Why not a USD CBDC?

[legiteum]

In human history, politics often does strange things to the progress of technology, often leaving us stuck with obsolete methods and inefficient markets for far too long.

To take two examples, there was the original AT&T monopoly, in which the US government gave AT&T a total monopoly on telecommunications in the US. When the laws were changed and AT&T was finally allowed to break up, this new thing (you might have heard of) called the "Internet" sprang into life. Another example is the regulation of airlines back in the day, which kept ticket prices high and flexibility low.  And there are no doubt thousands of other examples.

The point here is this: sometimes the reason we don't innovate as a society can be chalked up to "politics".

Today, I see the same thing happening with the popular public discussions of the US offering a digital currency.

Physical paper and metal currency is an anachronism in the year 2024. Digital devices are ubiquitous today, and we're getting to the point where retailers are refusing to use this old means of value transfer because it is less safe and more expensive to administer. Physical cash, in other words, is going the way of horses for transportation and US mail for the sending of letters.

It would make sense, therefore, that the US government quickly move to creating a digital version of the US Dollar. Eventually, it should actually eliminate paper and metal currency entirely because this is expensive and cumbersome to operate.

And yet there seems to be a lot of political "noise" around this very obvious technological change--as if changing the technical means of moving US Dollars around will somehow change American society or something. I simply don't get that.

What is wrong with the US replacing paper and metal instruments with a digital one? What are the arguments against a USD CBDC?

[Dunamisx]

What is wrong with the US replacing paper and metal instruments with a digital one? What are the arguments against a USD CBDC?

The number one aim of every government will be to have control over the currency circulation and regulate its usage in their own favour and not the people's interest, their initial plan was to engage the people with the shift of interest from cryptocurrency to their own CBDC, but the truth is that the people realized what they want and knows the difference from what a digital fiat is from the government controlled digital fiat.

[legiteum]

What is wrong with the US replacing paper and metal instruments with a digital one? What are the arguments against a USD CBDC?

The number one aim of every government will be to have control over the currency circulation and regulate its usage in their own favour and not the people's interest, their initial plan was to engage the people with the shift of interest from cryptocurrency to their own CBDC, but the truth is that the people realized what they want and knows the difference from what a digital fiat is from the government controlled digital fiat.

But governments already control their own currency circulation. What difference would making it digital make?

And could a CBDC effect cryptocurrencies or other digital currencies? Bitcoin is valued at over a trillion dollars, and almost nobody uses it as a currency, rather, it's just an investment instrument for most people.

I think you are right that people will know that a digital US Dollar would still just be a US Dollar, which would be the whole point. Why is that an argument against a CBDC?

[OgNasty]

But governments already control their own currency circulation. What difference would making it digital make?

It gives them a lot more control.  They can do things like issue stimulus payments to your account and give them a date when they have to be spent or the money disappears.  They could even start doing this with your paychecks to make sure nobody can save or obtain property.  They could limit your spending by your social score or carbon footprint.  The only thing stopping them from this type of idiocy now is cash, and they're working hard to get rid of that.  It's no wonder they've got Blackrock buying up all the BTC so that people have to use custodial options which can be confiscated.  Make no mistake about it.  Mankind is under attack by big government.  Protect yourself and your family's future.

[legiteum]

But governments already control their own currency circulation. What difference would making it digital make?

It gives them a lot more control.  They can do things like issue stimulus payments to your account and give them a date when they have to be spent or the money disappears.  They could even start doing this with your paychecks to make sure nobody can save or obtain property.  They could limit your spending by your social score or carbon footprint.  The only thing stopping them from this type of idiocy now is cash, and they're working hard to get rid of that.  It's no wonder they've got Blackrock buying up all the BTC so that people have to use custodial options which can be confiscated.  Make no mistake about it.  Mankind is under attack by big government.  Protect yourself and your family's future.

Account? What account? If it's digital cash, there would be no "accounts". You are thinking of a bank, etc. Insofar as its just a replacement for physical cash, there would be no identity attached to it.

And since almost everybody already gets their paycheck digitally, all of those things you say a government could do with a CBDC they could be doing already if they wanted to.

And almost everybody uses Bitcoin through a broker or an app, so it's hardly Blackrock causing this. It's just the way most people like to use Bitcoin--they don't really care about evading the government.

But if you want to evade the government, there are products like Monera to do that. That's not what a CBDC or any centralized digital currency or any currency with a public ledger (e.g. Bitcoin) would do.

[coolcoinz]

Some things to consider:

Why should people agree to the government taking away their cash? How would this happen? Would they be told that they have until January to put all cash in the bank because later it won't be accepted? What if someone inherits a house and finds cash inside? What if someone's grandparent was saving cash and you find out after the launch of CBDC?

Many people, me included, would see that as attack on freedom and privacy. I wouldn't want the government to know what I'm spending my money on.
CBDC will open a new options for the government. They'll be able to say that they don't want you to do this or that and will make the digital cash unusable in certain places or for certain goods and services.
They don't want you to donate to certain organizations - done. They don't want you to visit certain countries - done. They don't want you to drink alcohol, or eat sugar - done. I know these are extreme, but certainly possible situations.

[legiteum]

Some things to consider:

Why should people agree to the government taking away their cash?

Who is talking about the government taking away anybody's cash? Creating a CBDC would be no different than coming out with a new design of the hundred dollar bill.

I wouldn't want the government to know what I'm spending my money on.

How would this change anything? Remember that today, most large payments are done through banks, e.g. with credit cards and the like. Hence the government doesn't know unless they subpoena the transaction (which would be no different with a CBDC), but the banks and marketers do get to know about the transaction without any subpoena at all.

They don't want you to donate to certain organizations - done. They don't want you to visit certain countries - done. They don't want you to drink alcohol, or eat sugar - done. I know these are extreme, but certainly possible situations.

When was the last time you donated to an organization... by hauling some physical cash to them? I think this conversation needs to come back down to Earth, folks...

[btcinfo891]

Account? What account? If it's digital cash, there would be no "accounts". You are thinking of a bank, etc. Insofar as its just a replacement for physical cash, there would be no identity attached to it.

There will be wallets for the CBDCs. The wallet balances will be kept in a centralized government-controlled database and those wallets will be created by the government, which means that most likely those wallets won't be anonymous.

For practical purposes these CBDCs will be same as the electronic money provided by the commercial banks to the banks' clients. That is there will be almost no difference between the electronic money accessed through the debit/credit cards and the CDBC accessed through the corresponding mobile/desktop application.

The only peculiarity will be that the bank's electronic money are handled by a commercial bank and the CBDCs will be handled by the national bank and/or another government institution created specifically for that purpose.

So in a nutshell - there will be "accounts" and the government will have total and immediate control over the so called "digital cash". They will be able to track every purchase and lock anyone out of their "cash" in the blink of an eye. Obviously that is not possible with the current paper cash.

[legiteum]

Account? What account? If it's digital cash, there would be no "accounts". You are thinking of a bank, etc. Insofar as its just a replacement for physical cash, there would be no identity attached to it.

There will be wallets for the CBDCs. The wallet balances will be kept in a centralized government-controlled database and those wallets will be created by the government, which means that most likely those wallets won't be anonymous.

Why would that be? They could implement it any way they wanted, and adding an identity like that would actually be harder to do.

If they did it like we do at Haypenny, one could implement a wallet any way one wanted to, including totally anonymously e.g. a client-side wallet.

At the end of the day, the CBDC will be, like everything else, something Congress does, and they could vote to keep privacy or not. Most likely in the USA, they would vote to to make it a simple replacement for paper and metal currency and nothing else.

If they proposed accounts, like you are saying, then we would all oppose that (and what would be the difference between that and credit cards?), but if a country does a digital currency that works just like a physical one, then what would be the problem?

[btcinfo891]

Account? What account? If it's digital cash, there would be no "accounts". You are thinking of a bank, etc. Insofar as its just a replacement for physical cash, there would be no identity attached to it.

There will be wallets for the CBDCs. The wallet balances will be kept in a centralized government-controlled database and those wallets will be created by the government, which means that most likely those wallets won't be anonymous.

Why would that be? They could implement it any way they wanted, and adding an identity like that would actually be harder to do.

The way they are designing the European CBDC (aka the "digital euro") it is not going to be anonymous.
Here https://www.ecb.europa.eu/euro/digital_euro/how-it-works/html/index.en.html they say

The first step would be to set up your digital euro wallet through your bank. But you could also go to a designated public authority, for example a post office, to do this.

And in the document on the "Digital euro Privacy options"
https://www.ecb.europa.eu/euro/digital_euro/timeline/profuse/shared/pdf//ecb.degov220404_privacy.en.pdf
they say

User anonymity is not a desirable feature, as this would make it
impossible to control the amount in circulation and to prevent money
laundering.

So for those living in EU the digital euro will be just another bank account, albeit with the central bank. As far as I know the Russian CBDC is not going to be anonymous either. I don't know about the US CBDC but I wouldn't be surprised if they model it after the so called "digital euro".

So yeah, the way it is planned at the moment, it is not much better than the regular credit/debit card.

I will be happy if someone proves me wrong.

[Hispo]

Account? What account? If it's digital cash, there would be no "accounts". You are thinking of a bank, etc. Insofar as its just a replacement for physical cash, there would be no identity attached to it.

There will be wallets for the CBDCs. The wallet balances will be kept in a centralized government-controlled database and those wallets will be created by the government, which means that most likely those wallets won't be anonymous.

Why would that be? They could implement it any way they wanted, and adding an identity like that would actually be harder to do.

If they did it like we do at Haypenny, one could implement a wallet any way one wanted to, including totally anonymously e.g. a client-side wallet.

At the end of the day, the CBDC will be, like everything else, something Congress does, and they could vote to keep privacy or not. Most likely in the USA, they would vote to to make it a simple replacement for paper and metal currency and nothing else.

If they proposed accounts, like you are saying, then we would all oppose that (and what would be the difference between that and credit cards?), but if a country does a digital currency that works just like a physical one, then what would be the problem?

If you pay attention on the tendency regulators have when comes to digital services which involve management of money and wiring money, then you would realize KYC and anti money laundering measures are obligatory, the implementation of the CBDC by the United States and the European Union will not be the exception. Even if it is possible to make the CBDC to function in an anonymous way as cash already does, it is not within the interest of the governments of those countries to allow anonymity to become the norm when comes to transactions of FIAT, that is why I am very certain those wallets won't be anonymous but linked to our personal identity.
The danger comes when there is the implicit tentation to gather information on what we spend money in, how much we earn, how much we save month, etc. Only the information on what we spend money in would be a gold mine for a company like Google, Microsoft or Facebook/Meta, so they can step up even more their targeting ads and make more money out of them.

That is an implicit danger against our privacy many are not willing to accept just for a bit more con convenience.

[legiteum]

The danger comes when there is the implicit tentation to gather information on what we spend money in, how much we earn, how much we save month, etc. Only the information on what we spend money in would be a gold mine for a company like Google, Microsoft or Facebook/Meta, so they can step up even more their targeting ads and make more money out of them.

That is an implicit danger against our privacy many are not willing to accept just for a bit more con convenience.

That is what the big banks and big tech companies are already doing because people use credit cards and banks sell your information. That "implicit danger" has already been accepted by consumers--including most holders of Bitcoin since they mostly use centralized apps and brokers who act just like any bank or tech company acts.

All the anti-CBDC hype is doing, as near as I can tell, is drawing attention to something that is... already happening and has been happening for years--but is actually worse than what people say will happen since it's unregulated private companies doing this to people.

All that said, this whole discussion makes me question whether CBDCs are even necessary when a private high-scale digital currency would accomplish the same thing for consumers. Maybe that future we all expect where there is no longer paper money or metal coins will happen without the help of governments. In other words, maybe USD will just be the measurement mechanism, but the actual technical means of transfer will be something we tech people invent.

At Haypenny, we have the "USD equivalent (USDE)" concept, which allows users to just show USD values for everything, with the currency's value being calculated in the on the fly (our system has to have this value around because transactions must always cost "a haypenny", which is $0.005, which means we need to know the USD exchange rate for every currency so we can charge the transaction fee).

So I've come full circle here .

Store your wealth in an account that takes positions in a variety of investment instruments based on your view of what will be the most valuable in the future, and convert that to a widely accepted, private, privacy-enhanced digital currency when you want to spend some of it at the retail level. And keep track of it all in "USDE" so you know how much things costs, how much you are getting paid, and how wealthy you are.

That is the future: USD stays around forever (and becomes even more predominant, worldwide, than it is today), but only as a measurement standard and nothing else. And on a day to day basis everybody transacts in digital currency as the technical transaction mechanism.