Bitcoin Forum

In the recent US House hearing on digital currency (https://www.c-span.org/video/?448611-1/house-panel-examines-digital-currency), most of the lawmakers were worried that a cryptocurrency would out-compete the US dollar, and so they were interested in creating an official USD cryptocurrency to preempt this. (Mainly they were worried about a cryptocurrency created by a different government, but some also contemplated Bitcoin achieving dominance.) This sort of "FedCoin" is a hilarious effort doomed to fail.

Most people are fine with using things like credit cards, bank autopayments, bank-linked payment apps, etc. They're easy enough, and since the payments are reversible, they're highly forgiving of the average person's absolutely abominable security practices. These people are not going to switch to either Bitcoin or FedCoin any time soon, and they can be ignored for now.

Of course, the above-mentioned traditional payment methods have a huge list of problems. Listing just a few:
 - Pull-based payments are inherently insecure.
 - Payments based on shared secrets like credit card numbers are inherently insecure.
 - The person you're paying has to know your personal information.
 - Your intermediary has to know your payment history. Most credit card companies actively sell this information to advertisers, all of them are probably vulnerable to Equifax-like breaches, and all of them are open books to government agencies.
 - USD is inflationary, and its future is highly unpredictable and (depending on your viewpoint) maybe dubious.
 - Accepting payments is costly due to fees and chargeback risk.
 - Accepting payments requires significant set-up time, and is impossible to do privately.
 - The entire thing is debt-based and filled with intermediaries. If $5 is moved, then multiple parties are simultaneously borrowing $5. It's fragile and inefficient.

If you're in the minority of people who runs into these problems, then you're probably going to use cash if possible, which solves most of those problems. If you're online, then you'd be interested in accepting BTC, which also solves most of those problems.

But any FedCoin likely to be created is going to solve few of those problems, if any:
 - Banking protocols have historically almost never been designed securely, and I doubt that any FedCoin would change this pattern.
 - Because the average person can't handle security, the system is either going to be forbidden to the average person or it's going to be reversible.
 - Governments hate privacy.
 - The very last thing that governments would give up is their power to print money.

So any FedCoin is just going to be another credit card system. But people who already like credit cards will just continue using their credit cards. There's no market for it.

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Now, a smart statist might recognize all of the above, and abandon all of their other money-related goals just in order to maintain their power to print money. This could be done by implementing the 1996 NSA paper How To Make a Mint (http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsamint.htm) (which I often like to evangelize). The Federal Reserve would run some powerful timestamping servers which everyone would use, and then the rest of the system would be based on public-key crypto directly between payers and payees, probably aided by dedicated hardware. This would be better than Bitcoin in several ways:
 - It would be 100% anonymous. Not even the government could unmask you. (*)
 - Payments would be instantly irreversible and nearly free.
 - There would be no need for anyone but the Federal Reserve to run any heavy full nodes.
 - The value would be tied to USD, and therefore less volatile than BTC currently.
 - More complicated smart contracts could be implemented, since the Fed could act as a built-in smart-contract oracle.

The only thing that BTC would have going for it vs this type of e-cash would be its decentralization and finite supply. Valuable properties IMO, but I would never expect BTC to out-compete this e-cash as long as the USD was reasonable stable, whereas I do think that BTC can out-compete either today's USD or any likely hypothetical FedCoin over a long period of time.

But I would be shocked if any government tries this. Many will try the pointless FedCoin-type thing, but they are too arrogant, anti-privacy, and incompetent to create an actually-useful e-cash system like this.

(*Note that it would be possible to design the system such that certain backdoor keys could be used to unmask payments. Everyone would know about this in advance; it wouldn't be a secret backdoor. Maybe something like this could be made tolerable to the average person, though no matter what measures are in place at the start, if any backdoor is tolerated at all, then it's only a matter of time before the NSA is looking through every transaction's history.)

(There is absolutely no need to shoe-horn a block chain into such a system, BTW.)

I think this is more of a problem for bitcoin than a “FedCoin”.

If people lose money because their bitcoin is stolen, they will be less likely to use it in the future and if many people lose money for these reasons some will not be interested in starting to use bitcoin out of fear of loss.

The government can implement regulations that make it more difficult to screw things up that result in losses, such as requiring hardware wallet manufacturers to ship multiple backups when selling said wallets, requiring certain security standards that make losses less likely.

I don’t think the US government will make any coin that allows for anon payments in unlimited value out of money laundering concerns. Further, this would make it more difficult to enforce sanctions, which has the potential to lead to more armed, violent conflicts. There are numerous laws in place and a lot of resources that are used to track and monitor large financial transactions within the banking system and I don’t see the government giving that up.

The market has innovated somewhat in this regard. So called “chip” cards effectively make it so cards must be present at the time of the transaction and the card cannot be charged a second time if it is not present the second time. Many banks offer temporary card numbers that have short expiration’s and limits near the amount of a transaction at a merchant, making them effectively “one time use” card numbers for purchases online. ApplePay and AndroidPay have similar security protections as chip cards, but with addded protections via a users phone, such as a pin or a users fingerprint being needed to make a purchase.

Overall, I find it very unlikely any 1st world government will ever attempt any kind of fedcoin

I'm so glad that you do like to evangelize this :) what a cool read... who could expect such a useful piece from this agency?
However the fact that this paper was disclosed tells us the whole story, they wont utilize this particular idea. Absolute morons at the top of the food chain, no surprise there. Basically they rejected the golden eggs laying hen... typical but... were we lucky?
Do you think satoshi read this paper? Was it an inspiration for his ideas? (tinfoil hats on) Laurie Law, Susan Sabett, Jerry Solinas was this satoshi?  :D After their work was dismissed, left unappreciated maybe they got somewhat rouge and open source with the on-line version only of this work? How does their mathematics compare(if at all) with the blockchain?   

I can't imagine that Satoshi didn't know about this, since it was one of the main ideas in achieving electronic cash before Bitcoin, but I can't find any references to it from him. Bitcoin is only very loosely similar to this system (called blinded bearer certificates or chaumian e-cash), though.

Yes, one of the ways to confront bitcoins on the part of the states is to create their own digital centralized money. In any case, this will happen. However, if we are confident in the strength of the decentralized Crypto currency, then we have nothing to fear. In addition, the creation of such a crypto currency by the state will raise interest and the general popularity of the crypto currency.

This is a great thread. You know, they have a great potential with that kind of anonymous payment system to centralize everything and keep it all under lock and key, so what's stopping them? I think that they have this in mind and are already slowly moving towards it (Sweden is something like 98% cashless now) just by getting people used to the fact that they don't need physical currency anymore. Then what? Slip them across from the Swedish Krona to the e-Krona, and just change the terms slightly. Many more countries will begin to follow suit. And I don't think it will necessarily be fully anonymous, in fact, they might even sell the information to the highest bidding market research firm.

This is actually a great news and good idea. This shows in their own way they are trying to buy the idea of cryptocurrency, well they will be warmly welcomed into our world. This will also create a lot of awareness and trust me many other nations will follow suite. Let's cross our legs and watch if it will be able to stand the test of time.

Actually I think that the best way that the government can try to overpower Bitcoin is to create a cryptocurrency that will be more stable and less volatile unlike Bitcoin. Its a good thing if they try to achieve this as it means that they have seen the relevance of cryptocurrency. Unfortunately, they might not want to follow the decentralization route which is why i think they wouldn't defeat Bitcoin as it has gone a long way being decentralized.

I wish more people realized that, it seems like most bitcoiners actually believe that in the next years everyone and their grandma will stop using banks and switch to Bitcoin. A lot of people will get so disappointed in 5-10 years that there's no "mass" adoption. They like to compare Bitcoin with Internet, electricity and other inventions to somehow make an argument that Bitcoin will have the same adoption curve, which is completely wrong because Bitcoin's innovation is very different from those examples.

Yeah I agree. A lot of crypto users have their heads up in the clouds when it comes to the the real life application of the currency. It's easy to dream of it achieving word domination in the realm of finance, but the real question is how?

Bitcoin needs many more features to be inherent in it to be usable, namely those mentioned above. It has great potential, but we need actualization for it to work. It doesn't just flood through and then everyone magically makes the shift over to crypto. There has to be a good reason for it, and a strong enough guarantee to make people feel safe. Try asking someone to pay you in bitcoin, and watch the look on his/her face. The majority aren't ready to trust it yet.

Perhaps in the future we'll have something like Bitcoin-based banks that will be centralized payment systems with digital tokens backed by Bitcoin. It sounds stupid at first, but even now a lot of institutional investors and just users are scared to use Bitcoin because they are afraid to manage their private keys. With Bitcoin banks this can be outsourced and their funds can be insured. Of course they would lose the main benefit of Bitcoin of eliminating the need for trust, as well as other benefits like privacy, but they would still be using fixed-supply currency, which might be the most important feature for some people.

The trend and role of Blockchain technology is undeniable. Governments in several countries have agreed to apply Blockchain technology in many areas of the country, including financial operations. But managing Bitcoin is a very difficult job. Perhaps the best way for the government to overwhelm Bitcoin is by creating its own electronic money. Maybe.

The government can create its own electronic money based on Blockchain technology. But besides that, the electronic money they create will also have a significant impact on the economy and society of that country. In addition, what is the value of electronic money they create compared to Bitcoin and other Altcoin. It is possible that when e-money is created by the nations themselves, it is also the time when they carry on the economic burden.

Not really a good news. The government created its own electronic money in order to manage them more easily and better. But in fact, people using electronic money are the ones who want to be anonymous in their trading activities. They do not want to be managed in the use of personal money. And they will choose Bitcoin by its great anonymity and security. It is very hard for the government.

by allowing it. thats the only way that government can be successful. because if they allow it, they can put tax on it and can earn on it as well.

GovCoins are backed by governments and that is where their coins will fail. Most people already realized that the government is

ruining Fiat currencies and they will know that they should not trust a government to run a Crypto currency with the same result. If

you back your GovCoin with fiat money, then you failed already. The problem is not with the Crypto currency, but rather the "asset"

or currency it is backed by, because that can be manipulated.  ::)

They know they can't stabilise their shitcoin because all their crimes of financial mismanagement would have to be exposed.

That could be possible when op's idea becomes reality. When there is any government issued currency people automatically trusts it.

It's human nature to trust an authority. We need some form of foundation to surround us so we can see that what we are doing is stable and safe. A lot of people on this forum would probably admit that they were a little bit hesitant about bitcoin when they first heard about it, and if they had known what they do now, they would have gotten on it earlier. But you can almost never make a sound judgement with the limited amount of knowledge that is in front of you at the moment.

So the decentralized nature of bitcoin is its Achilles Heel in a way because it appears as a vulnerability for those who don't want to put their money in something that is not backed up by a government.

Agree.
Besides, finite supply of BTC is one of the main reason why it will have advantage over USD in the long run.
As printability of USD has no limits, it`s inflationity will always be USD`s HIV, on the road.
The main goal shouldn`t be BTC to completely annulate USD, but have it`s decent portion/share, based on it`s characteristics.

First Chaumian Ecash Server Coming Soon
https://www.hookedin.com/
https://www.hookedin.com/overview/
discussion https://youtu.be/1pcKQIXPbec Block Digest #172 22minutes in

Compete with bitcoin is not easy job but when governments go for that compete with bitcoin then it's a big threat for bitcoin. Bitcoin is such a difficult to maintain, it's technology is difficult to run on the proper way. If the government compete with bitcoin I'm little bit confused that what's happen with bitcoin. But my question is now many country accept bitcoin officially then why governments compete bitcoin? Is bitcoin become a threat for currency or something else?

That sounds pretty interesting and on the right track, though their website is incomplete, and it sounds like it might be fractional reserve:

I'd really love it if it's not fractional reserve and the "bank" is actually a multisig of several independent entities. But as long as it works well and actually uses blind signing, it'll be good to see.

Crypto is a threat to governments because they have absolutely no control over it which means they don't have control over peoples money anymore like they do right now with banks. People start to realize that and are moving their fiat funds to cryptocurrencies and that's why cryptocurrencies have become a threat to governments.

I feel in some time to come this will happen that the US wil create their own coin in a way that will be centralized and stable to compete and try to defeat bitcoin. Somehow people will be thrilled to adopt this over bitcoin because of some features of centralization and others. This is going to be a big problem for bitcoin in the near future if eventually they come out with their own coin.

Is it supposed to be functional?

How do you get an address to send to a hookins?

not yet really it's only testnet
follow along/learn more https://github.com/hookedin

bump with new development

https://twitter.com/NickSzabo4/status/1187089734910136326

https://opaque.link/post/scrit-vision/


edit https://youtu.be/mjt7pQkPbSA
Great talk by Smuggler

Hi! Just wanted to let you know that hookedin has been rebranded into "Moneypot" and is currently live on testnet for anyone to try out:

https://wallet.moneypot.com (using: https://testnet.moneypot.dev as the custodian)

Curious to know what the current state of the other project (Scrit) is? Can't find any representation on the forum though there seems to be some stuff on github which does not immediately make clear how far they are in terms of development..?

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To reiterate some stuff that also has been mentioned in the ANN thread (https://bitcointalk.org/index.php?topic=5302025/):

- moneypot allows for (free) internal transactions (using internal lightning invoices, if you were wondering how to try it out), and is supposed to be completely free of any unproveable repudiation by making almost all interaction certified by signatures proving your intent, both from the custodian and the user. So (almost) every action is hashed and then signed using the keys of either the custodian, or the keys of the coins involved in the transfer if the action is coming from the user. The idea is that both parties verify this during and after the transaction to keep communications fair.

The biggest caveat currently is that it still is a centralized entity, which apart from naturally raising anguish and discomfort, makes it especially vulnerable to attacks from third-parties, insiders (us) and mistakes in the custodian code that go unspotted (though we are fully open-source).

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With the upcoming Taproot activation, it seems like an interesting option to explore to see if we can leverage schnorr either in the form of multisigs or threshold sigs schemes to make moneypot decentralized in the sense that funds are held by multiple signers and every signer keeps their own record of all off-chain actions, and then have a master custodian relay all actions from users and initiate on-chain transfers... If there is enough interest in this whole chaumian bank idea at all.

Though the above description of ideas is intentionally vague and not so much concrete because I (at least) am not (yet) well-acquainted with said scripting (threshold sig), and the upcoming taproot update, so we will really have to look into this to see if this will even be possible to concoct in combination with stuff such as lightning.

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That being said, we're currently in the process of gathering some feedback before deciding if we're going live on mainnet, so if you're interested in trying out the wallet, I'd say eat your heart out! We are really desperate for any criticism at all!

the government doesn't really need to compete with bitcoin, they do this to have control over it, because if they do not control the price and the use of bitcoin then it could make the value of USD crash because instead of USD being the international currency, then bitcoin will take its place. this will mean the downfall of US economy and could destroy their country internally.