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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 cryptocurrenc

by 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.
        exdsq 5y ago
        > It's difficult to organize a bet, but if it were easy and you were offering even money, I'd take that bet. Ironically one of the use cases I advocate blockchain for is how difficult bets are with strangers without smart contracts, albeit for this one I'm not sure we'd be able to agree on the data source as input :P
        danielmarkbruce 5y ago
        Maybe we could get a trusted party to act as an intermediary? :)
      - chrismorgan 5y ago
        If by “blockchain” you mean “Merkle tree ledger with any kind of mining”: the only reason to go with a blockchain design is trustlessness. In an environment where you can (or have to) trust one party with the operation of the whole thing, blockchains are an absurdly inefficient way of doing things. If by “blockchain” you only meant the Merkle tree ledger part but without any kind of mining, well, that gets rid of the absurdly inefficient part, but it would still be a rather surprising design.
        exdsq 5y ago
        It depends on if we do end up with only one party, or if banks end up running nodes too. I believe Visas blockchain projects require institutions to run nodes. If you are using USD-CBDC as a reserve currency for your country you'd sure as hell want to make sure that the currencies aren't being changed from under your feet, as would banks sending money between each other.
tux3 5y ago
The dollar can't have negative interest rates to discourage savings, though. It can have inflation, but that's comparatively invisible to people. If the bank starts "taking away your money" in a way that makes numbers visibly go down, people will convert to cash. In a cashless society, the central bank has a lot more control and room to maneuver.
- Ericson2314 5y ago
  Silvio Gesel and demurrage, look them up. All the good parts of inflation (incentive not to hold money / rent seek nominally, shrinks debts) without the bad parts, because price stability is preserved.
  - randomhodler84 5y ago
    Demurrage is an evil concept. When you steal the time value saved of a man’s labor, you rob him of his future. There is no reason the unit of account should change day to day or year to year. Saving is good. For most of human history things were relatively stable, we didn’t need these games to amplify, leverage and drain.
    - Ericson2314 5y ago
      Well find, then I counter "store of value" is a largely evil concept :D. Unit of account != store of value.
    - Ericson2314 5y ago
      Also read some Graeber on debt. Even when materially society seemed pretty stable, financially things were more complex, hence the debt jubilees and whatnot. Demurrage is nothing but a continuous debt jubilee.
    - imtringued 5y ago
      Demurrage prevents the unit of account from changing precisely because the real world is an endless chain of growth and decay. Money that doesn't die akin to an immortal cancer that spreads until the host dies. By the way, demurrage has been implemented by ancient egypt and in medieval times and in wörgl and it has brought more prosperity to everyone not less. The masons that built the cathedrals had much shorter work weeks than us.
danielmarkbruce 5y ago
This is missing a big piece of a central bank digital dollar. What we have now isn't the same thing at all.
searchableguy 5y ago
I wrote about it on my blog. It's not the same. What countries want is currency that can be programmed. Right now, all the programming bits is handled by banks and merchants. For example, if a bank wants you to purchase something from amazon - they will give you a cashback on transaction. Similarly, amazon gives vouchers for you to spend only on their site. If countries could directly program money so no matter where you move it, you cannot spend it on things they don't like or expire it - it gives central banks way more leverage. There will be no need for welfare vouchers when you can give money that is only spendable on grocery and not reedemable to cash or transfer. Countries could add complex TDS (taxation at source) rules to their programmable currency any time to influence the economy and spending. They could control supply which isn't easy today with all the parties involved. The tools central banks have today are too blunt.

by 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.
      - exdsq 5y ago
        > It's difficult to organize a bet, but if it were easy and you were offering even money, I'd take that bet. Ironically one of the use cases I advocate blockchain for is how difficult bets are with strangers without smart contracts, albeit for this one I'm not sure we'd be able to agree on the data source as input :P
        danielmarkbruce 5y ago
        Maybe we could get a trusted party to act as an intermediary? :)
    - chrismorgan 5y ago
      If by “blockchain” you mean “Merkle tree ledger with any kind of mining”: the only reason to go with a blockchain design is trustlessness. In an environment where you can (or have to) trust one party with the operation of the whole thing, blockchains are an absurdly inefficient way of doing things. If by “blockchain” you only meant the Merkle tree ledger part but without any kind of mining, well, that gets rid of the absurdly inefficient part, but it would still be a rather surprising design.
      - exdsq 5y ago
        It depends on if we do end up with only one party, or if banks end up running nodes too. I believe Visas blockchain projects require institutions to run nodes. If you are using USD-CBDC as a reserve currency for your country you'd sure as hell want to make sure that the currencies aren't being changed from under your feet, as would banks sending money between each other.

tux3 5y ago

The dollar can't have negative interest rates to discourage savings, though. It can have inflation, but that's comparatively invisible to people. If the bank starts "taking away your money" in a way that makes numbers visibly go down, people will convert to cash. In a cashless society, the central bank has a lot more control and room to maneuver.

Ericson2314 5y ago
Silvio Gesel and demurrage, look them up. All the good parts of inflation (incentive not to hold money / rent seek nominally, shrinks debts) without the bad parts, because price stability is preserved.
- randomhodler84 5y ago
  Demurrage is an evil concept. When you steal the time value saved of a man’s labor, you rob him of his future. There is no reason the unit of account should change day to day or year to year. Saving is good. For most of human history things were relatively stable, we didn’t need these games to amplify, leverage and drain.
  - Ericson2314 5y ago
    Well find, then I counter "store of value" is a largely evil concept :D. Unit of account != store of value.
  - Ericson2314 5y ago
    Also read some Graeber on debt. Even when materially society seemed pretty stable, financially things were more complex, hence the debt jubilees and whatnot. Demurrage is nothing but a continuous debt jubilee.
  - imtringued 5y ago
    Demurrage prevents the unit of account from changing precisely because the real world is an endless chain of growth and decay. Money that doesn't die akin to an immortal cancer that spreads until the host dies. By the way, demurrage has been implemented by ancient egypt and in medieval times and in wörgl and it has brought more prosperity to everyone not less. The masons that built the cathedrals had much shorter work weeks than us.

danielmarkbruce 5y ago

This is missing a big piece of a central bank digital dollar. What we have now isn't the same thing at all.

searchableguy 5y ago

I wrote about it on my blog. It's not the same. What countries want is currency that can be programmed. Right now, all the programming bits is handled by banks and merchants. For example, if a bank wants you to purchase something from amazon - they will give you a cashback on transaction. Similarly, amazon gives vouchers for you to spend only on their site. If countries could directly program money so no matter where you move it, you cannot spend it on things they don't like or expire it - it gives central banks way more leverage. There will be no need for welfare vouchers when you can give money that is only spendable on grocery and not reedemable to cash or transfer. Countries could add complex TDS (taxation at source) rules to their programmable currency any time to influence the economy and spending. They could control supply which isn't easy today with all the parties involved. The tools central banks have today are too blunt.