The First Gorvernmental Cryptocurrency

[robamichael]

As a preface to my question below:

Recently I had the realization that if Bitcoin goes viral, it will eventually draw competition from governments.

If this is the case, governments might create Altcoins which benefit themselves by involving some sort of tax within the code. Of course, these versions of cryptocurrency would not be open-source, and the client would be designed and distributed centrally.

But to compete with Bitcoin, the State may design a more ergonomic system than Bitcoin. This is made possible by taxing its paper currency holders so that it may divert enough resources to outpace Bitcoin's private development.

The government designed coin, Govcoin, could then be touted as the answer to the economic problems, as Bitcoin had, but with the endorsement of political powers. "Look, here is a coin just like that Bitcoin thing, but it's better because it is backed up by us, the State."

Those unconvinced by Bitcoin's free market approach would likely turn to authority figures for answers - Ta Da! Govcoin!

So here is my question to you:

When will we see the first government designed cryptocurrency, and could it succeed, even if only temporarily?

[rupertbg]

anyone can make cryptocoinzzzz

doesn't mean it's going to catch on.

anyone can speak too.

doesn't mean anyone is going to listen.

P.S no government or society of humanity has created or paid (or probably is ABLE to pay) for the world's most powerful supercomputer network - the hashing backbone of Bitcoin.

[robamichael]

anyone can make cryptocoinzzzz

doesn't mean it's going to catch on.

anyone can speak too.

doesn't mean anyone is going to listen.

P.S no government or society of humanity has created or paid (or probably is ABLE to pay) for the world's most powerful supercomputer network - the hashing backbone of Bitcoin.

But the State has lent its hand to the manifestation of our current fractional reserve banking system, which employs quite a lot of resources itself, man and computer alike.

PS. Maybe this belongs in Bitcoin Discussion...

[rupertbg]

plus - why would people make a change to something that's the same as the thing they are changing from?

[robamichael]

plus - why would people make a change to something that's the same as the thing they are changing from?

Well, it is different.

As I suggested in the hypothetical, Govcoin is more user-friendly, and has the full endorsement of the political parties of the given territory. It also benefits the State in its design.

Even if not for the ergonomics, maybe other coins are ignored, dismissed, or outlawed by the State.

It's the same reason USPS is still around, and that we have public schools even though private ones exist.

[rupertbg]

maybe there is financial viability in banks using a cryptocurrency based system instead of current infrastructure to look after the transactions.. to enable them to mimic bitcoin in features such as international transactions. . but the transparency.. . and the philosophy . . and the very nature of the design . . . is kind of lost.. don't you think? like .. I'm sure they can come up with a better - more manipulated/able - alternative? which is what they would prefer of course. Being private profit-driven corporations. Anyway, the old money in banking will probably never understand what Bitcoin stands for. What world it shines a light on.

[robamichael]

maybe there is financial viability in banks using a cryptocurrency based system instead of current infrastructure to look after the transactions.. to enable them to mimic bitcoin in features such as international transactions. . but the transparency.. . and the philosophy . . and the very nature of the design . . . is kind of lost.. don't you think? like .. I'm sure they can come up with a better - more manipulated/able - alternative? which is what they would prefer of course. Being private profit-driven corporations. Anyway, the old money in banking will probably never understand what Bitcoin stands for. What world it shines a light on.

This is why I pose the question.

The new Govcoin currency would replace fiat, but not gold or Bitcoin.

It would not embody the fundamentals of sound money.

But, by the power of the State, it may succeed.


So if this were to occur, where would it first happen, and would it succeed?

[cbeast]

Governments are unable and unwilling to do anything in a decentralized nature. The current system is a fiat-based cryptocurrency issued by the central banks. You can see the addresses on your checkbooks and credit cards. Their best efforts have all but failed.

maybe there is financial viability in banks using a cryptocurrency based system instead of current infrastructure to look after the transactions.. to enable them to mimic bitcoin in features such as international transactions. . but the transparency.. . and the philosophy . . and the very nature of the design . . . is kind of lost.. don't you think? like .. I'm sure they can come up with a better - more manipulated/able - alternative? which is what they would prefer of course. Being private profit-driven corporations. Anyway, the old money in banking will probably never understand what Bitcoin stands for. What world it shines a light on.

Well said.

This is why I pose the question.

The new Govcoin currency would replace fiat, but not gold or Bitcoin.

It would not embody the fundamentals of sound money.

But, by the power of the State, it may succeed.


So if this were to occur, where would it first happen, and would it succeed?

Canada is trying to do this.

[Timo Y]

There is no need for a cryptocoin if it's centralized.  Just store the transaction ledger in a government database and be done with it.

[btcven]

Governments are unable and unwilling to do anything in a decentralized nature. The current system is a fiat-based cryptocurrency issued by the central banks. You can see the addresses on your checkbooks and credit cards. Their best efforts have all but failed.

maybe there is financial viability in banks using a cryptocurrency based system instead of current infrastructure to look after the transactions.. to enable them to mimic bitcoin in features such as international transactions. . but the transparency.. . and the philosophy . . and the very nature of the design . . . is kind of lost.. don't you think? like .. I'm sure they can come up with a better - more manipulated/able - alternative? which is what they would prefer of course. Being private profit-driven corporations. Anyway, the old money in banking will probably never understand what Bitcoin stands for. What world it shines a light on.

Well said.

This is why I pose the question.

The new Govcoin currency would replace fiat, but not gold or Bitcoin.

It would not embody the fundamentals of sound money.

But, by the power of the State, it may succeed.


So if this were to occur, where would it first happen, and would it succeed?

Canada is trying to do this.

MintChip (2012)

[Ichthyo]

Governments are unable and unwilling to do anything in a decentralized nature.

maybe there is financial viability in banks using a cryptocurrency based system instead of current infrastructure to look after the transactions.. to enable them to mimic bitcoin in features such as international transactions...

Its not that "they" aren't able to do it. Rather, ther is no point in doing so.
For a person trained in and accustomed to the conventional money system, a non centralised cryptocurrency will seem like a somewhat weird and artificially complicated construction. From a conventional POV, a cryptocurrency lacks those crucial features which makes the exising money so sweet for them.

On a related note, also I don't think that something like the Canadian MintChip was created out of desperation. Just to the contrary, those people feel that they have the power, and they think they create something really good for the general public. Kind of a win-win-win. Something which is "modern" and "innovative" and also lucrative and additionally even helps with improving "public security" and "fighting crime".


We shouldn't forget that (right now) we're a small niche community populated by all kinds of somewhat strange geeky folks.

[ErisDiscordia]

I don't see any reasons why any government (a centralized power structure) would want to create, encourage and use a decentralized currency, which they would have no control over. You could argue, that they might try to change it into something more beneficial to their purposes (being able to monitor transactions or suspend accounts for example), but at that point Greshams law goes into effect once again and people flock towards the superior alternative and we're back where we're started.

[ErisDiscordia]

but there's plenty of people in governments worldwide that genuinely try their best to make the world a better place and its unfair to tar them with a generic "evil bastard" brush.

If you get well-meaning people in government (and I feel certain you do) there's the underlying assumption that they'll not only be willing but able to effect change for the better through the force of government. There are a lot of problems with this assumption. First, their progress might be hindered by entrenched interests, which would buy them out or intimidate them into complacency. Also there is another assumption here: that it is possible for a person or entity to correctly gauge what people want and need. In my experience the higher up you go a hierarchical structure, the more distorted and meaningless information becomes. People with good intentions end up acting on incomplete and incorrect information.

See, my point is that I don't doubt that there's a lot of people who would want to use government to create change from which all (or most) would benefit. It does seem to me that government and power attracts sociopaths and the corrupt but I would feel stupid denying there are any people of good will involved. The obvious question to me is: if this is so, why haven't those people succeeded at least partially at least in some parts of the world for some of the time? Or have I missed some benevolent governments acting in the best interest of their citizens? If changing the people running the government doesn't produce change, maybe the problem aren't the people running the system but the system itself - see my point?

Also the whole thing is a spectrum. From the hypothetical end of total government control over every aspect of the lives of individuals (think 1984) to the hypothetical total absence of central control. When I see the world heading towards the centralized extreme I argue for the opposite path for the simple reason that freedom pleases me.

[ErisDiscordia]

I pretty much agree with your view there. The gap between government and the people has become unbearably great. In practice this means people are pretty much powerless to effect desired changes and people in position of authority don't know and/or don't care what people want/need and couldn't give it to them even if they wanted to. I put my hopes in the internet and the new options it provides as well. Maybe the internet will provide us with tools with which to finally test how well a real democracy works (if that happens I know where I'd place my bets ) and virtual currencies are obviously a fantastic thing for restoring power with the individual.

[yokosan]

I doubt this would happen by a single government. It would be a collaboration among nations, similar to the Euro.

[Qoheleth]

This is why I pose the question.

The new Govcoin currency would replace fiat, but not gold or Bitcoin.

It would not embody the fundamentals of sound money.

But, by the power of the State, it may succeed.


So if this were to occur, where would it first happen, and would it succeed?

Canada is trying to do this.

The Canadian solution has a fundamental weakness at the signature chips used for transfer. If one of those ever gets its private keys extracted, the person who did it may as well have stolen a Royal Mint printing press.

A more Bitcoin-like network, ironically, would give the government more control, inasmuch as it wouldn't have to put the access codes to create money in the hands of the users.

[Piper67]

This is why I pose the question.

The new Govcoin currency would replace fiat, but not gold or Bitcoin.

It would not embody the fundamentals of sound money.

But, by the power of the State, it may succeed.


So if this were to occur, where would it first happen, and would it succeed?

Canada is trying to do this.

The Canadian solution has a fundamental weakness at the signature chips used for transfer. If one of those ever gets its private keys extracted, the person who did it may as well have stolen a Royal Mint printing press.

A more Bitcoin-like network, ironically, would give the government more control, inasmuch as it wouldn't have to put the access codes to create money in the hands of the users.

Hey, a more Bitcoin-like network already exists! It's called... Wait for it... Bitcoin!