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Comment by mikece | Hacker News Reader

What if the Federal Reserve introduced an alt coin pegged 1:1 to the USD (upwards of 92% of the USD money supply only exists as digits in a computer anyway so this is definitely doable). Would banks, fintech, the government, or "common people" be the losers in that scheme?

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What would make that an "alt-coin" as opposed to just being a dollar?

It's not like you can't trade dollars already.

You can't use them in the logic of a smart contract.

That's a good thing, it's an added form of protection from losing money to 'smart' contracts.

I have a lot more confidence in the US Federal Reserve, and the power of the US government in general than I do in a crypto company and their “commercial paper”.

You don't have to pick one or the other. Most people who hold cryptocurrencies including stable coins representing various currencies also keep US dollars as well as bonds and traditional financial instruments.

This is like saying most people who snort cocaine also buy coffee and so why not just do both?

> Most people who hold cryptocurrencies including stable coins representing various currencies also keep US dollars as well as bonds and traditional financial instruments.

Source for that claim? Because it sounds like you just pulled it out of thin air.

Most every “common” person I know with any Bitcoin is using it as a get rich quick scheme and very much do not have other financial investments to offset potential losses. I’ve begged one buddy to hedge his bets because I expect like others here he’s going to lose his ass at some point.

Do you have a source for that?

There already is a digital USD coming on the pipeline.

https://www.federalreserve.gov/faqs/what-is-a-central-bank-d...

There is an internal debate at the Fed, but nothing decided yet.

I would figure (smaller) banks and payment processors and "common people" could potentially stand to lose.

For smaller banks if you assume that an alt coin would continue the goals of the FedNow instant payment system that's currently in the works would cut out the banks that currently operate as a payment intermediary [1, "The structural bank disintermediation issue" ] and seems like it could indicate a shift away from fractional reserve money, where the bank could for example hold $2.5 and create $100 in loans, which then increases the power of the central bank.

I think in such a scenario people stand to potentially lose out due to a increase in state power that would result.

[1]https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2351~c8c18bbd...

The central bank that issues dollars also issuing a different currency pegged to the dollar doesn't make any sense. If you're just talking about abolishing cash and only issuing digital dollars, I feel like they've been considering this for a long time. The losers are digitally-disconnected people like hermits living voluntarily in the woods, homeless, extremely privacy fanatics, and criminals who use cash for anonymous illegal transactions.

There are plenty of other countries that peg their currency to the dollar, by the way. That is very different from making your currency digital-only.

Excuse my ignorance, but how do you achieve this? There needs to be some institution that is always ready to buy the coin for $1 a piece, and ready to sell coin for $1 a piece.

That's exactly why the Fed would be best for an actual perfect stable 1:1 USD to Token equivalent. They can print and delete money at a whim, it will always be worth 1 dollar.

What does this do that a dollar doesn't?

From what I've been reading this is coming soon. If the population will accept digital IDs, it may become compulsory. Under this scenario negative rates, UBI and much more become possible.

Some here would present these ideas as positive, but I'd argue that "common people" would be the losers in this scenario.

agreed on those economic points. Also not a fan of negative real rates and increased direct control over the economy that it could enable. And I'm a bigger fan of (effective) big government than most.

Depending on how much tinfoil is in your hat, central bank digital currencies open the door to surveillance and control. Consider the elimination of physical cash and the implementation of a social credit system that sees exactly what you buy, and from who. I don't think the US will get that far, especially not soon, but also think having cash as an option is fine.

China has moved faster with the digital yuan; there are discussions over things like whether there will be capability for anonymous small transactions, or just private transactions, still viewable by the government, just not by the other party.

I'm not versed in the space but also heard payment processors and especially banks are against CBDCs, since they would get cut out of various transactions and even loans.

https://www.weforum.org/agenda/2021/01/this-new-approach-to-...

There are proposals to use consumer's electronic trail to create "alternative credit scores". CBDCs will allow this. The WEF proposal includes AI/big data hype, psychometrics, social media use, contacts and purchase history.

Social media and smart devices have also been proposed for use as part of gun control schemes in the US. Some called this a "social credit score".

https://yro.slashdot.org/story/19/08/30/2037251/the-plan-to-...

Not being snarky - why does anyone need to be a loser in this scenario?

I didn't read the comment as saying anyone needed to be. It was asking whether certain parties would be.

Crypto appreciation is based on the idea that it is the future of finance. Even though its only use is to buy other crypto coins.

A digital dollar would be spent on actual goods and services, and would leave crypto coins in an "emperor with no clothes" situation.

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