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Let's extrapolate, and say that no country should adopt a purely digital currency. Would that be accurate? I don't know too much about the topic domain, so for

Let's extrapolate, and say that no country should adopt a purely digital currency. Would that be accurate? I don't know too much about the topic domain, so for those who do, what would be required of a purely digital currency to be a good candidate for a national currency?

sj4nz 12y ago
This slides in the assumption that you need a national currency. No traditional nation-state will _really adopt_ a crypto-currency unless it bakes in some ability to seize or inflate it's subject's currency. If that exists in their desired crypto-currency then, of course, no one will ever use it without the threat of violence. Catch-22 for modern nation-states.
- anigbrowl 12y ago
  By that logic, private ownership of gold should be forbidden. That did happen once, during the Great Depression, but that policy was abandoned in the 1960s and nobody has made any attempt to reinstate it since. http://en.wikipedia.org/wiki/Gold_Reserve_Act http://en.wikipedia.org/wiki/Gold_Reserve_Act
  - oafitupa 12y ago
    In many countries it's forbidden. Eg: Argentina, Venezuela, etc. The government doesn't like it when their people find ways of escaping inflation.
- megoah 12y ago
  This is the same reason that no government allows or encourages the large-scale ownership of property, land, minerals, gold, or anything else. Except that they do. All the time. Because governments are not evil machines that only want to steal your money. That's just a Dunning-Kreuger / nutjob interpretation of reality that is often repeated by a certain kind of broken individual.
  - entrop13 12y ago
    those arn't liquid assets. who's suffering from dunning-kreuger effects now? nice puppet account you got there with 1 karma. also land and property are taxed so... yea
  - shit_parade 12y ago
    shill
  - sj4nz 12y ago
    Nice DH1 you've got there. Governments are not evil machines. They're machines staffed by people and people do what people often do: follow the laws blindly because "it's their duty", exploit the existing laws to their advantage "because it's legal", and craft new laws to monkey-patch the flaws in older laws "because it's their job." When two opposing groups of people disagree with each other, they resort to theatrics and name-calling and the machine kind of idles in its current state. The machinery isn't evil and the people aren't evil. This is just how the machine works. If the people operating the machine decide it needs more of a resource, they'll try to get it by any any available means to keep the machine running. Their job, and belief in the machine depend on it. Whether or not the machine gives the world "a better place" is a coincidental side-effect of the machine that happens often, but not always. Adopting a crypto-currency would give this machine less control over resources because it would either have too much transparency (no black budgets or quid-pro-quos) or perfect opacity (no ability to seize funds from victims or punish criminals financially). Elections do not change the machine except in the sense of an oil-change--to optimize its continuous operation. The machine is never replaced. And people who do not believe in the machine are always attacked by the operators with a vested interest in the machine... a certain kind of broken individual.
- kiba 12y ago
  Nothing prevent nation-states from adopting their own altcoin and altering the supply as they like.
  - oafitupa 12y ago
    Except they would have to also create their own mining industry to secure it, or enemy countries could easily attack it.
    - sliverstorm 12y ago
      Why would they allow other actors to be part of their mining?
      - oafitupa 12y ago
        The real question is why would a government use a Bitcoin clone, instead of either traditional fiat or just Bitcoin.
- Frondo 12y ago
  What threat of violence are you describing?
  - leereeves 12y ago
    Taxes.
  - krapp 12y ago
    https://en.wikipedia.org/wiki/Monopoly_on_violence https://en.wikipedia.org/wiki/Monopoly_on_violence
  - PhasmaFelis 12y ago
    Some very silly people have concluded that, since ultimately no rule or law can be enforced against the unwilling without some sort of ability to exercise power over them, making a law is logically equivalent to saying that anyone who breaks it should be shot; and, therefore, people who make laws against any but the most extreme crimes are violent thugs. And thus it naturally follows that you shouldn't have to pay taxes. Isn't that convenient? (I think this formulation was originally conceived by anarchists, where it is at least logically consistent, but tax protestors and some libertarians have adopted and deformed it into a convenient catch-all for "anything the government does that I don't like is ZOMGviolence.")
    - TeMPOraL 12y ago
      AFAIK libertarians have this "principle of non-aggression" which basically defines "anything I don't like" as an attack, and thus pretty much anything that government does becomes violence. But in general, "monopoly on violence" is a legitimate concept and I think it's a requirement for a state-sized group of people to live in (a relative) harmony. You need to have some means to enforce coordination or else people get trapped in various destructive behaviours.
      - skilesare 12y ago
        They also have a tendency to put capitalism up on a pedestal even though it requires the charging of economic rent. Apparently extracting taxes is a crime but extracting economic rent is to be lauded.
leereeves 12y ago
The article is pointing out that governments like to increase the money supply every year and Bitcoin doesn't allow that. But a purely digital currency need not be a distributed cryptocurrency with a limited supply like Bitcoin. From electronic transactions with the Fed down to direct deposits and debit and credit card purchases, US currency could function without paper bills already.
- s_q_b 12y ago
  >The article is pointing out that governments like to increase the money supply every year and Bitcoin doesn't allow that. But that's nonsense. If anything a sovereign digital currency would give governments even more fine-grained control over the money supply. Of course governments shouldn't use Bitcoin, but a sovereign altcoin is a very interesting idea. Sure, they couldn't use Bitcoin itself, but in a hypothetical world of government-backed cryptocurrencies Bitcoin would be more of a reserve commodity, like gold, than a circulating fiat currency.
  - leereeves 12y ago
    Much of the appeal of Bitcoin is the limited supply. But from a Keynesian government point of view, that's a flaw. A sovereign cryptocurrency without that limitation might be an interesting alternative to cash, but the bulk of our money couldn't be in a "hard" cryptocurrency unless we also eliminated fractional reserve banking. (Why? In short, with fractional reserve banking, the total value of everyones checking and savings accounts is far greater than the supply of currency, whether paper or crypto.)
    - themartorana 12y ago
      Do you need fractional reserve banking with cryptocurrency? The physical object limitation of hard currency simply doesn't exist. But the real hallmark of FRB is that banks only need hold in reserve a fraction of their depositors' account balances. I don't see how CC would change that requirement. As scary as FRB is, without it lending would be a much, much more limited activity. Money is funny - it's just an IOU. An IOU blown up to massive scale, obviously, but since a business sets the price of something and the market determines if it fits well in to a tradable value comparison, then I don't see how a digital IOU is any worse than a paper one, considering how little that paper is worth when everyone decides it has no value. And let's be honest. If the value of paper can crash when people agree it has no value, it's just as easy for everyone to agree gold isn't worth a lick either. So in the end, we're just choosing a representation of an IOU we all agree upon, and if that's paper, rock, or digital (or 4 ton coins [0]) what does it matter, in the end? (This all presumes some degree of safety in CC - with the recent value of Bitcoin thefts, people would ditch it really quickly on a national scale.) /rambling [0] http://en.m.wikipedia.org/wiki/Rai_stones http://en.m.wikipedia.org/wiki/Rai_stones
thephyber 12y ago
For a currency to take off, there must be a large market that requires you to use the currency (such as paying taxes to the IRS). This creates a base market which can be used as a springboard for wider adoption. BitCoin managed to take off because, IMHO, the novelty of the "cryptocurrency" and some of the problems it solved. For a fiat currency to work, there must be faith in the currency and the governing bodies that support it. The US dollar used to be tied to the price of gold and silver, then later entirely to gold, then it was turned fiat in the Nixon years.[1] BitCoin, in particular, does not allow a central bank to "print" currency (which is a tool used to control the inflation rate). Without the ability for a central bank to regulate the creation of a fiat currency, there would eventually be an erosion of faith in the currency. Alternatively, a digital currency could be tied to a gold silver / other commodity standard, but then it's not much different than any other commodity. The Canadian bank is experimenting with a digital currency, but it won't replace the paper+coin currency, only augment it.[2] [1] https://en.wikipedia.org/wiki/Nixon_Shock https://en.wikipedia.org/wiki/Nixon_Shock [2] http://business.financialpost.com/2013/09/19/canadian-mint-pushes-ahead-in-murky-world-of-crypto-currency-with-mintchip-project/ http://business.financialpost.com/2013/09/19/canadian-mint-p...
- oafitupa 12y ago
  You can't print gold either, but that's precisely why even central banks use it as a store of value.
entrop13 12y ago
digital/analog really makes no difference for fiat currencies. What matters is the way their managed and peoples belief that they will continue to hold value for the long term. I doubt any states will go digital for awhile due to purely cultural/psychological reasons. Humans like physical objects even if they're worse, just ask any vinyl record enthusiasts to explain why they like vinyl and you'll see this dynamic.

sj4nz 12y ago

This slides in the assumption that you need a national currency. No traditional nation-state will _really adopt_ a crypto-currency unless it bakes in some ability to seize or inflate it's subject's currency. If that exists in their desired crypto-currency then, of course, no one will ever use it without the threat of violence. Catch-22 for modern nation-states.

anigbrowl 12y ago
By that logic, private ownership of gold should be forbidden. That did happen once, during the Great Depression, but that policy was abandoned in the 1960s and nobody has made any attempt to reinstate it since. http://en.wikipedia.org/wiki/Gold_Reserve_Act http://en.wikipedia.org/wiki/Gold_Reserve_Act
- oafitupa 12y ago
  In many countries it's forbidden. Eg: Argentina, Venezuela, etc. The government doesn't like it when their people find ways of escaping inflation.
megoah 12y ago
This is the same reason that no government allows or encourages the large-scale ownership of property, land, minerals, gold, or anything else. Except that they do. All the time. Because governments are not evil machines that only want to steal your money. That's just a Dunning-Kreuger / nutjob interpretation of reality that is often repeated by a certain kind of broken individual.
- entrop13 12y ago
  those arn't liquid assets. who's suffering from dunning-kreuger effects now? nice puppet account you got there with 1 karma. also land and property are taxed so... yea
- shit_parade 12y ago
  shill
- sj4nz 12y ago
  Nice DH1 you've got there. Governments are not evil machines. They're machines staffed by people and people do what people often do: follow the laws blindly because "it's their duty", exploit the existing laws to their advantage "because it's legal", and craft new laws to monkey-patch the flaws in older laws "because it's their job." When two opposing groups of people disagree with each other, they resort to theatrics and name-calling and the machine kind of idles in its current state. The machinery isn't evil and the people aren't evil. This is just how the machine works. If the people operating the machine decide it needs more of a resource, they'll try to get it by any any available means to keep the machine running. Their job, and belief in the machine depend on it. Whether or not the machine gives the world "a better place" is a coincidental side-effect of the machine that happens often, but not always. Adopting a crypto-currency would give this machine less control over resources because it would either have too much transparency (no black budgets or quid-pro-quos) or perfect opacity (no ability to seize funds from victims or punish criminals financially). Elections do not change the machine except in the sense of an oil-change--to optimize its continuous operation. The machine is never replaced. And people who do not believe in the machine are always attacked by the operators with a vested interest in the machine... a certain kind of broken individual.
kiba 12y ago
Nothing prevent nation-states from adopting their own altcoin and altering the supply as they like.
- oafitupa 12y ago
  Except they would have to also create their own mining industry to secure it, or enemy countries could easily attack it.
  - sliverstorm 12y ago
    Why would they allow other actors to be part of their mining?
    - oafitupa 12y ago
      The real question is why would a government use a Bitcoin clone, instead of either traditional fiat or just Bitcoin.
Frondo 12y ago
What threat of violence are you describing?
- leereeves 12y ago
  Taxes.
- krapp 12y ago
  https://en.wikipedia.org/wiki/Monopoly_on_violence https://en.wikipedia.org/wiki/Monopoly_on_violence
- PhasmaFelis 12y ago
  Some very silly people have concluded that, since ultimately no rule or law can be enforced against the unwilling without some sort of ability to exercise power over them, making a law is logically equivalent to saying that anyone who breaks it should be shot; and, therefore, people who make laws against any but the most extreme crimes are violent thugs. And thus it naturally follows that you shouldn't have to pay taxes. Isn't that convenient? (I think this formulation was originally conceived by anarchists, where it is at least logically consistent, but tax protestors and some libertarians have adopted and deformed it into a convenient catch-all for "anything the government does that I don't like is ZOMGviolence.")
  - TeMPOraL 12y ago
    AFAIK libertarians have this "principle of non-aggression" which basically defines "anything I don't like" as an attack, and thus pretty much anything that government does becomes violence. But in general, "monopoly on violence" is a legitimate concept and I think it's a requirement for a state-sized group of people to live in (a relative) harmony. You need to have some means to enforce coordination or else people get trapped in various destructive behaviours.
    - skilesare 12y ago
      They also have a tendency to put capitalism up on a pedestal even though it requires the charging of economic rent. Apparently extracting taxes is a crime but extracting economic rent is to be lauded.

leereeves 12y ago

The article is pointing out that governments like to increase the money supply every year and Bitcoin doesn't allow that. But a purely digital currency need not be a distributed cryptocurrency with a limited supply like Bitcoin. From electronic transactions with the Fed down to direct deposits and debit and credit card purchases, US currency could function without paper bills already.

s_q_b 12y ago
>The article is pointing out that governments like to increase the money supply every year and Bitcoin doesn't allow that. But that's nonsense. If anything a sovereign digital currency would give governments even more fine-grained control over the money supply. Of course governments shouldn't use Bitcoin, but a sovereign altcoin is a very interesting idea. Sure, they couldn't use Bitcoin itself, but in a hypothetical world of government-backed cryptocurrencies Bitcoin would be more of a reserve commodity, like gold, than a circulating fiat currency.
- leereeves 12y ago
  Much of the appeal of Bitcoin is the limited supply. But from a Keynesian government point of view, that's a flaw. A sovereign cryptocurrency without that limitation might be an interesting alternative to cash, but the bulk of our money couldn't be in a "hard" cryptocurrency unless we also eliminated fractional reserve banking. (Why? In short, with fractional reserve banking, the total value of everyones checking and savings accounts is far greater than the supply of currency, whether paper or crypto.)
  - themartorana 12y ago
    Do you need fractional reserve banking with cryptocurrency? The physical object limitation of hard currency simply doesn't exist. But the real hallmark of FRB is that banks only need hold in reserve a fraction of their depositors' account balances. I don't see how CC would change that requirement. As scary as FRB is, without it lending would be a much, much more limited activity. Money is funny - it's just an IOU. An IOU blown up to massive scale, obviously, but since a business sets the price of something and the market determines if it fits well in to a tradable value comparison, then I don't see how a digital IOU is any worse than a paper one, considering how little that paper is worth when everyone decides it has no value. And let's be honest. If the value of paper can crash when people agree it has no value, it's just as easy for everyone to agree gold isn't worth a lick either. So in the end, we're just choosing a representation of an IOU we all agree upon, and if that's paper, rock, or digital (or 4 ton coins [0]) what does it matter, in the end? (This all presumes some degree of safety in CC - with the recent value of Bitcoin thefts, people would ditch it really quickly on a national scale.) /rambling [0] http://en.m.wikipedia.org/wiki/Rai_stones http://en.m.wikipedia.org/wiki/Rai_stones

thephyber 12y ago

For a currency to take off, there must be a large market that requires you to use the currency (such as paying taxes to the IRS). This creates a base market which can be used as a springboard for wider adoption. BitCoin managed to take off because, IMHO, the novelty of the "cryptocurrency" and some of the problems it solved. For a fiat currency to work, there must be faith in the currency and the governing bodies that support it. The US dollar used to be tied to the price of gold and silver, then later entirely to gold, then it was turned fiat in the Nixon years.[1] BitCoin, in particular, does not allow a central bank to "print" currency (which is a tool used to control the inflation rate). Without the ability for a central bank to regulate the creation of a fiat currency, there would eventually be an erosion of faith in the currency. Alternatively, a digital currency could be tied to a gold silver / other commodity standard, but then it's not much different than any other commodity. The Canadian bank is experimenting with a digital currency, but it won't replace the paper+coin currency, only augment it.[2] [1] https://en.wikipedia.org/wiki/Nixon_Shock https://en.wikipedia.org/wiki/Nixon_Shock [2] http://business.financialpost.com/2013/09/19/canadian-mint-pushes-ahead-in-murky-world-of-crypto-currency-with-mintchip-project/ http://business.financialpost.com/2013/09/19/canadian-mint-p...

oafitupa 12y ago
You can't print gold either, but that's precisely why even central banks use it as a store of value.

entrop13 12y ago

digital/analog really makes no difference for fiat currencies. What matters is the way their managed and peoples belief that they will continue to hold value for the long term. I doubt any states will go digital for awhile due to purely cultural/psychological reasons. Humans like physical objects even if they're worse, just ask any vinyl record enthusiasts to explain why they like vinyl and you'll see this dynamic.