of the American thinking that people need to own assault rifles to make sure the government doesn't overstep. Dude, even if you win, the world's become a very bad place if you find yourself in a shooting match with your government. How about instead reforming said government and instituting legal safeguards for your liberties?
- salawat 5y ago
  All the legal safeguards in the world won't save you from a sufficiently high proportion of bad apples in centralized places of power. This is a very real threat in today's world of mostly Administrative Law, legislative buffoonery, and a Supreme Court that shoves their fingers in their ears instead of dealing with clear misinterpretations of the Constitution.
afpx 5y ago
ELI5 - Why can’t each country (or state) have it’s own node and proof of stake?
t_mann 5y ago
I think one point the author is missing is that none of the dystopian use cases described really depend on a CBDC (in fact, China had a lot of similar things prior to its digital yuan launch). It would only make them marginally easier to implement (which might still be relevant in democratic countries). Another thing that's missing is the fact that 'No more need for banks' has very wide implications. It would mean that banks can no longer do lending as they do now, they would have to essentially ask for permission from the central bank every time before they make a loan (that's because bank lending isn't based on 'fractional reserve banking', contrary to what most econ 101's teach [1]). [1] https://www.imf.org/en/Publications/WP/Issues/2019/12/20/Money-Creation-in-Fiat-and-Digital-Currency-Systems-48843 https://www.imf.org/en/Publications/WP/Issues/2019/12/20/Mon...
- coldtea 5y ago
  >It would only make them marginally easier to implement If by "marginal" you mean "several orders of magnitude", then yes.
  - t_mann 5y ago
    Once the initial setup is there (which isn't easy in either case), the difference is to write a new law that forces commercial banks to implement some changes vs one that forces the central bank to do so. The former currently have strong lobbies, that's what really makes it harder.
    - coldtea 5y ago
      If societies still have cash and multiple banks, the power to order/stop/whatever is much less centralized, and there are multiple levels to resist it.
- scrubs 5y ago
  The subtitle suffix phrase "...totalitarian nightmare" isn't helpful. To a child parents are totalitarian nightmare by his reckoning. Except that parents are not out mess kids over. Institutional power in a sphere of work is not definitionally totalitarian. It how you use it. Let's not conflate choice in a matter with intent to harm. A CBDC should probably have checks and balances anyway, because human factors sometimes drift into nonsense. For example, maybe there can be per-US-state account with different administrative rules. This cuts both ways. The network of BC miners and users is still just people running code like the CBDC. Code can be changed. Forks can occur. People can decide other things then act on it. In fact it's worth reminding that non-CBDC have never had to deal with the full set of roles and responsibilities of a serious national currency in an international setting under war, pandemics, depressions, social welfare (payments from Congress) and major Wall Street failures. It's far, far from clear that BC would emerge running the same 1.0 version of BC on the same fork it seven years ago.
ilove196884 5y ago
Intresting of you to think that governments are capable of rolling them for everyone. It is a fluff and complete hype. The technology is solid but rolling it will be a pain.
synctext 5y ago
Rebuttal from responsible professor deploying such systems: - Do you trust your bank? (to never get hacked, go bankrupt, etc.) - Do you trust Big Tech to run the global financial system? (search: "Google Cloud for banking" or read "Cloud Computing in Banking" by capgemini). - Do you trust the government with critical infrastructure? Central bank digital currency could indeed be evil. The way Delft University is building it gives more power to the people. Here in Europe the digital Euro is coming. We've done some open source Internet-deployment test, with live connection to the IBAN system[1]. [1] https://github.com/Tribler/trustchain-superapp#digital-euro https://github.com/Tribler/trustchain-superapp#digital-euro
- perryizgr8 5y ago
  > Do you trust your bank? (to never get hacked, go bankrupt, etc.) Let me rephrase this generally: Do you trust <any entity other than yourself>? (to never <do any number of bad things>) Answer is always no. So this does not give us any insight about the issue at hand. Would you trust your central bank? (to always act in the citizen's interest, to never give in to an authoritarian leader, etc.) > Here in Europe the digital Euro is coming. And that should scare Europeans.
coldtea 5y ago
The naive happy-go-lucky approach on this: "The problem is not CBDC per se, it's how we use it". As if people will be asked how its used, and as if once they've given an inch, the governments (and businesses explociting the same opportunities) wont take a mile...
drexlspivey 5y ago
The US severely weakened the case for the US dollar as a reserve currency with their recent actions of freezing Russian reserves. Why would any central bank stash USD when they can’t count for these reserves to be there when they most need them? I believe the next global reserve currency would be in the form of a blockchain.
JSavageOne 5y ago
We can have Central Bank Digital Currencies while still having cash. Also, the analogy suggesting the Fed could lock peoples' wallets for random tweets is ridiculous.
- notRacistSir 5y ago
rdevsrex 5y ago
I think a central bank coin would be an improvement over our current system given some very strict safeguards and democratic control over what gets regulated. I think we should already have a national referendum system, but I'd definitely want that in place before central bank coin. We all know that fiat won't last forever, so a new monetary system not based on debt would be great. And one that doesn't take as much energy as crypto does today would also be great. But having bureaucrats or an AI push buttons to restrict what you can buy is outright despotic.
biztos 5y ago
Off-topic but if anyone else is curious about where that image comes from, it's a Lord of the Rings themed mashup: https://boingboing.net/2010/12/09/eye-of-mordorus-doll.html https://boingboing.net/2010/12/09/eye-of-mordorus-doll.html
mattbrewsbytes 5y ago
The intent of a Central Bank is as a Bank for Banks. Consumers never interact with the Federal Reserve directly. The Federal Reserve is not owned by the actual government, there is a board of governors who reports to congress. The actual ownership is shared across actual banks as shareholders. I find it very peculiar that they want to interact directly with consumers via a digital currency. An article I read mentions ideas around financial products, etc. which to me sounds like a huge red flag that they would want to interact with consumers. It sounds like another way for Banks to siphon off money from common people with the advantage that they (or 3 letter agencies) can track the money.
spacexsucks 5y ago
Wait till you combine this with the EARN IT act. Every transaction is out in the open. Fund ACLU, EFF and FSF.
bannedbybros 5y ago
walnutclosefarm 5y ago
At the macro level, major currencies are already digital, and maintained by central banks. There is no specie or notes moving between bank vaults for most interbank transactions. That's precisely why the United States and Europe are able to nullify Russia's foreign currency reserves as effectively as they can. The only thing Russia has to exchange for most of its USD and Euro holdings is the right to tell the Fed or the ECB to move money from the Russian Central Bank's account at those institutions to some other account. By freezing those accounts, Russia's money effectively ceases to be Russia's. Consumer transactions are not yet typically digital currency based. Rather, they are digital notations reflecting desired real currency exchanges between and through banks, that happen to increasingly satisfied by digital means. But no specific digital "coin" or bill is moved by my credit card transaction. Yet. But more robust and ubiquitous CBDCs are inevitable, especially if central bank-independent cryptocurrencies actually start to gain traction as currencies. Central banks and the governments that underwrite them will never permit fiscal policy to be controlled by an independent, non-manageable currency. Governments and central banks use their ability to control the volume of currency, and the cost of acquiring capital to manage economic stability through monitoring and influencing inflation, employment and investment. For them to not be able to do that would be catastrophic (read the economic history of the nineteenth century for a minor key preview of the results). That means they need to be able to control their currencies. If the future of transactions is digital currencies, all the way down to consumer transactions, then central banks will have to issue CBDCs and mandate their use. BTW, a cryptocurrency, as we currently use the term is, if it actually becomes a currency, only one possible species of digital currency. A CBDC need not be crypto per se. It will use cryptographic techniques for sure, but may not be crypto/blockchain as we understand it. Finally, note that a CBDC requires ubiquitous reliable digital identities to be workable. A lot of what the banking system does is the work of "know your customer." That's only more important in a full digital currency world.
rwmj 5y ago
I assume if expiring FedCoins became popular, then so would purchases of fungible items (fuel, gold coins and so on). You can then invest your expiring FedCoins in something which can be resold later.
cphoover 5y ago
So far cryptocurrencies seem to be really good at: * Pump and Dump and Ponzi schemes * Illicit Purchases in black markets (drugs, other illegal sales), * A means for corrupt governments to skirt economic sanctions. What they aren't good at: * A stable currency used for the exchange of goods and services
helen___keller 5y ago
This is a writing style of heavy-handed satire that I’ve come to identify as “slippery slope porn”. I don’t really mind discussing or envisioning long term and worst case scenarios, but readers beware that you can play the same game with any numbers of existing policies that have not yet turned into the predicted dystopian fiction. Largely, I imagine, because in a democratic society there are feedback loops where individual opinions are taken into consideration in aggregate, even if it sometimes doesn’t feel like it. (everyone is in the minority group on some issue; your “why do they need an electronic currency grumble” is my “why don’t we have socialized healthcare grumble”)
- pjc50 5y ago
  Yeah, it's practically copypasta: a laundry list of made up situations from the fear profile of a particular group. However, in the past couple of weeks we've seen the seizure or devaluation of hundreds of billions of dollars of Russian assets as the result of the war, and a bunch of people have been put on sanctions lists with basically zero legal review or recourse. I wonder how things would have developed if Russia had a CBDC: what would happen to Western holders of it? (Note that the oligarchs aren't holding much of their fortune in actual physical folding money cash, that's too inconvenient once you get above the amount that fits in a safe. They've been keeping it in property, businesses, banks, bought politicians, and football clubs)
  - hackernewds 5y ago
    > they've been keeping it in property... And now heavily in Tether, which is known infamously to have shady and little collateral. Help us all when the cryptocurrency system crumbles.
asah 5y ago
CBDCs retain most of the value, even if they're not on a distributed blockchain: * 24x7x365 commerce and trading - no more wire-cutoff deadlines. * lower fees - no more middlemen taking 10s-100s of basis points. * "programmatic money" - clean, open APIs for lending, hedges, derivatives, futures, pooling, etc. * transparency and safety - reduce Lehman-type debacles: more "money" is visible to the Fed and it's less common for private companies to invisibly create (large) private debts. ...
bannedbybros 5y ago
TheMightyLlama 5y ago
The topic of programmable money aside, Why centralise the ability to freeze an account? If I deem someone (or some organisation) to be a bad actor I would like to block the ability to make payments to them and put that account number on a publicly visible register. Now this organically created list can be consumed by other people or organisations effectively excluding them from receiving payments.
jonahbenton 5y ago
Am late to this game but this whole scenario is almost not worthy of ridicule, but more importantly is not unique to any hypothetical participation by the Fed at the retail level in the US. In fact, seemingly every few weeks a post appears on HN from a Paypal or other private account user complaining that they were for no reason refused service and access to their funds. The libertarian HN crowd has fantastic Orwellian dreams of government intervention while the risks of privatization, THE ACTUAL REASON TO HAVE GOVERNMENTS AND DEMOCRACIES, hits them in the fucking head every day.
jokethrowaway 5y ago
This is the reason I didn't invest in BTC in 2011 and that's why I'm not rich. I expected the government to spin up an official centralised BTC fork and send the value of the community one to zero (or even make it illegal). Apparently I was dead wrong on the timing and I missed on millions of speculation. I still think we'll get there, if the history of the USA and Europe is any indication, regulations keep piling on and getting added and nothing ever gets removed, so the future we're slowly drifting forward is undoubtedly a totalitarian nightmare. China and Russia are already totalitarian. The USA and EU are getting more totalitarian every passing day. My only hope is for South America to become a bit safer and retain some degree of freedom, so I can escape there in 10-20 years. Or maybe some Caribbean island. Hopefully enough libertarian made money with BTC and will be able to create a better society. I hope future South America to be good for my kids' generation or maybe for some future totalitarian regime to explode somehow so they can move there.
zamalek 5y ago
I see what point the author is trying to make, but painting an unpopular but important idea (renewable energy) is incredibly poor taste. All things considered a vehicle has to pay off its manufacturing energy cost. It would make no sense to so heavily penalize fossilized cars until their energy break-even.
- JoshuaDavid 5y ago
  > It would make no sense to so heavily penalize fossilized cars until their energy break-even. "This policy could not achieve its stated goals under any reasonable set of assumptions" is unfortunately not as strong of a guarantee of "this policy will not be implemented" as I would like.
datavirtue 5y ago
I miss editors.
- hammyhavoc 5y ago
  Continue.
space_rock 5y ago
CBDCs will be a tool of all totalitarian, predatory governments. That I'm sure of. They will also be popular with people after a fair socialist utopia with top down economic incentives. I'm skeptical it can lead anywhere good
- deleted 5y ago
  [deleted]
- randomhodler84 5y ago
  It cannot lead anywhere good, unless you desire a complete stagnation of society. Thank satoshi we have an alternative.
  - automatic6131 5y ago
    Lmao, if you crypto weirdos had actually made some good things, then these ideas would be DOA. Instead, cryptocurrencies became: scams, deflationary traps, scams, money laundromats, scams, digital casinos, scams, programming competitions where being first place means you steal someone else's money, programming competitions where NOT being first means you lost all YOUR money, and yet more scams. Whilst also driving up the price for consumer electronics to run these scams - because in order to run them you need unreal amounts of computing power to run a bad append-only ledger.
    - randomhodler84 5y ago
      This equally applies to “internet”. Agree, lots of fraud. Scams. Tricks traps and hacks. But there is something you are missing here. Bitcoin is mined using specialty hardware, it has no impact on consumer electronics. A lot of these concerns are leveled at ethereum. Bitcoin should be thought of as a fundamental value exchange protocol for the internet. We don’t blame TCP/IP for internet scams.
- matheusmoreira 5y ago
  Yeah. It's the anti-cryptocurrency, the negation of everything it was meant to be. This technology was meant to emancipate us but it failed and seems to have inspired the creation of something even worse that what we had before.
groby_b 5y ago
"What would happen if the federal banking system was only a 10th as corrupt/inept as libertarian blockchain fantasies" is a hell of a writing prompt.
- whatshisface 5y ago
  No, that writing prompt would end in, "and then the US government exited Dollarcoin and left everyone else holding the bag." This writing prompt is, "What would happen if we lived in China?"
  - randomhodler84 5y ago
    Or, “what is China doing now that the west can achieve as soon as that Overton window gets in range.”
satisfice 5y ago
Seems to me you can make anything sound ominous with your choice of writing style. In 1982 I was advised not to use ATM machines because it would enable government surveillance of our spending. That was breathlessly silly, too. I am more worried about people cheating society. I pay my taxes and try to do the right thing. So bring on more government oversight and control over the economy. But only if we also secure voting rights and have stronger protections against Trumpian destruction of government.
- gruez 5y ago
  >In 1982 I was advised not to use ATM machines because it would enable government surveillance of our spending. That was breathlessly silly, too. Isn't that what we have right now? The only thing they got wrong was that it wasn't caused by ATMs, it was caused by AML/CFT laws and people switching to using cards for payments.
  - fineIllregister 5y ago
    I would assume that any transaction with a bank would be available to the government, even prior to the invention of the ATM.
- yarky 5y ago
  Cheating is a serious issue, but you won't stop it relying on more potential cheaters. And out of curiosity, what's been making you feel so safe around ATMs since 1982? COBOL ?
- drewcoo 5y ago
  > . . . not to use ATM machines because it would enable government surveillance of our spending. That was breathlessly silly, too. And how is that silly? It seems to be factual. > I am more worried about people cheating society. I pay my taxes and try to do the right thing. The funny thing about privacy is most people don't really notice it let alone treasure it until it's been violated. And anyone who wants to surveil us loves it when people shrug and say they have nothing to hide. It's a nice bandwagon slogan, applying social pressure. It shifts the burden from the watchers (why do they need the info?) to the watched (what do they have to hide?). It's a rotten rhetorical twist and deserves to be decried whenever it's used. > But only if we also secure voting rights Now I'm wondering if I misread sarcasm earlier. Poe's Law was written for this moment.
sk5t 5y ago
Matt Levine noted a few months ago that the US dollar is already a digital currency (you don't pay the rent with a sack of coins), it just isn't a cryptocurrency.
- yarky 5y ago
  I agree, they'll just use a blockchain to replace some old database and that's it, let's digitally print some more ...
  - exdsq 5y ago
    Just a note - I’m not sure how serious you are with this comment, but it’s nothing like how it’ll work (I’ve been keeping up with the CBDC literature and it might not even be a blockchain)
    - yarky 5y ago
      Well now you make me wonder if there's some noble technology I don't know about. Oh wait, are they still running on mainframes and will just switch to aws, is that the whole CBDC point ? Ok that one was a joke, but I am honestly curious about your literature review since all I see are banks trying to upgrade old databases, yet relying on the same old economic principles.
    - danielmarkbruce 5y ago
      There is practically zero chance it will be a blockchain.
      - exdsq 5y ago
        There are two active projects in research stages at the moment - without knowing internal politics, it's equally likely.
        danielmarkbruce 5y ago
        You can weigh up the costs and benefits of each and make a judgement call as to whether they see it the same way or differently. I'm making it and saying it's not even close. It's difficult to organize a bet, but if it were easy and you were offering even money, I'd take that bet.
karagenit 5y ago
I don’t really get the author’s argument. A lot of it seems very “slippery slope” to me. The government already can (and does) restrict what people can and cannot buy. The idea of limiting spending on certain things (like gas) is interesting, but that isn’t exactly a new thing. The government could already just straight up ban the sale of anything, this would just give them more nuance to their policy. Other things mentioned, like automatic taxes and preventing money laundering, seem… good? The more extreme authoritarian uses cases like financial “imprisonment” are certainly bad, but similarly can already basically be done. Look up what happens to those few people each year that are accidentally declared dead and can’t open lines of credit etc. The government can already ruin your life with the press of a button. I’m not sure I support CBDCs, but these seem like weak arguments. There are definitely benefits to taking away power from existing financial institutions.
- program_whiz 5y ago
  "slippery slope" is supposed to be a fallacy, I call it "seeing past patterns and extrapolating". Every problem we have as a society came about because of slippery slopes. They began from a relatively benign start and progressed organically as entropy, incompetence, and greed pushed it forward to a state that was dangerous or uncontrollable (e.g. politics, environment, criminal justice, etc). The key difference in the author's argument and your counter-examples are that things like "being declared dead" doesn't benefit anyone (unless you were any enemy). Take a look at imminent domain, drug seisures, and for-profit prisons if you want to see how "virtuous and obviously needed power" go on to be used when inevitably someone corrupt or incompetent comes to power. Once you create a lever for the government, it will at the very least go into the playbook of "possible tools to be used for control" (or more popularly, to 'help' people). Kind of how OSHA was the excuse to force all employers to require vaccines. Whether or not you agree with vaccines, can you see that the government thinking went: 1. We have an outcome we want, that is obviously good 2. Stupid citizens aren't complying with the Executive Order 3. How can we make them comply using something we have, and excuse it as "within the legal limits"? 4. Ah! OSHA exists and has broad powers, maybe we can say that we will fine anyone who doesn't have all workers vaccinated $150K per worker per month! That literally happened a couple months ago, so not sure how many more examples you need before "slippery slope" of "people spending 10s of millions to acquire a powerful office want power" is confirmed.
Ericson2314 5y ago
> Well, you’re not going to be able to make it to work at the warehouse on what you have in the tank. Hell no! If I can survive of "stimmie days" I will just tell the boss too bad I'm not showing up. What's he gonna do, fire me? Who cares! ---------- Central Bank Accounts for All is a good policy. The painlessness of getting fired will reform work, and help get rid of stupid planned on obselesence. The most important thing is trade policy so we don't all slack off by making foreign workers toil for us.
- csdvrx 5y ago
  > Central Bank Accounts for All is a good policy. Not according to the central banks themselves, who fear the degree of disintermediation it will cause will be bad for the economy. This was proeminently featured in the report that came a few weeks before the executive order.
  - Ericson2314 5y ago
    Link? "Degree of disintermediation", yes, it is central by definition! Is that bad? Well, that's a fancy question. We already have very few banks, so if that was really what one cares about, I'd say the "disintermediation" Rubicon has already been crossed. Now, banks has a creative and non-creative function. The creative one is loans, and more broadly subverting the rules to do finance things (insert Minsky things here). The non-creative one is just mere accounting. I see 0 point why we don't centralize all the accounting as a public utility. Certainly it would be a political argument about AML and KYC getting too strong, not an economic one. Baring such woo woo, accounting is either boring....or fraud! Centralize is to to make less busywork!
jacknews 5y ago
So naturally many fees are collected along the way for such services. Moreover, in such a centralized system there is no longer any need for middlemen like banks or credit card companies. Some planning documents for CBDCs discuss still including private banks in a “public-private partnership” system. But that’s only because customers love banks so much and because banks would love to keep charging fees LOL. Indeed, the existing banking system HATES the very idea of consumer central bank money. They would much rather be the choke point, uh, intermediary. When the CB issues new money, it has to go through the banks. That was fine when communications were slow - the CB dumps money in the bank's CB account, and then the bank distribute it to end users via loans (or more likely 'invest' it to pump up asset prices). Now that communications are instant, there does not appear to be any need for banks, end-users could interact directly with the CB. The totalitarian FUD is of course overblown. For a start, CBDC does not mean the end of cash, just the end of the necessity of commercial banks. And in any case, govt is much more accountable than private companies; For example, banks can, and do, cut off classes of users at their sole discretion, whereas govt would be forced to serve all legal actors.
- cced 5y ago
  The Canadian government just mandated the freezing of bank accounts for protestors associated with the freedom convoy. Let’s not pretend like the government can’t decide to reclassify what it thinks is legal based on what coloured shirt it’s wearing.
  - jacknews 5y ago
    So as govt has the power to seize bank accounts anyway, CBDC would not make any difference at all in this case, it's a question of govt accountability. The article seems to conflate CBDC with a totally cashless society, which yes, we should probably think through a bit more carefully.
    - hellojesus 5y ago
      It does matter. See things like Operation Choke Point and how much easier that becomes with federal centralization.
EGreg 5y ago
https://community.intercoin.org/t/just-say-no-to-cbdcs-says-article-but-theyre-coming https://community.intercoin.org/t/just-say-no-to-cbdcs-says-...
eyelidlessness 5y ago
My non-central bank’s non-digital currency is already a central bank digital currency.
- randomhodler84 5y ago
  You sure of that? You live in a jurisdiction where the private banks are not issuing the currency based on debt? Where fractional reserves at the central bank do not reflect the circulating supply from mortgages? Where is this magical land. I don’t believe you.
  - eyelidlessness 5y ago
    It was a very glib comment on the federal reserve, and the various takes on that institution.
mdale 5y ago
Great article; but I think we already live in a version of the reality he is describing. The currency is attention and the government is the large tech companies ;) Even in his nightmares he is still "waving his phone" to conduct these transactions. What do we think we are doing today with our phones ?
Geee 5y ago
Just from economics point of view, it's a really bad idea to monopolize banking completely. There's a reason why central banks / money issuing should be separate from governments, although this principle has been eroding for a while. Typically the most oppressive and authoritarian governments also have more control over their central bank, which gives them the power to fund themselves while keeping people poor through inflation. Thank god for Bitcoin, for letting people to escape this financial tyranny.
leshow 5y ago
If anything this is the outcome I expect if "web3" sucks enough people in. Along with other things like "I clicked the wrong app and lost all my savings" and "I chose a bad password and lost all my savings" with no recourse.
- kragen 5y ago
  Computers aren't inherently insecure; that's just the way they're built right now.
bccdee 5y ago
There's a pretty big difference between the introduction of a CBDC (essentially just a government bank account + debit card) and the deprecation of cash such that the CBDC is the ONLY way you can transact. And it's not like these totalitarian measures couldn't be implemented already by legislating banks into complying with them, assuming we get rid of cash somehow. There's no difference between "FedWallet has declined your transaction" and "Citigroup has declined your transaction (in compliance with US law)." The article spends a lot of time pretending banks don't exist: "[T]here would be no more tax evasion, either, since we have a complete record of every transaction made by everyone" -- banks already keep track of all the transactions that take place. A CBDC alone is neither necessary nor sufficient for implementing the kinds of restrictions the author of this article is worried about. Meanwhile, it actually does have a shot at providing financial services to people with bad credit or in precarious situations. So the article strikes me as kind of hysterical.
- cherrycherry98 5y ago
  Banks only keep track of transactions they are involved in. Cash transactions are peer to peer, private, and anonymous. The US government has been effectively phasing out cash through inflation since 1969, as they haven't issued any notes larger than $100 since then. You need roughly 780 2022 dollars to equal 100 1969 dollars. Even a $500 note does not get us back to parity on buying power.
- forum_ghost 5y ago
  1. What benefit can a government bank card can possibly provide, as opposed to private banking in a country with a modern banking system? 2. No, you cannot implement the draconian measures via legislative push on domestic banks, unless you are willing to cut off ALL foreign banks and ALL foreign business vistors and ALL tourists, and cut off ALL foreign payment systems. Government CBDC is superfluous in a country with modern banking. It's only intention is to control you, it provides no other benefit. Simply because they aren't phasing out cash at the same time as introducing the CBDC, to make the connection obvious to you personally does not mean they cannot phase out cash as the next step. In fact, cash has been essentially phased out for all practical purposes, it's already been stigmatized to such a point that even legally earned cash is confiscated routinely in legally-sanctioned robberies, aka "civil forfeiture". Some stores even have signs "we don't take cash". It's history. What more do you want? Government officials telling you under oath on prime time TV daily at 8pm every day of the week, in case you forget, "yes, we are doing this to control you more, and specifically, personally you, yes you - bccdee" ?
mark_l_watson 5y ago
After watching similar ideas surfacing from the World Economic Forum/Davos, I take this article very seriously. I am just guessing here, but it seems probable that such automated totalitarian style control would become stable and enduring if a large majority of people were happy with it. Isn't that the way China operates? (I don't know, it has been years since I was in China.) Who gets the resources to be happy? The wealthy and people with valued skills, for sure. But additionally most people would have to get a 'good enough' deal for the system to be stable.
- robbedpeter 5y ago
  The apparent durability and stability of China is entirely dependent on American democracy and capitalism. China would be a third world country but for some greed and corruption within American politics starting in the 90"s. Boomers will not be well regarded in the history books.
- kragen 5y ago
  Happiness requires extremely minimal resources.
_Nat_ 5y ago
It was amusing until this part: > There’s a message from the Fed: “You have already spent more than the $400 maximum weekly limit on fossil fuels specified in the FedWallet User Agreement. Your remaining account balance cannot be used to purchase non-renewable energy resources. At that point, the conspiracy-theory vibe stopped seeming ironic. If the government wanted to phase out gas-usage, wouldn't they just raise gas-tax? Having cheap gas, but a sudden limit leaving motorists stranded, just seems a little too wacky, even for a thoughtless comedic argument.
- wmf 5y ago
  Yeah, there have been some quiet yet serious proposals about personal carbon rationing in recent years. People on the farther left are uncomfortable with carbon taxes or tradable credits because of inequality.
  - hellojesus 5y ago
    Tradable credits will happen no matter what. Let's say we impose a $100/week gas limit via CBDC. Immediately I would list ads on CL to trade my $100 credits for $200. Gov can't stop it. Rationing just breeds further market inefficiencies.
    - abecedarius 5y ago
      In this scenario, gov could easily penalize or ration conversions to cash, limiting this escape hatch. They wouldn't go that way immediately because outrage, but it'd get increasingly doable and tempting as people get used to CBDC. (Lots of precedent for this pattern.) I've already read one economist's proposal to tax cash withdrawals in order to support negative interest rates, a couple years ago.
      - hellojesus 5y ago
        Agreed. It would be a cat & mouse game. Instead of cash trades, the gas-consumer could buy me a $200 Amazon gift card, etc. with their CBDC. There are always ways around restrictions, especially when people that aren't deterred by illegality and jail time like me exist. It would be an arms race.
tjstebbing 5y ago
I'm the Product Lead at the Dogecoin Foundation, that amusing dog-themed crypto project that unlike others remembers the OG vision of crypto: being a useful decentralised currency for folk to spend world over (not just a store of value that magically goes up all the time, or a general purpose distributed compute platform). A major reason I'm involved in crypto at all is that I believe cryptocurrency is a Pandora's box that Satoshi unleashed on the world. It doesn't matter whether you love or hate crypto, it's not going back in the box, it will (in some form) be what we're using in 10-20 years for everything. This is what you're seeing with the Biden announcement that the US are investigating CBDCs. China already has one, governments the world over are looking at this and rubbing their hands together. The choice we have now is to decide whether our kids enjoy a decentralised currency in a form that cannot be taken away from them, that fundamentally belongs to the people, or centralised currency that yields 100% control to their government to suspend, redistribute, withhold and track to a degree never before imagined. There's a mighty big carrot in single-government CBDCs that is going to take a significant, unified effort to resist. The only way that I see of avoiding it is to establish a global, grass-roots financial product that wins bottom-up by being easier, simpler, more convenient.. so that's what we're trying to do.
- randomhodler84 5y ago
  Totally! Love Dogecoin, still have a few mined from the fun times! The mission of Dogecoin has always been about providing a transactional and decentralized payment system and it has done this flawlessly for years! Wow! Dogecoin is poised to offer a cute alternative to CBDCs. It’s very fast, cheap and the blockchain could fit in most of the worlds cellphones today, but SPV lite wallets work fine too! Can I recommend that Dogecoin looks to its parent, LTC, and implements mimblewimble too? Shibas deserve privacy too!!
  - kragen 5y ago
    Litecoin is implementing Mimblewimble?
    - randomhodler84 5y ago
deutschew 5y ago
The urgency behind CBDC tells me some things about the future: - attack on competing digital wild moneys aka crypto - uncontrollable inflation and erosion of US dollar despite rate increases - a 4 sigma event causing super-deflation - political instability from demographic most impacted by super-deflation - social instability from demographic most vulnerable to super-inflation - financial surveillance of said demographics - the rich who survive can bypass CBDC via bartering hard assets
- hellojesus 5y ago
  > uncontrollable inflation and erosion of US dollar despite rate increases Lol rate increases
- jbay808 5y ago
  It's no coincidence that it's coming up at a time when interest rates hit zero.
  - imtringued 5y ago
    They have been zero for almost a decade in europe and much longer in japan.
gigatexal 5y ago
If a digital currency lets me settle a large transfer or payment in minutes and not days I’m in! I’m so in! ACH is so slow
baskethead 5y ago
Once a country's central bank creates their own digital currency, you can be 100% sure that Bitcoin in that country will be rendered illegal immediately.
- randomhodler84 5y ago
  I don’t think so. Even if they could, what does that mean? That it is illegal to run the software? Illegal to sign transactions? Illegal to your broadcast transactions? Others? Blocks? Cash on the other hand, yes. It will stop being printed, and eventually demonetized.
- cuteboy19 5y ago
  Why? We already have a digital currency if you use any bank. CBDC just unifies all of them into one system.
brentis 5y ago
I’ve followed and been behind crypto for sometime. Over 11 years actually. My first exposure was when I downloaded the mining code in middle of 2011 when the price per coin was around $6. Despite personal missteps to fully capitalize on the opportunity, the notion was something which I stood behind as a way to have a degree of monetary sovereignty free from 3rd party banks participation. As many, I dove into the works and writings of Satoshi to understand who he was as it would have been disingenuous if it was actually built by any individual state. I did have suspicions that one of the NSA authors of How to Make a Mint: The Cryptography of Anonymous Electronic Cash was potentially related as he became completely silent about Bitcoin and to date never spoke about despite it being near and dear to his core research. Regardless, the crypto space evolved and devolved and the government, as always, has used dissent to soften and misalign the uninformed which is very kin to the wholesale “all drugs are bad” narrative. And while I’m sure anyone would find the efficiencies of crypto useful for business, it's always the bad that are highlighted and sensationalized. Ukraine gets nearly $100 million in crypto donations, but the risk that Russia may use to “bypass” sanctions that warrants swift movement of the cryptocurrency bill. Doesn’t it seem the timing of the record inflation due to trillions of dollars injected into the economy seems too coincidental to ignore? This bill will grease the skids for a US crypto, similar to what China has already in service. People who quickly believe everything they hear will get excited, perhaps it is the $10 of “free” US crypto that is offered that helps adoption or the Venmo-like ease it is to send money to/fro. However, its very important to know - your money is will no longer act like it has in the past. It will now be more like “credits” which dynamically increase or decrease in value based on government whims. If the government wants to provide funding to stimulate the economy - magically trillions are distributed to everyone. Even more, they can make those funds disappear or expire if not used in a certain time. What’s worse, is that the notion of negative interest rates could be enacted to where your million dollar nest egg decays over time. The gross inefficiencies of government coupled with their ability to wash away any misstep with trillions of dollars which we are paying for as a hidden tax via devaluation is what at issue and don’t see it going away soon. As I imagine the narrative will move to the USA crypto is the trusted and valid option and others are not secure, valid or even legal; I don’t think cryptos have much runway. The incentive for the US to control the money supply is too great. And if the US is one of the only two governments to warrant taxation of US citizens living abroad then you can be 100% certain they want to cover all their revenue leakage. Until the US Government says to the contrary, Bitcoin and 100’s of other cryptocurrencies future are at risk. And if asking, is there any way to hedge against inflation? I think, metals are probably the answer. Gold, Copper, and even Uranium are all finite resources which similar to notion of BTC require “work” to mine and are done so on a global scale.
fooblitzky 5y ago
Sure makes me glad cryptocurrencies were invented to set us free from the totalitarian nightmare of everyone using cryptocurrency.
- CryptoPunk 5y ago
  A centralized and permissioned digital currency is not a cryptocurrency. Cryptocurrencies rely solely on cryptography to authorize transactions. There is no legal access-control based on identity and governed by a central authority.
- jbay808 5y ago
  CBDCs and cryptocurrencies have virtually nothing in common.
csense 5y ago
Some predictions: - The government's not going to have an official true cryptocurrency where anyone with a computer and an Internet connection can just generate a private key and anonymously send / receive coins. - The system won't allow an address to send / receive coins without approval from a government key, and that approval will only be given if the government's gotten a name / SSN / real-life identity to associate with that address. - The system will provide a function where a government-controlled key can freeze any address's ability to send or receive funds. - The government's going to say "But we need to take a stand against terrorists / Russian oligarchs / drug kingpins" and then it ends up being used against successively lower and lower degrees of criminals, such as money launderers / tax dodgers / deadbeat dads / unpaid parking tickets, and eventually ends up targeting ordinary citizens.
- delusional 5y ago
  I'm going to say something crazy. How about we just stop electing people who are going to use power against their own citizens? If you think that's impossible, then how about we change the system such that it is. That seems much more constructive than erecting barriers for ourselves because we can't control the beast we've constructed.
  - octoberfranklin 5y ago
    > How about we just stop electing people who are going to use power against their own citizens? You have too much faith in humanity. > If you think that's impossible, then how about we change the system such that it is. Because that's impossible too? It's like buttered butter. The system is made of humans.
  - 5350-uiop-1130 5y ago
    you really drank that democratic kool aid. unless you have more money or bigger guns you don't get to decide anything. furthermore the internet has show really why democracy doesn't work at scale. it's so easy to manipulate the unwashed masses. you think if fox made up a smear campaign on you, there wouldn't be hoards of people at your door with pitchforks the next day.
charcircuit 5y ago
So instead we should trust companies to make coins like USDT and USDC instead of trusting the government to make them?
Puts 5y ago
What kind of crackpot wrote this? Most new money "printed" is already digital and created through debt. If anything a digital currency would allow central banks to create more money without creating more debt.
- forum_ghost 5y ago
  I guess this "crackpot" would be Agustin Carstens, the General Manager of the Bank of International Settlements (BIS). Some irrelevant tinfoil type in the Swiss Alps somewhere, or something. He helpfully put it at a 2020 summit of the International Monetary Fund: “We don’t know who’s using a $100 bill today and we don’t know who’s using a 1,000 peso bill today. The key difference with the CBDC is the central bank will have absolute control on the rules and regulations that will determine the use of that expression of central bank liability, and also we will have the technology to enforce that… and that makes a huge difference.” absolute control on the rules and regulations that will determine the use absolute control on the rules absolute control He will OWN you. and you WILL like it.
  - amusedcyclist 5y ago
    - MadSudaca 5y ago
      If the power to do it exists, it’ll get used, whether you know it or not. That’s why something as cryptography is so powerful. We can prove mathematically what can and cannot be done, essentially partitioning the universe of possibilities and granting you the privilege of not having to worry about some of those partitions.
alexb_ 5y ago
Something I think a lot of people are forgetting is that NOT EVERYONE HAS A BANK ACCOUNT! Nor does everyone trust banks, wish to make a bank account, have the necessary cognitive ability to make a bank account, etc. By making cash completely digital, you are getting rid of the unbanked. Which isn't a small amount of people - approximately 1 out of every 20 people in America do not have a bank account. That's literally tens of millions of people who would not be able to FUNCTION should we have a digital dollar. So who would be giving out these bank accounts? The government? Banks? Can banks say that if you don't have an address, or if you don't have 40 bucks to your name, or any other list of conditions, then you cannot have a bank account? The fact that people are not even thinking about this blatant problem shows exactly how much care is given to those who have no bank account, and what the true intention is. The intention of a digital dollar is to make banks necessary to live. The intention of a digital dollar is to make it literally impossible to function without a bank account, and that's a huge problem.
- rswail 5y ago
  If everyone gets a CB bank account then they will have a bank account. For example, Australia has a banked population of 100%, as in, everyone needing one has a bank account. It's required for receiving government benefits.
- jcadam 5y ago
  Everybody must be part of the system. How else can we control them?
Qworg 5y ago
Beyond the bombastic (and admittedly difficult to stomach) opening, there are definitely concerns with any CBDC. However, this article doesn't discuss the more likely outcome - not a CBDC issued by the Fed directly, but rather a hybrid model where banks issue CBDCs (much like today's bank money model). This would preserve the role of banks in the new system, while opening up many of the efficiencies. It'll also limit the expansion of authoritarian power described.
- forum_ghost 5y ago
  Why would that limet authoritarian power? The authoritarian power is literally the only goal of the CBDC, the article quotes the General Manager of BIS wanting "absolute control" Let that sink in. Absolute control.
  - Qworg 5y ago
    The GM of BIS can declare that all they want - banks are powerful entities within the US and won't go down with out a fight.
    - salawat 5y ago
      ...You realize you're telling someone else that a group of people wielding disproportionate power at the behest of a potentially authoritarian government is going to somehow protect the end user against actual authoritarian government overreach, where the capability to dissolve or otherwise threaten such banks is entirely in play by definition? Just wanted to make sure you realized what you seem to be doing.
jcadam 5y ago
You'd be a fool to keep any savings in such a currency. You'd be a fool to actually use your FedCoin to do anything other than pay your boring monthly bills and expenses. Disposable income gets converted to anything else: BTC, silver, etc.
mise_en_place 5y ago
> [The Congress shall have Power . . . ] To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; . . . It doesn't matter if Biden decrees he is now king of the United States for life, the Constitution specifically enumerates powers to each branch of government. Why is everyone asleep at the wheel?
- salawat 5y ago
  Because everyone is too busy to actually be bothered to read all those laws. Isn't it obvious?
hunglee2 5y ago
not sure whether saying 'no' is going to do anything - governments can simply roll CBDC out and scale it through incentives. In the PRC for example, their CBDC started by simply loading up people's mobile wallets with free money, which can be used to buy real products. HK Govt about to do the same - $10,000 HKD give away to Oyster Wallet to all permanent residents. Of course you are going to use it, not initially as any substitute for any other form of currency but as a nice supplement to your income. Then, in designed scope creep, you get an option to take your salary via CBDC, with the incentive of auto taxation, maybe even a lower tax rate if you do so. You are going to do it. Then maybe retailers start charging slightly more for any sale that uses anything else. They eventually won't accept anything else. Slowly but surely, society transitions entirely to CBDC, with the only alternative being straight up barter between citizens, as by then crypto will have been so squeezed through increasingly stringent regulation, that it can no longer pragmatically operate as currency. Good or bad? Dunno, can't really see what you can do about it!
prognu 5y ago
The author presumes that a CBDC has to be account-based and privacy-invasive. As pointed out in this other posting [1] that was made today, that is not the only option. [1] https://news.ycombinator.com/item?id=30625163 https://news.ycombinator.com/item?id=30625163
knorker 5y ago
I will. Not as strongly as I say no to Bitcoin or the other ones, but sure.
toomanybeersies 5y ago
CBDC isn't a prerequisite for that dystopian future suggested by the author. In some parts of Australia, the government has been trailing cashless benefit payments. Welfare recipients are given a special "Cashless Debit Card", which can't be used to pay for alcohol or gambling. I'm pretty sure that food stamps work the same way in the USA. Limiting purchases of fossil fuels has been done before too. During WWII most countries managed to implement fuel rationing with little more than paper tokens.
- Barrin92 5y ago
  Unless we've radically redefined what dystopia means someone has to explain to me what's bad about a welfare system that people can't abuse to buy booze. All I get from the article is that CBDCs enable pretty reasonable interventions like subsidizing electric cars, penalizing fast food, and so on. Which we already do because it's a good idea to not set the planet on fire or have the entire population be obese in 30 years. And we get rid of the middlemen in the process pretty tame as far as dystopias go
- noisy_boy 5y ago
  > Welfare recipients are given a special "Cashless Debit Card", which can't be used to pay for alcohol or gambling. All that would do is to give rise to unorganized/underground barter market that will happily exchange your purchases with alcohol, at an exploitative markup of course, so that you can give up even more essentials in exchange for pumping your life down the drain faster.
unfocussed_mike 5y ago
Crypto-dudes saying "say no to CBDC" are a lot like drug cartels saying "say no to licensed marijuana". The looming authoritarian crisis of centrally controlled digital money wouldn't have been looming at quite the same speed if it were not for highly-capable software developers spending time that could have been used to advance humanity on a libertarian wet dream instead. And it would have been more difficult to roll out without all the groundwork that has been done for crime-adjacent reasons. (Edit for comedy coffee-shortage CNBC typo. Definitely say no to CNBC)
throwaway22032 5y ago
The primary reason to use cash or otherwise anonymous means of payment as much as possible is to allow for incomplete enforcement of laws. Quite literally, to enable free trade. We don't want perfect enforcement of the law. It doesn't allow for progression towards a better state of being. It's as if you just cement your current way of life forever with very limited movement permitted per cycle. For example, imagine if we had ubiquitous mass surveillance in the 1960s and the processing power to back it to the degree that we do now. Homosexuality would probably still be illegal because no-one would have been able to form the movement to change that. Being able to do something that is (currently) illegal is a strictly preferable state of affairs to having it be completely impossible. Imagine that you just couldn't transfer money to a friend because the Government has strictly delineated between businesses and "consumers" because that's the 90%+ use case and it doesn't really affect the aggregate economy that much to just ban individual-individual transfers. e.g. "Using a card is more convenient cause I just do a tap on the machine". Except no, it's not, because only businesses have card terminals. So you're restricting the free flow of trade over time. Each individual 'outside of the norm' use case is quite small, all of them added together is massive.
ppcelery 5y ago
This is exactly the daily life of Chinese people

390 points by mortenjorck 5y ago

gspr 5y ago

I see insightful comments from both sides of this issue, but what worries me is that most solutions seem to rely on technical solutions. I'm a technology-optimist and materialist at heart, but I don't think technological solutions are the best way to safeguard liberty. Even if they are, there's no reason that we should accept to live in an antagonistic relationship with the authorities. In liberal democracies, the authorities should be on our side, and legal safety nets should be in place to prevent them from straying too far from this if they're acting in bad faith. (Purely) technological solutions to the problems in this thread remind me a bit of the American thinking that people need to own assault rifles to make sure the government doesn't overstep. Dude, even if you win, the world's become a very bad place if you find yourself in a shooting match with your government. How about instead reforming said government and instituting legal safeguards for your liberties?

salawat 5y ago
All the legal safeguards in the world won't save you from a sufficiently high proportion of bad apples in centralized places of power. This is a very real threat in today's world of mostly Administrative Law, legislative buffoonery, and a Supreme Court that shoves their fingers in their ears instead of dealing with clear misinterpretations of the Constitution.

afpx 5y ago

ELI5 - Why can’t each country (or state) have it’s own node and proof of stake?

t_mann 5y ago

I think one point the author is missing is that none of the dystopian use cases described really depend on a CBDC (in fact, China had a lot of similar things prior to its digital yuan launch). It would only make them marginally easier to implement (which might still be relevant in democratic countries). Another thing that's missing is the fact that 'No more need for banks' has very wide implications. It would mean that banks can no longer do lending as they do now, they would have to essentially ask for permission from the central bank every time before they make a loan (that's because bank lending isn't based on 'fractional reserve banking', contrary to what most econ 101's teach [1]). [1] https://www.imf.org/en/Publications/WP/Issues/2019/12/20/Money-Creation-in-Fiat-and-Digital-Currency-Systems-48843 https://www.imf.org/en/Publications/WP/Issues/2019/12/20/Mon...

coldtea 5y ago
>It would only make them marginally easier to implement If by "marginal" you mean "several orders of magnitude", then yes.
- t_mann 5y ago
  Once the initial setup is there (which isn't easy in either case), the difference is to write a new law that forces commercial banks to implement some changes vs one that forces the central bank to do so. The former currently have strong lobbies, that's what really makes it harder.
  - coldtea 5y ago
    If societies still have cash and multiple banks, the power to order/stop/whatever is much less centralized, and there are multiple levels to resist it.
scrubs 5y ago
The subtitle suffix phrase "...totalitarian nightmare" isn't helpful. To a child parents are totalitarian nightmare by his reckoning. Except that parents are not out mess kids over. Institutional power in a sphere of work is not definitionally totalitarian. It how you use it. Let's not conflate choice in a matter with intent to harm. A CBDC should probably have checks and balances anyway, because human factors sometimes drift into nonsense. For example, maybe there can be per-US-state account with different administrative rules. This cuts both ways. The network of BC miners and users is still just people running code like the CBDC. Code can be changed. Forks can occur. People can decide other things then act on it. In fact it's worth reminding that non-CBDC have never had to deal with the full set of roles and responsibilities of a serious national currency in an international setting under war, pandemics, depressions, social welfare (payments from Congress) and major Wall Street failures. It's far, far from clear that BC would emerge running the same 1.0 version of BC on the same fork it seven years ago.

ilove196884 5y ago

Intresting of you to think that governments are capable of rolling them for everyone. It is a fluff and complete hype. The technology is solid but rolling it will be a pain.

synctext 5y ago

Rebuttal from responsible professor deploying such systems: - Do you trust your bank? (to never get hacked, go bankrupt, etc.) - Do you trust Big Tech to run the global financial system? (search: "Google Cloud for banking" or read "Cloud Computing in Banking" by capgemini). - Do you trust the government with critical infrastructure? Central bank digital currency could indeed be evil. The way Delft University is building it gives more power to the people. Here in Europe the digital Euro is coming. We've done some open source Internet-deployment test, with live connection to the IBAN system[1]. [1] https://github.com/Tribler/trustchain-superapp#digital-euro https://github.com/Tribler/trustchain-superapp#digital-euro

perryizgr8 5y ago
> Do you trust your bank? (to never get hacked, go bankrupt, etc.) Let me rephrase this generally: Do you trust <any entity other than yourself>? (to never <do any number of bad things>) Answer is always no. So this does not give us any insight about the issue at hand. Would you trust your central bank? (to always act in the citizen's interest, to never give in to an authoritarian leader, etc.) > Here in Europe the digital Euro is coming. And that should scare Europeans.

coldtea 5y ago

The naive happy-go-lucky approach on this: "The problem is not CBDC per se, it's how we use it". As if people will be asked how its used, and as if once they've given an inch, the governments (and businesses explociting the same opportunities) wont take a mile...

drexlspivey 5y ago

The US severely weakened the case for the US dollar as a reserve currency with their recent actions of freezing Russian reserves. Why would any central bank stash USD when they can’t count for these reserves to be there when they most need them? I believe the next global reserve currency would be in the form of a blockchain.

JSavageOne 5y ago

We can have Central Bank Digital Currencies while still having cash. Also, the analogy suggesting the Fed could lock peoples' wallets for random tweets is ridiculous.

notRacistSir 5y ago

rdevsrex 5y ago

I think a central bank coin would be an improvement over our current system given some very strict safeguards and democratic control over what gets regulated. I think we should already have a national referendum system, but I'd definitely want that in place before central bank coin. We all know that fiat won't last forever, so a new monetary system not based on debt would be great. And one that doesn't take as much energy as crypto does today would also be great. But having bureaucrats or an AI push buttons to restrict what you can buy is outright despotic.

biztos 5y ago

Off-topic but if anyone else is curious about where that image comes from, it's a Lord of the Rings themed mashup: https://boingboing.net/2010/12/09/eye-of-mordorus-doll.html https://boingboing.net/2010/12/09/eye-of-mordorus-doll.html

mattbrewsbytes 5y ago

The intent of a Central Bank is as a Bank for Banks. Consumers never interact with the Federal Reserve directly. The Federal Reserve is not owned by the actual government, there is a board of governors who reports to congress. The actual ownership is shared across actual banks as shareholders. I find it very peculiar that they want to interact directly with consumers via a digital currency. An article I read mentions ideas around financial products, etc. which to me sounds like a huge red flag that they would want to interact with consumers. It sounds like another way for Banks to siphon off money from common people with the advantage that they (or 3 letter agencies) can track the money.

spacexsucks 5y ago

Wait till you combine this with the EARN IT act. Every transaction is out in the open. Fund ACLU, EFF and FSF.

bannedbybros 5y ago

walnutclosefarm 5y ago

At the macro level, major currencies are already digital, and maintained by central banks. There is no specie or notes moving between bank vaults for most interbank transactions. That's precisely why the United States and Europe are able to nullify Russia's foreign currency reserves as effectively as they can. The only thing Russia has to exchange for most of its USD and Euro holdings is the right to tell the Fed or the ECB to move money from the Russian Central Bank's account at those institutions to some other account. By freezing those accounts, Russia's money effectively ceases to be Russia's. Consumer transactions are not yet typically digital currency based. Rather, they are digital notations reflecting desired real currency exchanges between and through banks, that happen to increasingly satisfied by digital means. But no specific digital "coin" or bill is moved by my credit card transaction. Yet. But more robust and ubiquitous CBDCs are inevitable, especially if central bank-independent cryptocurrencies actually start to gain traction as currencies. Central banks and the governments that underwrite them will never permit fiscal policy to be controlled by an independent, non-manageable currency. Governments and central banks use their ability to control the volume of currency, and the cost of acquiring capital to manage economic stability through monitoring and influencing inflation, employment and investment. For them to not be able to do that would be catastrophic (read the economic history of the nineteenth century for a minor key preview of the results). That means they need to be able to control their currencies. If the future of transactions is digital currencies, all the way down to consumer transactions, then central banks will have to issue CBDCs and mandate their use. BTW, a cryptocurrency, as we currently use the term is, if it actually becomes a currency, only one possible species of digital currency. A CBDC need not be crypto per se. It will use cryptographic techniques for sure, but may not be crypto/blockchain as we understand it. Finally, note that a CBDC requires ubiquitous reliable digital identities to be workable. A lot of what the banking system does is the work of "know your customer." That's only more important in a full digital currency world.

rwmj 5y ago

I assume if expiring FedCoins became popular, then so would purchases of fungible items (fuel, gold coins and so on). You can then invest your expiring FedCoins in something which can be resold later.

cphoover 5y ago

So far cryptocurrencies seem to be really good at: * Pump and Dump and Ponzi schemes * Illicit Purchases in black markets (drugs, other illegal sales), * A means for corrupt governments to skirt economic sanctions. What they aren't good at: * A stable currency used for the exchange of goods and services

helen___keller 5y ago

This is a writing style of heavy-handed satire that I’ve come to identify as “slippery slope porn”. I don’t really mind discussing or envisioning long term and worst case scenarios, but readers beware that you can play the same game with any numbers of existing policies that have not yet turned into the predicted dystopian fiction. Largely, I imagine, because in a democratic society there are feedback loops where individual opinions are taken into consideration in aggregate, even if it sometimes doesn’t feel like it. (everyone is in the minority group on some issue; your “why do they need an electronic currency grumble” is my “why don’t we have socialized healthcare grumble”)

pjc50 5y ago
Yeah, it's practically copypasta: a laundry list of made up situations from the fear profile of a particular group. However, in the past couple of weeks we've seen the seizure or devaluation of hundreds of billions of dollars of Russian assets as the result of the war, and a bunch of people have been put on sanctions lists with basically zero legal review or recourse. I wonder how things would have developed if Russia had a CBDC: what would happen to Western holders of it? (Note that the oligarchs aren't holding much of their fortune in actual physical folding money cash, that's too inconvenient once you get above the amount that fits in a safe. They've been keeping it in property, businesses, banks, bought politicians, and football clubs)
- hackernewds 5y ago
  > they've been keeping it in property... And now heavily in Tether, which is known infamously to have shady and little collateral. Help us all when the cryptocurrency system crumbles.

asah 5y ago

CBDCs retain most of the value, even if they're not on a distributed blockchain: * 24x7x365 commerce and trading - no more wire-cutoff deadlines. * lower fees - no more middlemen taking 10s-100s of basis points. * "programmatic money" - clean, open APIs for lending, hedges, derivatives, futures, pooling, etc. * transparency and safety - reduce Lehman-type debacles: more "money" is visible to the Fed and it's less common for private companies to invisibly create (large) private debts. ...

bannedbybros 5y ago

TheMightyLlama 5y ago

The topic of programmable money aside, Why centralise the ability to freeze an account? If I deem someone (or some organisation) to be a bad actor I would like to block the ability to make payments to them and put that account number on a publicly visible register. Now this organically created list can be consumed by other people or organisations effectively excluding them from receiving payments.

jonahbenton 5y ago

Am late to this game but this whole scenario is almost not worthy of ridicule, but more importantly is not unique to any hypothetical participation by the Fed at the retail level in the US. In fact, seemingly every few weeks a post appears on HN from a Paypal or other private account user complaining that they were for no reason refused service and access to their funds. The libertarian HN crowd has fantastic Orwellian dreams of government intervention while the risks of privatization, THE ACTUAL REASON TO HAVE GOVERNMENTS AND DEMOCRACIES, hits them in the fucking head every day.

jokethrowaway 5y ago

This is the reason I didn't invest in BTC in 2011 and that's why I'm not rich. I expected the government to spin up an official centralised BTC fork and send the value of the community one to zero (or even make it illegal). Apparently I was dead wrong on the timing and I missed on millions of speculation. I still think we'll get there, if the history of the USA and Europe is any indication, regulations keep piling on and getting added and nothing ever gets removed, so the future we're slowly drifting forward is undoubtedly a totalitarian nightmare. China and Russia are already totalitarian. The USA and EU are getting more totalitarian every passing day. My only hope is for South America to become a bit safer and retain some degree of freedom, so I can escape there in 10-20 years. Or maybe some Caribbean island. Hopefully enough libertarian made money with BTC and will be able to create a better society. I hope future South America to be good for my kids' generation or maybe for some future totalitarian regime to explode somehow so they can move there.

zamalek 5y ago

I see what point the author is trying to make, but painting an unpopular but important idea (renewable energy) is incredibly poor taste. All things considered a vehicle has to pay off its manufacturing energy cost. It would make no sense to so heavily penalize fossilized cars until their energy break-even.

JoshuaDavid 5y ago
> It would make no sense to so heavily penalize fossilized cars until their energy break-even. "This policy could not achieve its stated goals under any reasonable set of assumptions" is unfortunately not as strong of a guarantee of "this policy will not be implemented" as I would like.

datavirtue 5y ago

I miss editors.

hammyhavoc 5y ago
Continue.

space_rock 5y ago

CBDCs will be a tool of all totalitarian, predatory governments. That I'm sure of. They will also be popular with people after a fair socialist utopia with top down economic incentives. I'm skeptical it can lead anywhere good

deleted 5y ago
[deleted]
randomhodler84 5y ago
It cannot lead anywhere good, unless you desire a complete stagnation of society. Thank satoshi we have an alternative.
- automatic6131 5y ago
  Lmao, if you crypto weirdos had actually made some good things, then these ideas would be DOA. Instead, cryptocurrencies became: scams, deflationary traps, scams, money laundromats, scams, digital casinos, scams, programming competitions where being first place means you steal someone else's money, programming competitions where NOT being first means you lost all YOUR money, and yet more scams. Whilst also driving up the price for consumer electronics to run these scams - because in order to run them you need unreal amounts of computing power to run a bad append-only ledger.
  - randomhodler84 5y ago
    This equally applies to “internet”. Agree, lots of fraud. Scams. Tricks traps and hacks. But there is something you are missing here. Bitcoin is mined using specialty hardware, it has no impact on consumer electronics. A lot of these concerns are leveled at ethereum. Bitcoin should be thought of as a fundamental value exchange protocol for the internet. We don’t blame TCP/IP for internet scams.
matheusmoreira 5y ago
Yeah. It's the anti-cryptocurrency, the negation of everything it was meant to be. This technology was meant to emancipate us but it failed and seems to have inspired the creation of something even worse that what we had before.

groby_b 5y ago

"What would happen if the federal banking system was only a 10th as corrupt/inept as libertarian blockchain fantasies" is a hell of a writing prompt.

whatshisface 5y ago
No, that writing prompt would end in, "and then the US government exited Dollarcoin and left everyone else holding the bag." This writing prompt is, "What would happen if we lived in China?"
- randomhodler84 5y ago
  Or, “what is China doing now that the west can achieve as soon as that Overton window gets in range.”

satisfice 5y ago

Seems to me you can make anything sound ominous with your choice of writing style. In 1982 I was advised not to use ATM machines because it would enable government surveillance of our spending. That was breathlessly silly, too. I am more worried about people cheating society. I pay my taxes and try to do the right thing. So bring on more government oversight and control over the economy. But only if we also secure voting rights and have stronger protections against Trumpian destruction of government.

gruez 5y ago
>In 1982 I was advised not to use ATM machines because it would enable government surveillance of our spending. That was breathlessly silly, too. Isn't that what we have right now? The only thing they got wrong was that it wasn't caused by ATMs, it was caused by AML/CFT laws and people switching to using cards for payments.
- fineIllregister 5y ago
  I would assume that any transaction with a bank would be available to the government, even prior to the invention of the ATM.
yarky 5y ago
Cheating is a serious issue, but you won't stop it relying on more potential cheaters. And out of curiosity, what's been making you feel so safe around ATMs since 1982? COBOL ?
drewcoo 5y ago
> . . . not to use ATM machines because it would enable government surveillance of our spending. That was breathlessly silly, too. And how is that silly? It seems to be factual. > I am more worried about people cheating society. I pay my taxes and try to do the right thing. The funny thing about privacy is most people don't really notice it let alone treasure it until it's been violated. And anyone who wants to surveil us loves it when people shrug and say they have nothing to hide. It's a nice bandwagon slogan, applying social pressure. It shifts the burden from the watchers (why do they need the info?) to the watched (what do they have to hide?). It's a rotten rhetorical twist and deserves to be decried whenever it's used. > But only if we also secure voting rights Now I'm wondering if I misread sarcasm earlier. Poe's Law was written for this moment.

sk5t 5y ago

Matt Levine noted a few months ago that the US dollar is already a digital currency (you don't pay the rent with a sack of coins), it just isn't a cryptocurrency.

yarky 5y ago
I agree, they'll just use a blockchain to replace some old database and that's it, let's digitally print some more ...
- exdsq 5y ago
  Just a note - I’m not sure how serious you are with this comment, but it’s nothing like how it’ll work (I’ve been keeping up with the CBDC literature and it might not even be a blockchain)
  - yarky 5y ago
    Well now you make me wonder if there's some noble technology I don't know about. Oh wait, are they still running on mainframes and will just switch to aws, is that the whole CBDC point ? Ok that one was a joke, but I am honestly curious about your literature review since all I see are banks trying to upgrade old databases, yet relying on the same old economic principles.
  - danielmarkbruce 5y ago
    There is practically zero chance it will be a blockchain.
    - exdsq 5y ago
      There are two active projects in research stages at the moment - without knowing internal politics, it's equally likely.
      - danielmarkbruce 5y ago
        You can weigh up the costs and benefits of each and make a judgement call as to whether they see it the same way or differently. I'm making it and saying it's not even close. It's difficult to organize a bet, but if it were easy and you were offering even money, I'd take that bet.

karagenit 5y ago

I don’t really get the author’s argument. A lot of it seems very “slippery slope” to me. The government already can (and does) restrict what people can and cannot buy. The idea of limiting spending on certain things (like gas) is interesting, but that isn’t exactly a new thing. The government could already just straight up ban the sale of anything, this would just give them more nuance to their policy. Other things mentioned, like automatic taxes and preventing money laundering, seem… good? The more extreme authoritarian uses cases like financial “imprisonment” are certainly bad, but similarly can already basically be done. Look up what happens to those few people each year that are accidentally declared dead and can’t open lines of credit etc. The government can already ruin your life with the press of a button. I’m not sure I support CBDCs, but these seem like weak arguments. There are definitely benefits to taking away power from existing financial institutions.

program_whiz 5y ago
"slippery slope" is supposed to be a fallacy, I call it "seeing past patterns and extrapolating". Every problem we have as a society came about because of slippery slopes. They began from a relatively benign start and progressed organically as entropy, incompetence, and greed pushed it forward to a state that was dangerous or uncontrollable (e.g. politics, environment, criminal justice, etc). The key difference in the author's argument and your counter-examples are that things like "being declared dead" doesn't benefit anyone (unless you were any enemy). Take a look at imminent domain, drug seisures, and for-profit prisons if you want to see how "virtuous and obviously needed power" go on to be used when inevitably someone corrupt or incompetent comes to power. Once you create a lever for the government, it will at the very least go into the playbook of "possible tools to be used for control" (or more popularly, to 'help' people). Kind of how OSHA was the excuse to force all employers to require vaccines. Whether or not you agree with vaccines, can you see that the government thinking went: 1. We have an outcome we want, that is obviously good 2. Stupid citizens aren't complying with the Executive Order 3. How can we make them comply using something we have, and excuse it as "within the legal limits"? 4. Ah! OSHA exists and has broad powers, maybe we can say that we will fine anyone who doesn't have all workers vaccinated $150K per worker per month! That literally happened a couple months ago, so not sure how many more examples you need before "slippery slope" of "people spending 10s of millions to acquire a powerful office want power" is confirmed.

Ericson2314 5y ago

> Well, you’re not going to be able to make it to work at the warehouse on what you have in the tank. Hell no! If I can survive of "stimmie days" I will just tell the boss too bad I'm not showing up. What's he gonna do, fire me? Who cares! ---------- Central Bank Accounts for All is a good policy. The painlessness of getting fired will reform work, and help get rid of stupid planned on obselesence. The most important thing is trade policy so we don't all slack off by making foreign workers toil for us.

csdvrx 5y ago
> Central Bank Accounts for All is a good policy. Not according to the central banks themselves, who fear the degree of disintermediation it will cause will be bad for the economy. This was proeminently featured in the report that came a few weeks before the executive order.
- Ericson2314 5y ago
  Link? "Degree of disintermediation", yes, it is central by definition! Is that bad? Well, that's a fancy question. We already have very few banks, so if that was really what one cares about, I'd say the "disintermediation" Rubicon has already been crossed. Now, banks has a creative and non-creative function. The creative one is loans, and more broadly subverting the rules to do finance things (insert Minsky things here). The non-creative one is just mere accounting. I see 0 point why we don't centralize all the accounting as a public utility. Certainly it would be a political argument about AML and KYC getting too strong, not an economic one. Baring such woo woo, accounting is either boring....or fraud! Centralize is to to make less busywork!

jacknews 5y ago

So naturally many fees are collected along the way for such services. Moreover, in such a centralized system there is no longer any need for middlemen like banks or credit card companies. Some planning documents for CBDCs discuss still including private banks in a “public-private partnership” system. But that’s only because customers love banks so much and because banks would love to keep charging fees LOL. Indeed, the existing banking system HATES the very idea of consumer central bank money. They would much rather be the choke point, uh, intermediary. When the CB issues new money, it has to go through the banks. That was fine when communications were slow - the CB dumps money in the bank's CB account, and then the bank distribute it to end users via loans (or more likely 'invest' it to pump up asset prices). Now that communications are instant, there does not appear to be any need for banks, end-users could interact directly with the CB. The totalitarian FUD is of course overblown. For a start, CBDC does not mean the end of cash, just the end of the necessity of commercial banks. And in any case, govt is much more accountable than private companies; For example, banks can, and do, cut off classes of users at their sole discretion, whereas govt would be forced to serve all legal actors.

cced 5y ago
The Canadian government just mandated the freezing of bank accounts for protestors associated with the freedom convoy. Let’s not pretend like the government can’t decide to reclassify what it thinks is legal based on what coloured shirt it’s wearing.
- jacknews 5y ago
  So as govt has the power to seize bank accounts anyway, CBDC would not make any difference at all in this case, it's a question of govt accountability. The article seems to conflate CBDC with a totally cashless society, which yes, we should probably think through a bit more carefully.
  - hellojesus 5y ago
    It does matter. See things like Operation Choke Point and how much easier that becomes with federal centralization.

EGreg 5y ago

https://community.intercoin.org/t/just-say-no-to-cbdcs-says-article-but-theyre-coming https://community.intercoin.org/t/just-say-no-to-cbdcs-says-...

eyelidlessness 5y ago

My non-central bank’s non-digital currency is already a central bank digital currency.

randomhodler84 5y ago
You sure of that? You live in a jurisdiction where the private banks are not issuing the currency based on debt? Where fractional reserves at the central bank do not reflect the circulating supply from mortgages? Where is this magical land. I don’t believe you.
- eyelidlessness 5y ago
  It was a very glib comment on the federal reserve, and the various takes on that institution.

mdale 5y ago

Great article; but I think we already live in a version of the reality he is describing. The currency is attention and the government is the large tech companies ;) Even in his nightmares he is still "waving his phone" to conduct these transactions. What do we think we are doing today with our phones ?

Geee 5y ago

Just from economics point of view, it's a really bad idea to monopolize banking completely. There's a reason why central banks / money issuing should be separate from governments, although this principle has been eroding for a while. Typically the most oppressive and authoritarian governments also have more control over their central bank, which gives them the power to fund themselves while keeping people poor through inflation. Thank god for Bitcoin, for letting people to escape this financial tyranny.

leshow 5y ago

If anything this is the outcome I expect if "web3" sucks enough people in. Along with other things like "I clicked the wrong app and lost all my savings" and "I chose a bad password and lost all my savings" with no recourse.

kragen 5y ago
Computers aren't inherently insecure; that's just the way they're built right now.

bccdee 5y ago

There's a pretty big difference between the introduction of a CBDC (essentially just a government bank account + debit card) and the deprecation of cash such that the CBDC is the ONLY way you can transact. And it's not like these totalitarian measures couldn't be implemented already by legislating banks into complying with them, assuming we get rid of cash somehow. There's no difference between "FedWallet has declined your transaction" and "Citigroup has declined your transaction (in compliance with US law)." The article spends a lot of time pretending banks don't exist: "[T]here would be no more tax evasion, either, since we have a complete record of every transaction made by everyone" -- banks already keep track of all the transactions that take place. A CBDC alone is neither necessary nor sufficient for implementing the kinds of restrictions the author of this article is worried about. Meanwhile, it actually does have a shot at providing financial services to people with bad credit or in precarious situations. So the article strikes me as kind of hysterical.

cherrycherry98 5y ago
Banks only keep track of transactions they are involved in. Cash transactions are peer to peer, private, and anonymous. The US government has been effectively phasing out cash through inflation since 1969, as they haven't issued any notes larger than $100 since then. You need roughly 780 2022 dollars to equal 100 1969 dollars. Even a $500 note does not get us back to parity on buying power.
forum_ghost 5y ago
1. What benefit can a government bank card can possibly provide, as opposed to private banking in a country with a modern banking system? 2. No, you cannot implement the draconian measures via legislative push on domestic banks, unless you are willing to cut off ALL foreign banks and ALL foreign business vistors and ALL tourists, and cut off ALL foreign payment systems. Government CBDC is superfluous in a country with modern banking. It's only intention is to control you, it provides no other benefit. Simply because they aren't phasing out cash at the same time as introducing the CBDC, to make the connection obvious to you personally does not mean they cannot phase out cash as the next step. In fact, cash has been essentially phased out for all practical purposes, it's already been stigmatized to such a point that even legally earned cash is confiscated routinely in legally-sanctioned robberies, aka "civil forfeiture". Some stores even have signs "we don't take cash". It's history. What more do you want? Government officials telling you under oath on prime time TV daily at 8pm every day of the week, in case you forget, "yes, we are doing this to control you more, and specifically, personally you, yes you - bccdee" ?

mark_l_watson 5y ago

After watching similar ideas surfacing from the World Economic Forum/Davos, I take this article very seriously. I am just guessing here, but it seems probable that such automated totalitarian style control would become stable and enduring if a large majority of people were happy with it. Isn't that the way China operates? (I don't know, it has been years since I was in China.) Who gets the resources to be happy? The wealthy and people with valued skills, for sure. But additionally most people would have to get a 'good enough' deal for the system to be stable.

robbedpeter 5y ago
The apparent durability and stability of China is entirely dependent on American democracy and capitalism. China would be a third world country but for some greed and corruption within American politics starting in the 90"s. Boomers will not be well regarded in the history books.
kragen 5y ago
Happiness requires extremely minimal resources.

_Nat_ 5y ago

It was amusing until this part: > There’s a message from the Fed: “You have already spent more than the $400 maximum weekly limit on fossil fuels specified in the FedWallet User Agreement. Your remaining account balance cannot be used to purchase non-renewable energy resources. At that point, the conspiracy-theory vibe stopped seeming ironic. If the government wanted to phase out gas-usage, wouldn't they just raise gas-tax? Having cheap gas, but a sudden limit leaving motorists stranded, just seems a little too wacky, even for a thoughtless comedic argument.

wmf 5y ago
Yeah, there have been some quiet yet serious proposals about personal carbon rationing in recent years. People on the farther left are uncomfortable with carbon taxes or tradable credits because of inequality.
- hellojesus 5y ago
  Tradable credits will happen no matter what. Let's say we impose a $100/week gas limit via CBDC. Immediately I would list ads on CL to trade my $100 credits for $200. Gov can't stop it. Rationing just breeds further market inefficiencies.
  - abecedarius 5y ago
    In this scenario, gov could easily penalize or ration conversions to cash, limiting this escape hatch. They wouldn't go that way immediately because outrage, but it'd get increasingly doable and tempting as people get used to CBDC. (Lots of precedent for this pattern.) I've already read one economist's proposal to tax cash withdrawals in order to support negative interest rates, a couple years ago.
    - hellojesus 5y ago
      Agreed. It would be a cat & mouse game. Instead of cash trades, the gas-consumer could buy me a $200 Amazon gift card, etc. with their CBDC. There are always ways around restrictions, especially when people that aren't deterred by illegality and jail time like me exist. It would be an arms race.

tjstebbing 5y ago

I'm the Product Lead at the Dogecoin Foundation, that amusing dog-themed crypto project that unlike others remembers the OG vision of crypto: being a useful decentralised currency for folk to spend world over (not just a store of value that magically goes up all the time, or a general purpose distributed compute platform). A major reason I'm involved in crypto at all is that I believe cryptocurrency is a Pandora's box that Satoshi unleashed on the world. It doesn't matter whether you love or hate crypto, it's not going back in the box, it will (in some form) be what we're using in 10-20 years for everything. This is what you're seeing with the Biden announcement that the US are investigating CBDCs. China already has one, governments the world over are looking at this and rubbing their hands together. The choice we have now is to decide whether our kids enjoy a decentralised currency in a form that cannot be taken away from them, that fundamentally belongs to the people, or centralised currency that yields 100% control to their government to suspend, redistribute, withhold and track to a degree never before imagined. There's a mighty big carrot in single-government CBDCs that is going to take a significant, unified effort to resist. The only way that I see of avoiding it is to establish a global, grass-roots financial product that wins bottom-up by being easier, simpler, more convenient.. so that's what we're trying to do.

randomhodler84 5y ago
Totally! Love Dogecoin, still have a few mined from the fun times! The mission of Dogecoin has always been about providing a transactional and decentralized payment system and it has done this flawlessly for years! Wow! Dogecoin is poised to offer a cute alternative to CBDCs. It’s very fast, cheap and the blockchain could fit in most of the worlds cellphones today, but SPV lite wallets work fine too! Can I recommend that Dogecoin looks to its parent, LTC, and implements mimblewimble too? Shibas deserve privacy too!!
- kragen 5y ago
  Litecoin is implementing Mimblewimble?
  - randomhodler84 5y ago

deutschew 5y ago

The urgency behind CBDC tells me some things about the future: - attack on competing digital wild moneys aka crypto - uncontrollable inflation and erosion of US dollar despite rate increases - a 4 sigma event causing super-deflation - political instability from demographic most impacted by super-deflation - social instability from demographic most vulnerable to super-inflation - financial surveillance of said demographics - the rich who survive can bypass CBDC via bartering hard assets

hellojesus 5y ago
> uncontrollable inflation and erosion of US dollar despite rate increases Lol rate increases
jbay808 5y ago
It's no coincidence that it's coming up at a time when interest rates hit zero.
- imtringued 5y ago
  They have been zero for almost a decade in europe and much longer in japan.

gigatexal 5y ago

If a digital currency lets me settle a large transfer or payment in minutes and not days I’m in! I’m so in! ACH is so slow

baskethead 5y ago

Once a country's central bank creates their own digital currency, you can be 100% sure that Bitcoin in that country will be rendered illegal immediately.

randomhodler84 5y ago
I don’t think so. Even if they could, what does that mean? That it is illegal to run the software? Illegal to sign transactions? Illegal to your broadcast transactions? Others? Blocks? Cash on the other hand, yes. It will stop being printed, and eventually demonetized.
cuteboy19 5y ago
Why? We already have a digital currency if you use any bank. CBDC just unifies all of them into one system.

brentis 5y ago

I’ve followed and been behind crypto for sometime. Over 11 years actually. My first exposure was when I downloaded the mining code in middle of 2011 when the price per coin was around $6. Despite personal missteps to fully capitalize on the opportunity, the notion was something which I stood behind as a way to have a degree of monetary sovereignty free from 3rd party banks participation. As many, I dove into the works and writings of Satoshi to understand who he was as it would have been disingenuous if it was actually built by any individual state. I did have suspicions that one of the NSA authors of How to Make a Mint: The Cryptography of Anonymous Electronic Cash was potentially related as he became completely silent about Bitcoin and to date never spoke about despite it being near and dear to his core research. Regardless, the crypto space evolved and devolved and the government, as always, has used dissent to soften and misalign the uninformed which is very kin to the wholesale “all drugs are bad” narrative. And while I’m sure anyone would find the efficiencies of crypto useful for business, it's always the bad that are highlighted and sensationalized. Ukraine gets nearly $100 million in crypto donations, but the risk that Russia may use to “bypass” sanctions that warrants swift movement of the cryptocurrency bill. Doesn’t it seem the timing of the record inflation due to trillions of dollars injected into the economy seems too coincidental to ignore? This bill will grease the skids for a US crypto, similar to what China has already in service. People who quickly believe everything they hear will get excited, perhaps it is the $10 of “free” US crypto that is offered that helps adoption or the Venmo-like ease it is to send money to/fro. However, its very important to know - your money is will no longer act like it has in the past. It will now be more like “credits” which dynamically increase or decrease in value based on government whims. If the government wants to provide funding to stimulate the economy - magically trillions are distributed to everyone. Even more, they can make those funds disappear or expire if not used in a certain time. What’s worse, is that the notion of negative interest rates could be enacted to where your million dollar nest egg decays over time. The gross inefficiencies of government coupled with their ability to wash away any misstep with trillions of dollars which we are paying for as a hidden tax via devaluation is what at issue and don’t see it going away soon. As I imagine the narrative will move to the USA crypto is the trusted and valid option and others are not secure, valid or even legal; I don’t think cryptos have much runway. The incentive for the US to control the money supply is too great. And if the US is one of the only two governments to warrant taxation of US citizens living abroad then you can be 100% certain they want to cover all their revenue leakage. Until the US Government says to the contrary, Bitcoin and 100’s of other cryptocurrencies future are at risk. And if asking, is there any way to hedge against inflation? I think, metals are probably the answer. Gold, Copper, and even Uranium are all finite resources which similar to notion of BTC require “work” to mine and are done so on a global scale.

fooblitzky 5y ago

Sure makes me glad cryptocurrencies were invented to set us free from the totalitarian nightmare of everyone using cryptocurrency.

CryptoPunk 5y ago
A centralized and permissioned digital currency is not a cryptocurrency. Cryptocurrencies rely solely on cryptography to authorize transactions. There is no legal access-control based on identity and governed by a central authority.
jbay808 5y ago
CBDCs and cryptocurrencies have virtually nothing in common.

csense 5y ago

Some predictions: - The government's not going to have an official true cryptocurrency where anyone with a computer and an Internet connection can just generate a private key and anonymously send / receive coins. - The system won't allow an address to send / receive coins without approval from a government key, and that approval will only be given if the government's gotten a name / SSN / real-life identity to associate with that address. - The system will provide a function where a government-controlled key can freeze any address's ability to send or receive funds. - The government's going to say "But we need to take a stand against terrorists / Russian oligarchs / drug kingpins" and then it ends up being used against successively lower and lower degrees of criminals, such as money launderers / tax dodgers / deadbeat dads / unpaid parking tickets, and eventually ends up targeting ordinary citizens.

delusional 5y ago
I'm going to say something crazy. How about we just stop electing people who are going to use power against their own citizens? If you think that's impossible, then how about we change the system such that it is. That seems much more constructive than erecting barriers for ourselves because we can't control the beast we've constructed.
- octoberfranklin 5y ago
  > How about we just stop electing people who are going to use power against their own citizens? You have too much faith in humanity. > If you think that's impossible, then how about we change the system such that it is. Because that's impossible too? It's like buttered butter. The system is made of humans.
- 5350-uiop-1130 5y ago
  you really drank that democratic kool aid. unless you have more money or bigger guns you don't get to decide anything. furthermore the internet has show really why democracy doesn't work at scale. it's so easy to manipulate the unwashed masses. you think if fox made up a smear campaign on you, there wouldn't be hoards of people at your door with pitchforks the next day.

charcircuit 5y ago

So instead we should trust companies to make coins like USDT and USDC instead of trusting the government to make them?

Puts 5y ago

What kind of crackpot wrote this? Most new money "printed" is already digital and created through debt. If anything a digital currency would allow central banks to create more money without creating more debt.

forum_ghost 5y ago
I guess this "crackpot" would be Agustin Carstens, the General Manager of the Bank of International Settlements (BIS). Some irrelevant tinfoil type in the Swiss Alps somewhere, or something. He helpfully put it at a 2020 summit of the International Monetary Fund: “We don’t know who’s using a $100 bill today and we don’t know who’s using a 1,000 peso bill today. The key difference with the CBDC is the central bank will have absolute control on the rules and regulations that will determine the use of that expression of central bank liability, and also we will have the technology to enforce that… and that makes a huge difference.” absolute control on the rules and regulations that will determine the use absolute control on the rules absolute control He will OWN you. and you WILL like it.
- amusedcyclist 5y ago
  - MadSudaca 5y ago
    If the power to do it exists, it’ll get used, whether you know it or not. That’s why something as cryptography is so powerful. We can prove mathematically what can and cannot be done, essentially partitioning the universe of possibilities and granting you the privilege of not having to worry about some of those partitions.

alexb_ 5y ago

Something I think a lot of people are forgetting is that NOT EVERYONE HAS A BANK ACCOUNT! Nor does everyone trust banks, wish to make a bank account, have the necessary cognitive ability to make a bank account, etc. By making cash completely digital, you are getting rid of the unbanked. Which isn't a small amount of people - approximately 1 out of every 20 people in America do not have a bank account. That's literally tens of millions of people who would not be able to FUNCTION should we have a digital dollar. So who would be giving out these bank accounts? The government? Banks? Can banks say that if you don't have an address, or if you don't have 40 bucks to your name, or any other list of conditions, then you cannot have a bank account? The fact that people are not even thinking about this blatant problem shows exactly how much care is given to those who have no bank account, and what the true intention is. The intention of a digital dollar is to make banks necessary to live. The intention of a digital dollar is to make it literally impossible to function without a bank account, and that's a huge problem.

rswail 5y ago
If everyone gets a CB bank account then they will have a bank account. For example, Australia has a banked population of 100%, as in, everyone needing one has a bank account. It's required for receiving government benefits.
jcadam 5y ago
Everybody must be part of the system. How else can we control them?

Qworg 5y ago

Beyond the bombastic (and admittedly difficult to stomach) opening, there are definitely concerns with any CBDC. However, this article doesn't discuss the more likely outcome - not a CBDC issued by the Fed directly, but rather a hybrid model where banks issue CBDCs (much like today's bank money model). This would preserve the role of banks in the new system, while opening up many of the efficiencies. It'll also limit the expansion of authoritarian power described.

forum_ghost 5y ago
Why would that limet authoritarian power? The authoritarian power is literally the only goal of the CBDC, the article quotes the General Manager of BIS wanting "absolute control" Let that sink in. Absolute control.
- Qworg 5y ago
  The GM of BIS can declare that all they want - banks are powerful entities within the US and won't go down with out a fight.
  - salawat 5y ago
    ...You realize you're telling someone else that a group of people wielding disproportionate power at the behest of a potentially authoritarian government is going to somehow protect the end user against actual authoritarian government overreach, where the capability to dissolve or otherwise threaten such banks is entirely in play by definition? Just wanted to make sure you realized what you seem to be doing.

jcadam 5y ago

You'd be a fool to keep any savings in such a currency. You'd be a fool to actually use your FedCoin to do anything other than pay your boring monthly bills and expenses. Disposable income gets converted to anything else: BTC, silver, etc.

mise_en_place 5y ago

> [The Congress shall have Power . . . ] To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; . . . It doesn't matter if Biden decrees he is now king of the United States for life, the Constitution specifically enumerates powers to each branch of government. Why is everyone asleep at the wheel?

salawat 5y ago
Because everyone is too busy to actually be bothered to read all those laws. Isn't it obvious?

hunglee2 5y ago

not sure whether saying 'no' is going to do anything - governments can simply roll CBDC out and scale it through incentives. In the PRC for example, their CBDC started by simply loading up people's mobile wallets with free money, which can be used to buy real products. HK Govt about to do the same - $10,000 HKD give away to Oyster Wallet to all permanent residents. Of course you are going to use it, not initially as any substitute for any other form of currency but as a nice supplement to your income. Then, in designed scope creep, you get an option to take your salary via CBDC, with the incentive of auto taxation, maybe even a lower tax rate if you do so. You are going to do it. Then maybe retailers start charging slightly more for any sale that uses anything else. They eventually won't accept anything else. Slowly but surely, society transitions entirely to CBDC, with the only alternative being straight up barter between citizens, as by then crypto will have been so squeezed through increasingly stringent regulation, that it can no longer pragmatically operate as currency. Good or bad? Dunno, can't really see what you can do about it!

prognu 5y ago

The author presumes that a CBDC has to be account-based and privacy-invasive. As pointed out in this other posting [1] that was made today, that is not the only option. [1] https://news.ycombinator.com/item?id=30625163 https://news.ycombinator.com/item?id=30625163

knorker 5y ago

I will. Not as strongly as I say no to Bitcoin or the other ones, but sure.

toomanybeersies 5y ago

CBDC isn't a prerequisite for that dystopian future suggested by the author. In some parts of Australia, the government has been trailing cashless benefit payments. Welfare recipients are given a special "Cashless Debit Card", which can't be used to pay for alcohol or gambling. I'm pretty sure that food stamps work the same way in the USA. Limiting purchases of fossil fuels has been done before too. During WWII most countries managed to implement fuel rationing with little more than paper tokens.

Barrin92 5y ago
Unless we've radically redefined what dystopia means someone has to explain to me what's bad about a welfare system that people can't abuse to buy booze. All I get from the article is that CBDCs enable pretty reasonable interventions like subsidizing electric cars, penalizing fast food, and so on. Which we already do because it's a good idea to not set the planet on fire or have the entire population be obese in 30 years. And we get rid of the middlemen in the process pretty tame as far as dystopias go
noisy_boy 5y ago
> Welfare recipients are given a special "Cashless Debit Card", which can't be used to pay for alcohol or gambling. All that would do is to give rise to unorganized/underground barter market that will happily exchange your purchases with alcohol, at an exploitative markup of course, so that you can give up even more essentials in exchange for pumping your life down the drain faster.

unfocussed_mike 5y ago

Crypto-dudes saying "say no to CBDC" are a lot like drug cartels saying "say no to licensed marijuana". The looming authoritarian crisis of centrally controlled digital money wouldn't have been looming at quite the same speed if it were not for highly-capable software developers spending time that could have been used to advance humanity on a libertarian wet dream instead. And it would have been more difficult to roll out without all the groundwork that has been done for crime-adjacent reasons. (Edit for comedy coffee-shortage CNBC typo. Definitely say no to CNBC)

throwaway22032 5y ago

The primary reason to use cash or otherwise anonymous means of payment as much as possible is to allow for incomplete enforcement of laws. Quite literally, to enable free trade. We don't want perfect enforcement of the law. It doesn't allow for progression towards a better state of being. It's as if you just cement your current way of life forever with very limited movement permitted per cycle. For example, imagine if we had ubiquitous mass surveillance in the 1960s and the processing power to back it to the degree that we do now. Homosexuality would probably still be illegal because no-one would have been able to form the movement to change that. Being able to do something that is (currently) illegal is a strictly preferable state of affairs to having it be completely impossible. Imagine that you just couldn't transfer money to a friend because the Government has strictly delineated between businesses and "consumers" because that's the 90%+ use case and it doesn't really affect the aggregate economy that much to just ban individual-individual transfers. e.g. "Using a card is more convenient cause I just do a tap on the machine". Except no, it's not, because only businesses have card terminals. So you're restricting the free flow of trade over time. Each individual 'outside of the norm' use case is quite small, all of them added together is massive.

ppcelery 5y ago

This is exactly the daily life of Chinese people