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Author Topic: [2017-12-27] 5 Reasons the Fed Needs a Bitcoin-Style Currency  (Read 29 times)
bbc.reporter
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December 27, 2017, 02:17:05 AM
 #1

I can think of some reasons that it is not a good idea to create a fedcoin. Two of those reasons are fungibility and privacy. Look at reason no. 3. Is that really a good idea for the common users?

I also disagree with the article's title. It should be Paypal-style, not bitcoin-style.



1) Fed Coin Would Be a Useful Tool to Stimulate the Economy

In the last financial crisis, the Federal Reserve bought assets like bonds and mortgages to pump liquidity into the economy. The policy appears to have worked, but it was not especially fast or efficient. If the Fed had a blockchain-based money supply instead, it could stimulate the economy more directly.

“A national cryptocurrency such as fedcoin would be able to operationalize Milton Friedman’s famous “helicopter cash” as an alternative strategy to stimulate the economy. A single line of code could instantly put $1,000 into every person’s wallet.”

2) Digital Currency Is More Efficient and Secure

Blockchain-based currency (including bitcoin) relies on an indelible ledger that shows who sent and received money, and when those transactions occur.

The Federal Reserve, of course, also records transactions, in part through the international money transfer system known as SWIFT. But a blockchain system would be superior: “Digital transactions are quick, cheap and potentially a lot more secure than the system we have today.”

3) It Would Be Harder for Criminals to Hide Money

“When police first captured infamous drug lord Joaquín “El Chapo” Guzmán, they also discovered a cash hoard including more than $200 million, mainly in $100 notes,” Harvey notes. This underscores how cash is anonymous compared to crypto-currencies like bitcoin, which leave a digital transaction trail (though some currencies like Zcash may be truly anonymous).

If the U.S. government got out of the business of printing $100 bills, and relied on a blockchain to circulate its supply of money, it would be harder for the El Chapos of the world to stash their wealth.

4) It’s Easier to Impose Negative Interest Rates

Recall how the central bank lowers interest rates to stimulate the economy and stave of deflation. But if interest rates fall to zero, the Fed’s influence falls since people may choose to just keep their money in cash rather buy a security with a negative interest rate.

Harvey suggests this would not be the case if the central bank had Fed Coin: “With a national cryptocurrency, whose supply is controlled by the central bank, rates can be negative.” (He leaves aside the question of whether negative interest rates are ever a good idea).

5) Cash is Going Away Anyways

A shrinking number of people are using cash—stores like the salad chain Sweetgreen don’t even accept it, while cash is disappearing altogether in countries like Sweden. Meanwhile, central banks from Singapore to Canada are experimenting with blockchain technology as a way to control the money supply.

In other words, society is heading towards a digital currency world anyways, so the Fed might as well get going with Fed Coin sooner than later. Yes, we already move money around on the Internet through banks and clearinghouses, but putting the country’s currency on a blockchain would be more efficient still.


Read the article http://fortune.com/2017/12/26/bitcoin-fed-coin/

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December 27, 2017, 02:59:53 AM
 #2

With this kind of cryptocurrency it still does not look like its not vulnerable to abuse. I mean criminals could still choose other methods outside of it as Bitcoin and other cryptocurrencies is still widely available. With the promotion of interest rate in the system of the Fedcoin don't you think that the rich will still take advantage of it and hoard the cryptocurrency? Because without any limitation they can have all the Fedcoin they want and play the prices just like what they are doing to Bitcoin.

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December 27, 2017, 03:00:38 AM
 #3

I really don’t see any point to a fedcoin. It is what we have except coopting the buzzwords of bitcoin and block chain.  It is a stupid concept used to try to fool people into a block chain based fiat system.
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December 27, 2017, 06:27:34 AM
 #4

Ha ha... All these are prefect reasons for people not to use Fedcoin, if at all such a project takes off.
1) Useful coin to simulate economy --> Easier for the government to debase your money, when compared to fiat
2) Harder for criminals to hide money --> No privacy for common users
3) Easier to Impose Negative Interest Rates --> Government can easily loot you.


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December 28, 2017, 01:16:46 AM
 #5

I really don’t see any point to a fedcoin. It is what we have except coopting the buzzwords of bitcoin and block chain.  It is a stupid concept used to try to fool people into a block chain based fiat system.

Read points from 1 to 5 in my post. That is the whole point of fedcoin.

@aso118 said it best. It will be there for the purpose of easy control over the financial system and of course that will make it also easier to control their citizens' wealth.

In any case, it is made more for their benefit not ours, while they dangle all those features trying to make us think it is better than cryptocoins like bitcoin or an anonymous coin like Monero.


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