How Would "Government Coins" Be Different From The Financial System Today?

[Siegfried]

Today, most fiat currency is already stored and transacted electronically, so "govcoin" would offer no big change there. Are the people who say that government issued cryptocurrencies will challenge bitcoin suggesting that governments will give up the power to arbitrarily "print" money and instead submit to an algorithmically constrained money supply? Are they suggesting that governments will give up the power to regulate who can send and receive money where and when? Will they give up the power to confiscate money from people they dislike? Will they submit to the transparency and permanence of the blockchain? If the answer to these questions is no, then why would anyone consider govcoin a rival to bitcoin? Would superior attributes would it possess? Why raise this possibility in discussions of bitcoin's future?

[bitpop]

Centralized mining.

[Soliloguy]

The only short term scenario in which I can imagine a government virtual currency being a serious topic of conversation--in the US anyway--is if the (being glib here) goldbug libertarians take it up as their new weapon in anti-inflationary financial battle. Some of them (as an old precious metal bug I should say "some of us" here) naively hope/hoped gold and silver might, in some distant utopia, be reinstated as a base for national currency... now, bitcoin et al are designed to imitate that general principle in the internet age.

But in a more likely reality, bitcoin will slither into the markets and snag its meathooks in before those guys even finish reading the wiki...

Keep an eye on Canada though!

[Siegfried]

The only short term scenario in which I can imagine a government virtual currency being a serious topic of conversation--in the US anyway--is if the (being glib here) goldbug libertarians take it up as their new weapon in anti-inflationary financial battle. Some of them (as an old precious metal bug I should say "some of us" here) naively hope/hoped gold and silver might, in some distant utopia, be reinstated as a base for national currency... now, bitcoin et al are designed to imitate that general principle in the internet age.

But in a more likely reality, bitcoin will slither into the markets and snag its meathooks in before those guys even finish reading the wiki...

Keep an eye on Canada though!

I see it brought up quite frequently here in this forum.

[Siegfried]

Centralized mining.

That would be a very insignificant change from the current centrally-managed financial system with all its digital capabilities. It is an improvement in any way?

[Siegfried]

Why raise this possibility in discussions of bitcoin's future?

In order to provide a distraction.

Yes, I think so.

[Kazimir]

GovCoin = just the same as Euro or Dollar, except they have to put little more effort into creating them out of thin air. Not too much though, as they'll be the only ones allowed to mining them.

So, no thanks, I'll skip the centralized crap and stick with Bitcoin

[beetcoin]

government coins would say: hey guys, i know the limit to the number of coins to be mined is xxxx, but we really need to create more of them because.. well, just because we said so. and once we create them, they will go into the hands of our friends.

[QuestionAuthority]

It's a sad statement toward governments that people would rather trust a bunch of complete strangers worldwide with their money before trusting their government. I hope government bureaucrats realize that support for Bitcoin type concepts mean that their people hate and distrust them.

[Siegfried]

It's a sad statement toward governments that people would rather trust a bunch of complete strangers worldwide with their money before trusting their government. I hope government bureaucrats realize that support for Bitcoin type concepts mean that their people hate and distrust them.

Unfortunately politicians and government bureaucrats tend to be some of the least-in-touch-with-reality people out there.

[QuestionAuthority]

It's a sad statement toward governments that people would rather trust a bunch of complete strangers worldwide with their money before trusting their government. I hope government bureaucrats realize that support for Bitcoin type concepts mean that their people hate and distrust them.

Unfortunately politicians and government bureaucrats tend to be some of the least-in-touch-with-reality people out there.

Very true.

[Kazimir]

It's a sad statement toward governments that people would rather trust a bunch of complete strangers worldwide with their money before trusting their government.

NO, NO, NO!

Bitcoin users are not trusting "complete strangers" with their money. They're trusting cryptography and mathematical laws with their money.

[QuestionAuthority]

It's a sad statement toward governments that people would rather trust a bunch of complete strangers worldwide with their money before trusting their government.

NO, NO, NO!

Bitcoin users are not trusting "complete strangers" with their money. They're trusting cryptography and mathematical laws with their money.

Really? Do you program? Are you well versed in public-key cryptography? Do you fully understand the Hashcash proof-of-work system? Are you capable of reading the current code in this download and understanding exactly what it's doing https://codeload.github.com/bitcoin/bitcoin/zip/master or do you trust that someone like a more knowledgeable stranger is keeping you safe?

[bitpop]

It's a sad statement toward governments that people would rather trust a bunch of complete strangers worldwide with their money before trusting their government.

NO, NO, NO!

Bitcoin users are not trusting "complete strangers" with their money. They're trusting cryptography and mathematical laws with their money.

Really? Do you program? Are you well versed in public-key cryptography? Do you fully understand the Hashcash proof-of-work system? Are you capable of reading the current code in this download and understanding exactly what it's doing https://codeload.github.com/bitcoin/bitcoin/zip/master or do you trust that someone like a more knowledgeable stranger is keeping you safe?

Question Authority

[Kazimir]

Really? Do you program? Are you well versed in public-key cryptography? Do you fully understand the Hashcash proof-of-work system? Are you capable of reading the current code in this download and understanding exactly what it's doing https://codeload.github.com/bitcoin/bitcoin/zip/master or do you trust that someone like a more knowledgeable stranger is keeping you safe?

Actually, the answers to those questions are: yes, yes, yes, yes, yes, and no.

But even for those that are not deeply into mathematics, programming, or cryptography, it's still very trustworthy that rather than just having trust to a single person, company or authority, instead you can now rely on literally thousands of independent programmers, hackers, mathematicians, cryptography experts, and other dedicated and very knowledgeable people from all over the world who are closely examining Bitcoin from every angle.

[QuestionAuthority]

Really? Do you program? Are you well versed in public-key cryptography? Do you fully understand the Hashcash proof-of-work system? Are you capable of reading the current code in this download and understanding exactly what it's doing https://codeload.github.com/bitcoin/bitcoin/zip/master or do you trust that someone like a more knowledgeable stranger is keeping you safe?

Actually, the answers to those questions are: yes, yes, yes, yes, yes, and no.

But even for those that are not deeply into mathematics, programming, or cryptography, it's still very trustworthy that rather than just having trust to a single person, company or authority, instead you can now rely on literally thousands of independent programmers, hackers, mathematicians, cryptography experts, and other dedicated and very knowledgeable people from all over the world who are closely examining Bitcoin from every angle.

Your cross discipline knowledge puts you in a very tiny minority. Add an understanding of economics and finance to your bag of tricks and you would be a member of a group that you could count on one hand. There are millions of people watching government and nothing changes in the corrupt systems of the world. That was my point. It's sad that people would rather trust a select few unregulated private citizens than their own government.

[Dr Bloggood]

It's a sad statement toward governments that people would rather trust a bunch of complete strangers worldwide with their money before trusting their government.

+1

That's how far we have come.

Although the overwhelming majority of people still trust their governments - but I expect that to change rather soon. Watch out for what will happen to the price of BTC then...

[fruitbat]

Dream big. First, assume that crypto isn't suppressed by force - monopoly of force is broken, at least temporarily. Then what happens if crypto wins? Fiat starts failing, but then...

...people will still demand "centralized government services" of some sort. How do you account for those?

Solution A: Private markets entirely trading in decentralized crypto.
Solution B: Government operates in crypto balances.

Sol. A eventually resembles Sol. B when a single party gets big enough. Either way, once you have a big actor, the incentive to take control of currency again rises anew - write out debt, impose market controls, etc. Thus we get a govcoin as Solution C: Centralized, uses strong identity, cuts the majority of today's bureaucracy. It can be 99%+ digital with paper as an "emergencies only" backup. This means...

...the economy can be tuned in ways unavailable to both fiat and decentralized systems. "Money supply" is a crude tool for managing transaction flow - it's abolished in favor of a pastiche of sinks, generators, taxations, records, rules and rewards as seen in online digital games. It can play sort of like capitalism, but with increasingly little drudgery exposed to humans, and made more efficient and motivating besides. I would note that there are already exchanges between game assets and crypto - the games are good enough to make people sit there clicking for hours, they need only be repurposed and scaled up to animate the larger economy. The only limit to their specific design is your imagination.

But how do people end up preferring the new govcoin over crypto if they start in crypto? Through the same mechanisms as the "free" model of today's popular online services. The coin and the associated rights and services are issued to you in exchange for your identity. Proven, well-understood marketing mechanism; may be done without your consent, via the existing institutions that track you. And as long as the government works for you, you play within its rules, no matter how arbitrary. When it starts failing, you go back to crypto, just like how older economies cycled between gold and fiat.

Recall that we are assuming monopoly on force is broken. But force is likely to be increasingly accessible to individuals in the future; if they don't already have a weapon, they will have tools that can make one. So the monopoly that will matter is monopoly of information - finding out who is dangerous. Governments will assume the worst of someone who isn't within their systems and subject to monitoring, so they will, sooner or later, start pressuring people to enroll. This doesn't, however, stop people from being a non-participant in the economic game the government is providing. The old tensions will continue to exist, but the mechanism to signal loss of faith will be through speculation on crypto assets. Governments will start moving at the speed of technology, because they will have to - if they want to be competitive.

So as I see it, govcoin is in all facets anticipated by existing systems and technologies; crypto is the mechanism that motivates its reification as a concept worthy of discussion. The two are already in competition with each other, but crypto is surging ahead right now, as we still discuss both in the dying language of industrial capitalism.

[Impaler]

Well on a basic level it would make the 'hardness' of BTC and the 'softness' of the USD the only principle difference between the two and we would get to see these two economic paradigms battle it out on a more level playing field. 

Some people focus on the 'instant', 'digital', 'cryptographic' nature of BTC, if that is your primary focus then you would not expect BTC to be competitive once government co-ops thouse features.  If you focus on 'limited supply', 'deflation', 'lack of central banking' then BTC would retain it's core advantages compared to a governmental crypto currency managed according to current practices.

[selavy59]

GovCoin = just the same as Euro or Dollar, except they have to put little more effort into creating them out of thin air. Not too much though, as they'll be the only ones allowed to mining them.

So, no thanks, I'll skip the centralized crap and stick with Bitcoin

The likes of you and I and most on this forum would prefer Bitcoin. However, the great unwashed would prefer bankster/gov backed fraudcoins. There is just no stopping people being stupid.