Could the Federal Reserve Issue Their Own Cryptocurrency?

[ebliever]

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.

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[countryfree]

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.

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...

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.

[Slaxt]

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.

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...

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.

[dwdoc]

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?

[knight22]

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

Fedcoin will be the AOL of internet.

[dwdoc]

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...

[Kazimir]

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.

[dwdoc]

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.

[louisLavery]

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

[ezeminer]

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

[cambda]

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.

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.

[calme]

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

[herzmeister]

well, Bitcoin relates to Fedcoin like Email relates to 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.

[maku]

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.

[calme]

In collaboration with this IT gigant they will create the best coin so far

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

[maku]

In collaboration with this IT gigant they will create the best coin so far

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.

[NyeFe]

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.

[calme]

In collaboration with this IT gigant they will create the best coin so far

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.

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

[tokeweed]

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.

They will probably use Ripple.

[theconnellschicken]

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