Gov must have power to reverse transactions, says co-chair of blockchain caucus

[o_e_l_e_o]

I totally agree with you here. But I guess systems already have similar database and it is too difficult to use and maybe not secure enough. I do not know the answer:) But blockchain should have improvements over traditional database in terms of recording accurately and timestamping I guess.

I think the point he was making is that governments won't want to use a blockchain. If you want centralized control and a third party to have complete jurisdiction over the currency in question, then a blockchain is an exceedingly inefficient way to do that. There is no reason the government would not just use a single centralized database rather than a distributed one. Transactions could be almost instant and nearly free (only taking as long as it takes to update an entry on a spreadsheet), but you lose all the benefits bitcoin brings - decentralized, trustless, immutable, censorship resistant, etc. - and the government retains the ability to print more of this currency freely. Any such "cryptocurrency" launched by a government will essentially just be fiat in disguise.

Now we need only to "give her a payment request", she taps, it opens bank app, she puts in password, paid. Instantly. Free, With no hitches.

We are not a million miles away from an experience similar to that with Lightning. There are a few Lightning wallets out there which will handle the opening/closing/funding/liquidity of channels for you. You just need to send some coins to that wallet, and then when you want to pay someone with Lightning, they generate a payment request, you scan it in your wallet, and it is paid, instantly and almost free. Sure, the process isn't as streamlined yet, but I'm sure that with the ongoing development we will get there soon.

But in this case I do think a government running its own blockchain would for sure want to have that power. Maybe not in developed countries (minus USA haha). But if you ask our leaders here,,, they would want to control the sun if they could.

Most governments are the same, which is exactly the reason we need bitcoin.

[BlackHatCoiner]

Any such "cryptocurrency" launched by a government will essentially just be fiat in disguise.

The only benefit I can think of is that CBDCs won't be like a bank account in theory. If you own digital euros, there's no person owing you anything. Debt can be discharged without cash, although it won't have the same resistance in censorship. Criminals will prefer going with cash or Bitcoin/Monero rather than a transaction which can be reversed by the government.  

CBDCs will essentially make human more confined and privacy oriented cryptocurrencies will be the escape from the system. That's my belief.

[o_e_l_e_o]

If you own digital euros, there's no person owing you anything.

I'm not sure I follow you here. As far as I can see, whether you have euros in your hand as fiat, in your bank account as savings, or in some new account as a CBDC, they are all issued and guaranteed by the central bank of your country and/or the European Central Bank, which retains the ability to set monetary policy, print more of the currency, and oversee the activities of the commercial banks which use the currency. Those central banks are ultimately what gives the digital currency value. If the central bank decides to double the supply overnight, then what you are holding effectively halves in value.

CBDCs will essentially make human more confined and privacy oriented cryptocurrencies will be the escape from the system. That's my belief.

I agree with you here. Governments don't like cash because they can't trace it and a lot of cash transactions are done to avoid paying tax, hence their desire to turn all these transactions in to a digital version which they can trace.

[BlackHatCoiner]

I'm not sure I follow you here.

Yes, I may was confusing. I was trying to say that your money in your bank account is an IOU of cash. The CBDCs won't be an IOU, but rather digital cash. That can be seen as an advantage.

If the central bank decides to double the supply overnight, then what you are holding effectively halves in value.

The mint can only double the supply by a government's mandate except if I'm missing your point. The bank can't inflate the system with the currency's units, but with IOUs. That's why we had the capital controls, people were cashing out from their bank based on their IOUs. Although, there were much more euros in IOUs than in the bank and thus, they limited the amount you can cash out. I remember endless lines of people outside of ATMs, trying to cash out €400 which was the maximum amount.

I agree with you here. Governments don't like cash because they can't trace it and a lot of cash transactions are done to avoid paying tax, hence their desire to turn all these transactions in to a digital version which they can trace.

Cash are untraceable, but not fungible. Each banknote has a unique id on it. An analysis can be done by the government and even though it sounds impossible, it's not. Now imagine a society living with three kinds of digital currencies.

• CBDCs that are completely traceable and centrally managed by the government.
• Decentralized cryptocurrencies like Bitcoin that can also be traced.
• Monero.

I don't think that humanity had ever the same fungibility and privacy on a currency. Governments will fight it for sure, that's why it's less likely to succeed same like Bitcoin did. But, you know what they say; the higher the risk, they higher the reward.

[o_e_l_e_o]

I was trying to say that your money in your bank account is an IOU of cash.

Cash itself used to be an IOU of gold. I don't even know what it is now. An IOU of "the government says so"?

The CBDCs won't be an IOU, but rather digital cash. That can be seen as an advantage.

Sure, but either way they are still backed up by the exact same thing - absolutely nothing other than the government's promise that they won't devalue it too much.

The mint can only double the supply by a government's mandate except if I'm missing your point.

My point was it doesn't matter if it is cash or CBDC - either way the supply is limitless and then can be minted at will by their centralized owner.

Cash are untraceable, but not fungible. Each banknote has a unique id on it. An analysis can be done by the government and even though it sounds impossible, it's not.

It is traceable, but not the same way bitcoin is traceable. If you withdraw 1 BTC from an exchange, send it to me, and I deposit some of it at another exchange, then everyone can see a direct link from you to me. If you withdraw $10,000 in marked notes from the bank, and later I deposit some of those notes at another bank, no one knows if there is a direct link from you to me or if there were 100 intermediaries.

[BlackHatCoiner]

Cash itself used to be an IOU of gold. I don't even know what it is now. An IOU of "the government says so"?

It's an IOU². 

Sure, but either way they are still backed up by the exact same thing - absolutely nothing other than the government's promise that they won't devalue it too much.

If you know that your government's currency will be slowly devaluated, you'll prefer spending it rather than keeping it. That's generally good for an economy, it's just the way you see it. You shouldn't be storing value by locking a million dollars in a chest; these dollars should be circulating in the market. Use gold instead, or in this case, deflationary cryptocurrencies.

[CryptoStar19]

The entire premise behind cryptocurrency is freedom from authoritarian control... it would defeat the purpose to have nation-states control any aspect of tokenomics or have the authority to reverse transactions. For state-backed / controlled digital currencies, we have CBDCs and they are well under way. As for cryptocurrencies, freedom from current financial institutions and governments is perhaps the most important advantage and to lose that would be a deal-breaker.

[Xhong54]

This is like simply saying that governments want to control btc. the freedom involved is the key thing is crypto, nothing else. If this is lost, then it loses meaning. Paper currency is losis its meaning every day because of that kind of control and ease in printing.

[pixie85]

The congressman also said that cryptocoins must become compliant with federal regulations and laws

The congressman is nuts to think a decentralized system can be made to comply with this or that. It's like telling all the ants in the world to move away from neighboring houses and into the woods. I'm sure they'll listen.

Demanding Bitcoin to do something is a nice way to show you have no idea how it works.

[2double0]

Yes, there is more easy access for cryptocurrency tracking than the fiat moves. Governments say it doesn't have control over the network and the same could fund terrorism and so on. This is how the government mislead people at the beginning in my country. Later it even tried to relate some fund transaction as funding to terrorism. This made more people stay away from crypto currency usage. Now people have got the better understanding, so nothing to worry on the manipulation by government in a different approach.

You know there are countries where terrorism is funded by governments only, they either do it for the sympathy or they do it to show their citizens and the world how dangerous they are. What can an other country's government do to that government spending behind terrorism? Nothing. So why these 'innocent' governments are before crypto? Because even if traceable, crypto does not bring them huge taxes yet.

[Woodie]

Lol why does this sound like a comedy show 😂🤣

Anyway it is true that too much power corrupts and this could be the case here....

No offense to these guys but do they have an idea how the blockchain technology works, or they are trying to pretend as if they are doing their jobs to impress their pay master's.

[leea-1334]

Can you post what your definition of a blockchain is? Because you and I might have a different understanding of what a working “blockchain” is. I believe some people view it as “something secure/decentralized”, but has stopped there, and hasn’t understood how/why it is decentralized.

I am 100% sure we both understand it differently. I am the definition of the masses. We do not have a good education. We only improved English online in past few years, in fact, I learnt a lot from this forum and just reading other people's thoughts. I still have trouble understanding Bitcoin whitepaper,,, so for sure, I am not the guy who understands fully how/why blockchain is decentralized.

But I always speak from practical side of things,,, because I only know what I know from practice:) I never saw blockchain as decentralized by the way, I saw Bitcoin as. 99% of blockchain projects out there, can claim secure/decentralized but even a small user like me knows these are only claims.

Thanks o_e_l_e_o for all that discussion. You are right about Lightning,,, I hope it happens faster than I feel.

[Wind_FURY]

Can you post what your definition of a blockchain is? Because you and I might have a different understanding of what a working “blockchain” is. I believe some people view it as “something secure/decentralized”, but has stopped there, and hasn’t understood how/why it is decentralized.

I am 100% sure we both understand it differently. I am the definition of the masses. We do not have a good education. We only improved English online in past few years, in fact, I learnt a lot from this forum and just reading other people's thoughts. I still have trouble understanding Bitcoin whitepaper,,, so for sure, I am not the guy who understands fully how/why blockchain is decentralized.

But I always speak from practical side of things,,, because I only know what I know from practice:) I never saw blockchain as decentralized by the way, I saw Bitcoin as. 99% of blockchain projects out there, can claim secure/decentralized but even a small user like me knows these are only claims.

YES, then connect that to the co-chairman of the blockchain caucus, CLAIMING that government must have the power to reverse transactions. Is he talking about “blockchains”, a real blockchain? Or mere databases? Plus what’s his definition of a blockchain? I am sure you know more than him.

[passwordnow]

The basic principle of crypto transactions that they're not reversible should sustain what he's fighting for. They have no choice but to regulate the exchanges that are operating in their jurisdictions but they have no means of regulating bitcoin and other cryptocurrencies unless those cryptos are centralized. It all ends up about taxation because they cannot tax people through transactions that are happening over blockchain because instead, the government earns some portion with those transactions, it goes to the miners and network itself.

[o_e_l_e_o]

it would defeat the purpose to have nation-states control any aspect of tokenomics or have the authority to reverse transactions.

Governments don't care if what they are proposing completely negates the very point of bitcoin, and they don't care if their rules or regulations will destroy it. As far as they are concerned, they either want it to behave how they tell it to behave, or not exist at all. As with most things, control or remove entirely are the only options they are interested in.

No offense to these guys but do they have an idea how the blockchain technology works, or they are trying to pretend as if they are doing their jobs to impress their pay master's.

I entirely suspect that Bill Foster has absolutely no idea how bitcoin works and how ridiculous the things he is saying are, but I also suspect that even if he did, he would continue saying such things. Almost all our politicians are bought and paid for by banks and corporations which are directly threatened by the proliferation of bitcoin.

They have no choice but to regulate the exchanges that are operating in their jurisdictions

By all means. Let them regulate exchanges however they like - they are, after all, private businesses and will be subjected to the laws of wherever they choose to operate. But regulating against a decentralized protocol is nonsense, just like when they try to regulate against encryption itself.

[Shenzou]

all they are are just a bunch of angry boomers they are trying to bring down bitcoin and cryptocurrency because they have been saying for years that it is a bubble and it is not worth investing in it, and for time to prove them wrong they will do and say anything just to bring it down, and governmment having the ability to reverse transactions is a stupid idea and shows how they have no idea about how the blockchain and cryptocurrency work in the first place.

[dezoel]

So anyone who does anything without informing the government is considered a criminal now? At least that's what I understand from such a statement. I understand that many people might be involved in money laundering and such things with the help of bitcoins but does that mean everyone who uses bitcoins should be labeled as a money launderer or scammer? Absolutely weird kind of mentality this.

The entire premise behind cryptocurrency is freedom from authoritarian control... it would defeat the purpose to have nation-states control any aspect of tokenomics or have the authority to reverse transactions. For state-backed / controlled digital currencies, we have CBDCs and they are well under way. As for cryptocurrencies, freedom from current financial institutions and governments is perhaps the most important advantage and to lose that would be a deal-breaker.

They don't the common sense that people are so fond of bitcoins not because of the transparent nature, not because of the decentralization, and even not because of the speed or anything. People are so crazy about bitcoins because they want irreversible transactions and if you make the transactions reversible, it just kills one of the main purposes of crypto currency.

[kaggie]

I believe we already have this, it's called credit cards or banks, or if you feel especially inclined, centralised B.S. coins.

A public ledger with distributed services (aka bitcoin) is the best thing to hold people accountable, especially government officials.

[passwordnow]

They have no choice but to regulate the exchanges that are operating in their jurisdictions

By all means. Let them regulate exchanges however they like - they are, after all, private businesses and will be subjected to the laws of wherever they choose to operate. But regulating against a decentralized protocol is nonsense, just like when they try to regulate against encryption itself.

They think that they can do that and modify the blockchain transactions that are happening. These people in the government that are subjecting the purpose and protocol of blockchain and cryptocurrencies think that they can do something that will change it forever.
They're all thinking that they can alter almost everything but blockchain and cryptocurrencies proved them that they cannot do it with every single entity that they saw that are against the government and are decentralized.