Bitcoin Forum

Since the invention of Bitcoin some have thought about cryptocurrencies issued by central banks or governments. Recently the idea of Fedcoin stimulated a lot of discussion after David Andolfatto from Federal Reserve Bank of St. Louis presented the idea at P2P Financial Systems 2015. David also discussed the idea in a post. As a concept the idea is intriguing, but soon a flurry of questions about details have been raised. Among those are issuance, distribution, peg to the dollar, miner rewards, restriction on users and miners, monetary policy and others. I will attempt to address these issues as I see them.

Read the full post on Diginomics (http://news.diginomics.com/thoughts-on-a-federal-cryptocurrency/).

They are probably at works already, creating a shitty dumbed down centralized filthy BTC rip off. Too bad it will only make everyone aware of the real alternative (Bitcoin). Basically adopt Bitcoin or die is the name of the game.

Of course they could. What would be stopping them? It wouldn't be the same though as the currency would be centralized and that's not what we want. I'm sure cryptos will influence the future of money in some way though.

They probably wouldn't create a cryptocurrency, but they instill a sense of transaction verification (i.e., blockchain) technology to decrease the ability to counterfeit the dollar. I don't see them replacing the dollar and what would a second currency, a crypto currency, do for them or the US?

They like things the way they are, I doubt any central bank could adapt to cryptocurrencies willingly and that's the point, this is something that was designed to replace them.

Would it matter if the Federal Reserve issued their own cryptocurrency?

No it would not matter in the slightest, the thing is they do what they want when they want anyway lol so what would be the difference between a rip off 100% premine coin or 100% premine rip off paper they have 1 main thing in common they are both a rip of built to trap, so if they decide to create one which i doubt then stay clear and there will be no change to what there is now..

They will. Most probably in not so a distant future.

I thought they already had currency in place?

http://patriotsbillboard.org/wp-content/uploads/2013/01/trillion-coin2.jpg

Forget 21 million supply, they got that beat.  Infinite!!!

They can use the blockchain technology and they can even create some sort of electronic USD where the "mining" gear sits in federal reserve facilities and banks are providing only different wallets for you. Paper notes could be replaced by cold wallets owned by the FED.

The money supply must be infinite I guess if they don't want to make hard forks in every few years :).

Anyone can create a cryptocurrency, you, me, the FED, anyone.  What matters is who uses it, not who creates it.

It would since most people are sheep and they would follow whatever is "official". Thing is, it can backfire and maybe all they do is drawn more attention to Bitcoin.

Those people are already using Dollars.

What really changes if the Fed slaps some cryptographic lipstick on that pig?

No, it can't. No way.
It would be totally illegal.

The Federal Reserve, nor any central bank, doesn't have the power to create a new currency. It's duty is to protect, or control, or develop (depending on circumstances) the currency which is legal tender in the country. It cannot create a new currency, and it cannot change the currency it's working with.

wrong, wrong, wrong. 

You are all wrong. 

They most certainly will.  In fact, they already have - but it remains experimental.  It is remarkably easy to create one.  The Fed is merely trying to figure out how it could introduce it AND win the public's confidence.  It is possible to make a strong rule whereby zero inflation is preserved.  You can bet, people would flock to it because it would have FDIC like insurance and our beloved bitcoin would merely be repeatedly racked with more scandal each week.  I think Andolfatto and the FedReserve could have a full blown dominate cryptocurrency in about 3 months - forever putting bitcoin away. 

I think you are missing an episode of alex jones bro flick the channel, please to begin with can you show me where you find out that they have and it is experimental stage?

It will not win the public confidence it will win over some sheeep for sure but not many from bitcoin and if they wanted to try and ruin bitcoin that would have been done.

Within the 3 months ay tell me more show me some proof?

They have to much control over fiat they do not want crypto lol

The hypothetical cryptocurrency mentioned in the article posted by OP has a mix of centralized and decentralized characteristics. The Fed won't have special powers and it won't have the ability to remove or add entries in the blockchain. However, the currency would be 100% premined and distributed and redeemed via centralized channels rather than distributed in a decentralized manner as in the case of Bitcoin.



It's not really a replacement for the dollar or even a new currency but rather a digital representation of the dollar that is able to leverage the power of the blockchain to allow or trustless, near-instant, and low-cost transactions. The Fed will keep the coin's value stable by readily accepting USD for fedcoins and vice versa.

Seeing as they already have a machine that prints out a limited amount of money everyday, I'm surprised they haven't found out about the untapped potential of making infinite money virtually.

Then again, we have all these l33t hackers and you can't really verify this virtual money.

I don't think it would be a good idea.

The machine us unlimited printing just check inflation for the last 100 years and they know about virtual money of course they do buddy they have just chose not to care i mean why should they it represents such a tiny part of the world economy, bitcoin 3.4billion last i checked all the other alts at a guess say the same so ten billion tops for virtual currency worldwide that is nothing to them and a waste of time them even thinking about it. I am pretty sure nothing will come of this there will be no fed crypto although there probably will in the future when they are done with the dollar :?

Absolutely they can... would the majority accept?... Yes they would because they have the power to regulate the shit out of bitcoin and they have ridiculous money to invest in promoting it.
We have been dumb enough to let the rich 1% to run congress... why wouldn't we (as a population) just lay down and support the corrupt?
At some point there needs to be enough people willing to give the effort to resistance & educate public opinion.

This is like the Postal Service announcing they are creating their own "electronic messaging system" like email. Why? What would be the point? It wouldn't save them, and there's no reason to think they'd do it better than is already being done by others. The shortcomings of bitcoin (security and ease of use) are not solvable by the Fed or any roomful of Nobel Laureates, so them creating an altcoin would be pointless. Any innovation they could come up with could just be replicated by every other crypto in existence. The only edge they could possibly get would be regulatory/legal in nature, and it would be blatantly obvious to everyone if such favoritism were put into words. That would simply wake up Wall Street and Mainstream America to the nepotism and how it would be inferior to existing cryptos in the ways that matter, which would end up providing a big boost to real cryptocurrency, even if it had to happen "underground."

Doubt the security of the fed's blockchain.

Firstly, there is no limit on number of coins, no incentive to hold the value over time.

Secondly, no incentive for miners to maintain such network.

Thirdly, if code is not open source, nobody will use this coin. If it is open source, consensus could put an upper limit to the coins, which defeats purpose of the FDR.

If Federal Reserve issue their own cryptocurrency, it will definitely not like bitcoin, or based on bitcoin protocol .bitcoin protocol is decentralized as no one can control it.
Federal Reserve will know allow this happened.
It should use ripple protocol.

Well, they are already issuing computer-generated "cryptic" currency, so it would not be too much of a stretch.

 I don't think in this way,  They will surely made this as a centralized system and use cryptologic and blockchain technologies for make the system more self-secured and  autonomous

so,,
(just in case), we should stay tuned and to prepare for the emergence of this crypto for do not to be late in case they would consider to veil certain excesses

http://merchant.mintchipchallenge.com/assets/images/mintchip_dev_promotion.jpg

ROFL - FAIL

Nice analogy and I agree with you. It's just not really feasible for them to create their own cryptos either as to have the sort of centralized processing power would be very costly to them whereas bitcoin's processing power is decentralized and all over the globe.

This may be good idea for them but I don't think they will ever consider this solution.
Paper money they can easily control but Cryptocurrency is another issue (they may consider something completely different from bitcoin).
It's also question of supply and demand and if local businesses will accept it.
To complicate issue.

Replacement or new currency, that doesn't change a thing. The Federal Reserve doesn't have any right or power to do anything with anything else besides the US dollar. the dollar is its one and only mission.

Yes, but they can change the medium for those dollars, just like they can change the paper and the printing technology over the time.

Well any individual can create crypto so why not they? Question is whether they want to in the first place. Probably it won't be something decentralized like what bitcoin is so it will be centralized and that there's always a form of control. Again in the end i don't think that they will ever need to do this.

Anyone can create a coin but they can't force people to use it. Just look at all the shit alts that come and go. Without people behind them they're worthless and will die a quick death.


Haha. Did they really copyrite it?

Yes they could but there isn't any need when we've already got Bitcoin.

No need for more shitcoins...especially centralised ones issued by the Fed.

Of course, they needed to make sure they had absolute control of the loser. lol

Government Bitcoin copycats will never be successful because they can't offer the things that draw people to Bitcoin. Even Bitcoin won't survive if it strays away from them. Money that's controlled by no one, auditable by everyone and secured by the world cannot be copied by a government. Money controlled by the govt, closed source and secured by the govt is called fiat. We already have that.

haha.  that would be a great pump and dump.  interesting way for the fed to get some BTC

Best answer someone could give to that question!

Canada's mint is already working on it :) Don't know if anythign will come of it though. Nevermind. (http://blogs.wsj.com/canadarealtime/2014/04/04/canada-puts-halt-to-mintchip-plans-could-sell-digital-currency-program/)
http://en.wikipedia.org/wiki/MintChip

This would not be about innovation, but about putting dollars on a blockchain. This way one can send dollars anywhere in the world as fast as bitcoins.
Also this would allow people from other countries to hold dollars, if they wanted to - and a lot of them do want to, without the permission of their local governments.
Don't think about it as an altcoin, but as a US dollar on a blockchain.

They could create a blockchain (let's call them bitdollars) and pass laws guaranteeing a fixed conversion rate between bitdollar and the dollar. This would  give them faster transaction times, but with some risks and problems. Since the bitdollar would have a level of supply independent of the supply of dollars, they could have difficulties supplying enough of the bitdollars to meet demand for the service. On the flip side, flood the market with too many bitdollars and you effectively inflate the dollar, causing inflation to get even worse. It would add an additional variable to their attempts to control the money supply of the dollar.

There would also be the issue of securing the network. We talk about how bitcoin challenges traditional fiat institutions, but no one is targeting bitcoin for destruction the way that countries like North Korea or the Taliban or ISIS would love to target an American dollar-backed blockchain. So right from the start the bitdollar would need a sizable investment in mining hardware (underwritten by our tax dollars?). And if America aggravates China or Russia or some other powerful state badly enough, the risks go thru the roof. I doubt the U.S. has the financial resources to defend a bitdollar against the Chinese in a few more years, if they decided to take the U.S. on. And if they relied on public mining, well you can imagine the shenanigans that even smaller entities could pull off using leased mining farms to attack the blockchain.

They could if they just said that they were "reformatting" the way that the USD is transacted within the banking system and that they are moving to a USDCoin that essentially just takes over the place of the physical USD and digital USD in bank account. They could also create an addendum to the current laws and they would sell the addendum as "we need to adapt the law to the current advances in cryptocurrencies that are among us".

The real question becomes this: IF the fed did create their own coin, would you trade all of your bitcoins in for them? I don't think so...

Also they could create "fake" hard caps to the currency and then they would need to hardfork it every few years to increase the cap, much like they need to vote on "increasing the debt ceiling" every few years...

Exactly. I would have no faith in their promises to hold the money supply fixed (or growing at a fixed rate). That's one of the advantages of bitcoin and any other crypto free of government control and motives to manipulate the economy.

Sorry, but the Federal Reserve cannot change any law. It can certainly look at cryptocurrencies, but it would require a vote from congress to allow it to change from paper money to virtual currency.

Ok you maybe right with that statement, but in reality it is the federal reserve of private bankers who create most if not all of the financial laws we have today and have done so for decades from the moment they stole America.

To answer the op they have no need to create their own crypto when they have total control anyway, they of course will one day change from the paper to some form of credit system but it won't be the crypto we know and love it will be something with total control like they have now.

Forget about mining and premining. Forget about a public blockchain.

Why couldn't the Federal Reserve just set up a website where you could open an account with them permitting you to transfer/send them money (USD, BTC, euros, etc.). Now for example you transfer $100USD from your checking account and you provide a "Fedcoin pubic address" (e.g. USD4859ht83649fnjborkoelg86395730957) generated by your Fedcoin wallet which holds the private key, the federal reserve takes the $100 you sent out of circulation and creates 100 fedcoins on the Fedcoin ledger (maintained on their server) and assigns it to that address. Anyone can use a Fedcoin wallet to generate public/private key pairs and transfer fedcoins they own by connecting to the Fedcoin ledger. One instant confirmation and you're done. The Fed agrees to pay one USD back per one fedcoin on demand.

The Federal Reserve functions as both an exchange and transaction verification service. The only way fedcoins are created is by conversion from USD.

Advantage to Fed is it keeps the economic activity in USD.

Advantage to users is all the advantages of cryptocurrency but transactions would occur cheaper, faster and with less volatility than bitcoin.

Could Fedcoin be to Bitcoin what iTunes is to Bittorrent?

Fedcoin won't be international and won't be open to innovation.

Fedcoin will be the AOL of internet.

Can you give examples of an international transaction or innovation that Bitcoin could accomplish that Fedcoin as described above could not?

Any one in the world could download a Fedcoin wallet. A fraction of a fedcoin could be used as a colored coin the same way as a fraction of a bitcoin...

They could, but it'd be completely pointless. Either they control it, in which case it's not a cryptocurrency (not decentralized) but just another fiat clone. Or they don't, in which case there's no single advantage over Bitcoin whatsoever (not for them, not for users).

Only reason anyone would launch "their own" altcoin (I'm using quotes because due to the nature of cryptocurrency, it's by definition not owned by anyone) is they can premine or mine early for free, hoping it will hype and turn into a Get Rich Quick scheme. But I hardly doubt the FED would be interested in that, as they already have an infinite money printing machine at their hands.

FED or Amazon or Company X or Bank Y or Government Z launching "their own altcoin" is simply contradictionary to the very definition of cryptocurrency. In other words, it's bollocks.

They create a new fiat clone, they can create their own Facebook credits, or WOW gold, but not their own altcoin.

It is a centralized cryptocurrency equal in value to the USD that can be sent instantly to anyone else in the world for free.
If it becomes useful it increases the value of the USD as the world's reserve currency.
I suppose the Federal Reserve could shut it down or stop accepting it as legal tender at some point but they could do the same thing with cash.

The Bank of England's looking into bitcoin now [1], but as always they're first concern is maintaining control. After all, we can't have the people who use it in control of it, goodness knows what'd happen. They could ruin the economy. Can't have them doing that, that's our job.

But can it be done? Or can we come close? I think it worth giving your best effort at doing so, anything else is effectively sticking your head in the sand, If it's possible to do - it will be done.

My own idea is for the state (or whatever controller)  to somehow control the miners, every thing else is as for bitcoin. So miners would only recognise other registered miners by using digital signatures. Don't know if that'd work as I'm not up on cryptography. I guess it'd likely introduce a week point as it's a sort of centralisation of info shared by a cohort of miners.

More generally, I view bitcoin and fiat as complements (decentralised vs centralised systems). Much like arrays and link lists are complements. They each have complementary properties. But there's also a great richness of hybrids in between (trees, dictionaries etc). So bitcoin gives us the other end of a spectrum of systems as yet unimagined, imo.  So there's sure to be some system more suitable for those wishing to have some control?

[1] http://www.telegraph.co.uk/finance/currency/11434904/Bitcoin-revolution-could-be-the-next-internet-says-Bank-of-England.html

All I could think of on this topic is this
https://www.cryptocoinsnews.com/ibm-federal-reserve-want-create-bitcoin-knock-off/ (https://www.cryptocoinsnews.com/ibm-federal-reserve-want-create-bitcoin-knock-off/)

But it is very similar how internet banking already works. It does not solve the problem of chargebacks because without public blockchain and clear rules the central authority can make decisions like chargebacks, removing/blocking your coins and so on.

I think the assassination of a government official pushing for decentralization might very well be paid for by funds made from centralization.

well, Bitcoin relates to Fedcoin like Email relates to De-mail (https://en.wikipedia.org/wiki/De-Mail)  :)

we had this topic many times already, at the end of the day FedCoin already exists, it's the US$, as it is already digital if anyone didn't notice it. If anything, Bitcoin is a competitor that pressures them to overhaul their infrastructure to become more efficient.

The proper question here should be: when Federal Reserve Bank will introduce their digital coins and not if. At this point I am sure that they are working on project like that, creation of an alt coin is
after all pretty simple task. Don't you guys forget that they at FED have blessing and support of IBM? In collaboration with this IT gigant they will create the best coin so far. Question is: when they release it.

Do you mean "best" as in decentralized or do you mean "best" as in most likely to appreciate in value?

I am not sure about decentralisation and other aspects of this FED's coin as its 'privacy", open source etc, but I think what this coin will excel with is its stability and anti-volatility.
Price of this coins with almost for sure match dollar value and will be linked to it.

Anyone could offer their own version of a cryptocurrency.

But who would use it? In most cases it'll help promote bitcoin and decentralisation further, since any FED coin is likely to be centralised.

But USD buying power is horrible in long run and most USD is already electronic

They will probably use Ripple.

YES BTU but why wold i want to use it ??????????????