Crypto != digital. A digital currency can be a database at The Fed.
I feel like too many people confuse the two, but it's fundamentally different, in every meaningful way.
I feel like too many people confuse the two, but it's fundamentally different, in every meaningful way.
> With cash, we don't know who is using the 100 dollar bill today ... a key difference with CBDC is that the central bank will have absolute control on the rules and regulations that determine the expression of that central bank liability .. also we will have the technology to enforce that ... if an advanced economy issues a CBDC, and someone in a 3rd country wants to use it, it will require the consent of the central bank of the residence of that person, therefore the degree of control will be far bigger.
June 2021 in the UK, https://www.msn.com/en-gb/money/other/bank-of-england-tells-...
> Tom Mutton, a director at the Bank of England, said during a conference on Monday that programming could become a key feature of any future central bank digital currency ... what happens if one of the participants in a transaction puts a restriction on [future use of the money]? ... Sir Jon Cunliffe, a deputy Governor at the Bank, said digital currencies could be programmed for commercial or social purposes ... “You could think of giving your children pocket money, but programming the money so that it couldn’t be used for sweets. There is a whole range of things that money could do, programmable money, which we cannot do with the current technology.”
This is so terrible.
There are countries who try really hard to control the USD exchange rate of their own currency. In practice, it means anyone getting paid in USD has their money confiscated and forcibly exchanged for their own nearly worthless local currency at absolutely terrible rates.
I've seen people posting about it here on HN: they claimed the government was pocketing about 50% of their earnings through this process and that bitcoin is a better proposition.
https://news.ycombinator.com/item?id=30141563
These CBDCs would empower governments to do so much worse.
This is, by and large, how it currently works today. Not that often do actual pallets of cash get moved from one bank to another; a lot more often, some centralized bank has a big ol' ledger, where various banks move money from one column to another. One of those centralized banks is The Fed, that's how the US was able to freeze so much of Russia's money; there is a bank account at The Fed, and that account is where Russia keeps its US dollars (or the bank that Russia works with keeps its dollars, some of which are Russian, or the bank that the bank that Russia works with... you get the idea).
The biggest difference between a CBDC is that there wouldn't need to be a printed dollar to back that ledger, so instead of rare pallets-of-cash movements, it would be entirely digital. Printing money would be an UPDATE statement rather than through a printing press.
CBDCs will probably happen in a similar way. Cheap and easy to implement. No room to make noise about the abuses because the people targeted won't have the money to defend themselves, let alone speak out in an unfavourable media environment being paid/given incentives/on board with the plan to Think of The Children. A lot like the how surveillance ended up the abuses are fairly quiet so people aren't really sure what specifically they need to fight.
That's stretching the concept 'money' a bit, is it still money if it's non-fungible? What on earth happens if the money is paid to someone? Can you 'launder' the restriction away by swapping money with a friend? Does the restriction remain indefinitely, making it completely non-fungible?
It's weird to call it swiss BIS, the place where international institutions are headquartered is not usually relevant :) We don't say Swiss FIFA, or Swiss WHO.
A good reason to have them would be that it'd be really easy for the government to pay you, for instance if we had a UBI or one of those things everyone on here loves. Right now they're surprisingly bad at it. A lot of government agencies have to pay people with prepaid debit cards, and there's people who never got their stimulus checks still.
[1] mainly unjustified because they're already tracking you in regular bank accounts so it can't even be any worse…
That's one way to look at it. Another way is to see that tracking will be backed up by efficient enforcement and control. That's more than a step further, that's something that completely re-organizes society.
You could argue that something like that is necessary in the 21st century, but besides the paranoia there's concern about who controls a system like that.
That seems like a good reason to not have them. Sending people checks is profoundly simple 17th century technology. Putting people who can't even master that in charge of securing against stealing an arbitrarily large amount of money over the internet is like that xkcd about voting software:
Just no.
A few years after I managed to get them to give me an account, I overdrafted my checking account by a few dollars and they disabled my ATM card. After my next deposit cleared, I went back to that bank branch to get my card reinstated. They did not want to do it. The manager eventually said he could help me if I "promised I wouldn't do it again". I asked for my account to be closed instead, and I will always remember how pleased the guy seemed to be losing me as a customer.
It is not easy for everyone to get and maintain a bank account.
This sounds uncomfortably similar to the "reason" the IRS can't do our own taxes for us and send us the bill.
Also, everyone here is arguing "the government shouldn't know about my finances", and I feel like "the government should do my taxes for me" conflicts with that?
[1] for instance, I don't remember the legal status of mailing cash through USPS, but pretty sure it's different privacy-wise even though it's "the government"
Uhm, isn't that what literally every bank in the world is nowadays?...
The only difference between a blockchain and a traditional database is that a blockchain has an inherit audit trail due to the use of crypto algorithms and digital signatures. A traditional database can have similarly immutable record keeping with digital signatures as well.