Ecuador: There's no *new* digital currency

[EcuaMobi]

Just an update:

Accounts can be created since December 2014. However they can be really used to send and receive money since last week.

At the moment there are only ~7,000 accounts so it's not very popular at all.

200 points among banks, restaurants, stores accept the electronic dollars. However most of them haven't made a single transaction yet.

Let's see how this goes. Apparently there won't be a significant change.

The possibility of rapid increase in price, universal acceptance, large community - these are things which make Bitcoin successful.
Somebody should tell the Ecuador government that.

Governments won't be willing to give up control of the currency.

I'm sure they care more about being able to 'print' digital currency than to take advantage of the features of bitcoin.

[polynesia]

Governments won't be willing to give up control of the currency.
I'm sure they care more about being able to 'print' digital currency than to take advantage of the features of bitcoin.

In this case, they are actually being able to print digital dollars.
This is something they wouldn't have thought possible previously.

[EcuaMobi]

Governments won't be willing to give up control of the currency.
I'm sure they care more about being able to 'print' digital currency than to take advantage of the features of bitcoin.

In this case, they are actually being able to print digital dollars.
This is something they wouldn't have thought possible previously.

Well in fact banks have been doing that all over the world for a long time.

As I mentioned in OP:
https://www.youtube.com/watch?v=Hg_1iXbIjFQ

The Ecuadorian Government wants to have the biggest bank of the country and the benefits that come with it.

[Reynaldo]

Specific cryptos for countries is a dumb concept, as demonstrated by AUR and the rest of knockouts. We have Bitcoin, a currency for planet earth. Everything else is deprecated.

Specific cryptos for counties would be a very good idea imho, it would make trading in and out of fiat a hell of a lot quicker and simpler but if cryptos really take off it could be very important. In a worst case scenario it could destabilise nations risking poverty for millions so they should really be a considering implementing them. Governments have the monopoly on taxation and could issue without the cost of middlemen, a transparent system based on previously successful uses of scrip could hugely increase cost effectiveness, efficiency and trust.

Thanks for clearing that up EcuaMobi, sounds like they're doing it all wrong but news was kind of vague.

I still dont see the point, just use Bitcoin and stop mentally masturbating with useless alts IMO.

not every altcoin is useless .. darkcoin is implementing really good protocols and ideas that could be implemented in the future onto the bitcoin chain, storj with a decentralized cloud storage that uses bitcoin mechanism is so revolutionary that im following the project.. it just takes a good eye to see them.

[dinofelis]

And now they can print dollars. That's what they have been eager to do all the time.

No, now they make their population BELIEVE that they can print dollars.

The point however, is, that if you want to use these "dollars" abroad, people will want to see REAL dollars.  So or the CB of Equador has a significant stock of real US dollars, or these points they call dollars are just a make-believe.  Now, as every monetary asset has this make-believe in it, there's nothing really wrong with that, but I wonder whether they really "print dollars".

I could do that too, you see.  In my town, I could set up a server to which I allow people to access with their phones, and have "points" on them which I call "dollars" or "Euros".  As long as people are selling stuff TO ONE ANOTHER and use their accounts, they may believe they are actually using dollars or Euros, and adopt prices as if they were.

However, the day that they want to purchase oil from Saoudi Arabia, I'm not sure that the Saoudis will accept points on my server as "dollars" or "Euros"

They might go to a bank, or an exchange, to exchange their "server dollars" into bank dollars, but then an exchange rate will be installed...  So then they will see that their "points on my server" are only worth $0.01 or so
(not 0, because after all, you CAN buy bread at the bakers' in my town with it...)

[dinofelis]

Governments won't be willing to give up control of the currency.
I'm sure they care more about being able to 'print' digital currency than to take advantage of the features of bitcoin.

In this case, they are actually being able to print digital dollars.
This is something they wouldn't have thought possible previously.

Well in fact banks have been doing that all over the world for a long time.

As I mentioned in OP:
https://www.youtube.com/watch?v=Hg_1iXbIjFQ

The Ecuadorian Government wants to have the biggest bank of the country and the benefits that come with it.

The point is that banks are doing this, but these banks that do this, do that with the agreement of the central bank issuing the money we're talking about.  The Ecuadorian government is trying to play "American bank" without committing to the regulations issued by the FED.  They behave like a rogue bank.  After all, the printing possibility of a US bank comes from the fact that they have an agreement with the FED: people trust an American bank because they have a reserve at the FED, and because the dollar is imposed as legal tender in the USA. 
The points on the Equadorian accounts will be legal tender in Equador if the Equadorian government asks taxes in these points, and within Equador, these points will be "national money", but they will not be redeemable against GENUINE dollars abroad, if the Equadorian CB doesn't have sufficient reserve dollars to honor all redeeming of points into actual dollars.
An American bank doesn't suffer from that problem because it is supported by the FED.  But the Equadorian CB isn't.
So these points will FLOAT against the dollar, as if it were an independent currency.  Ans because the Equadorian CB cannot print actual dollars, in contrast to the FED, it has a finite reserve of $$, and if it uses that reserve to sustain the course of points against $$, it will end up not having any any more.  The FED can print $$, but the Equadorian CB can't.  It can issue POINTS.  It can make believe that it are dollars.  But it can't ISSUE dollars.  It can make believe it issues dollars by getting real dollars out of its reserve.  But that will only last so long.

[dinofelis]

Governments won't be willing to give up control of the currency.

I'm sure they care more about being able to 'print' digital currency than to take advantage of the features of bitcoin.

Absolutely.  It doesn't make sense to have a centralized decentralized currency

If the idea is to have central control and accountability, then there is no NEED for the bitcoin protocol.  The whole cryptostuff was incorporated in bitcoin just to be able to get rid of central control.  If there is central control, there's no need for mining, there's no need for difficulty, there is no need for nodes or this or that.

After all, the central authority can play "miner" but without the difficulty.  It can make public a block chain, but without difficulty, and PUBLISH simply the hash of the last centrally approved block.  Everybody can then check that the block chain corresponds to that hash, and can see all transactions in it.  As the central authority is to be trusted (voluntary, or by force), there's no need for the mining competition.  The central authority would also have a protocol to choose the "block reward", and as such issue more or less coins.

A "statecoin" would be a simplified version of bitcoin.  It would be a total disaster if imposed.  The central authority could see all transactions, cash couldn't exist, and we would be at the opposite of what bitcoin stands for.

[NUFCrichard]

Governments won't be willing to give up control of the currency.

I'm sure they care more about being able to 'print' digital currency than to take advantage of the features of bitcoin.

Absolutely.  It doesn't make sense to have a centralized decentralized currency

If the idea is to have central control and accountability, then there is no NEED for the bitcoin protocol.  The whole cryptostuff was incorporated in bitcoin just to be able to get rid of central control.  If there is central control, there's no need for mining, there's no need for difficulty, there is no need for nodes or this or that.

After all, the central authority can play "miner" but without the difficulty.  It can make public a block chain, but without difficulty, and PUBLISH simply the hash of the last centrally approved block.  Everybody can then check that the block chain corresponds to that hash, and can see all transactions in it.  As the central authority is to be trusted (voluntary, or by force), there's no need for the mining competition.  The central authority would also have a protocol to choose the "block reward", and as such issue more or less coins.

A "statecoin" would be a simplified version of bitcoin.  It would be a total disaster if imposed.  The central authority could see all transactions, cash couldn't exist, and we would be at the opposite of what bitcoin stands for.

I think it was the economist that had an article about the prospect of Greece adopting bitcoin.  I agreed with their point that it would be a bad idea for any country to adopt a highy defaltionary currency such as bitcoin, as well as being against what cryptocurrencies are about.  Crypto is internet money, it is the money of the people, it is like Wiki and Reddit, it doesn't need to be printed out and adopted by the old media.  Ecuador should probably loosen their crypto controls and their economy could become a bitcoin, or Ecuadorcoin hub in the future, right now they are probably best off sticking with the USD.

[EcuaMobi]

Governments won't be willing to give up control of the currency.
I'm sure they care more about being able to 'print' digital currency than to take advantage of the features of bitcoin.

In this case, they are actually being able to print digital dollars.
This is something they wouldn't have thought possible previously.

Well in fact banks have been doing that all over the world for a long time.

As I mentioned in OP:
https://www.youtube.com/watch?v=Hg_1iXbIjFQ

The Ecuadorian Government wants to have the biggest bank of the country and the benefits that come with it.

The point is that banks are doing this, but these banks that do this, do that with the agreement of the central bank issuing the money we're talking about.  The Ecuadorian government is trying to play "American bank" without committing to the regulations issued by the FED.  They behave like a rogue bank.  After all, the printing possibility of a US bank comes from the fact that they have an agreement with the FED: people trust an American bank because they have a reserve at the FED, and because the dollar is imposed as legal tender in the USA. 
The points on the Equadorian accounts will be legal tender in Equador if the Equadorian government asks taxes in these points, and within Equador, these points will be "national money", but they will not be redeemable against GENUINE dollars abroad, if the Equadorian CB doesn't have sufficient reserve dollars to honor all redeeming of points into actual dollars.
An American bank doesn't suffer from that problem because it is supported by the FED.  But the Equadorian CB isn't.
So these points will FLOAT against the dollar, as if it were an independent currency.  Ans because the Equadorian CB cannot print actual dollars, in contrast to the FED, it has a finite reserve of $$, and if it uses that reserve to sustain the course of points against $$, it will end up not having any any more.  The FED can print $$, but the Equadorian CB can't.  It can issue POINTS.  It can make believe that it are dollars.  But it can't ISSUE dollars.  It can make believe it issues dollars by getting real dollars out of its reserve.  But that will only last so long.

I see your point partially, mainly the part that Ecuador can't print actual bills so if they issue too any digital dollars there's a chance people won't be able to redeem all of them. Let's hope that doesn't happen.

However it doesn't make sense to say it doesn't have an agreement with the FED. Of course it doesn't, only US banks need to be authorized by US authorities. Ecuadorian banks are approved by Ecuadorian authorities.

The Government of Ecuador was authorized by the Government of US to have US dollars as official currency and legal tender. And the Government of Ecuador approves all banks in Ecuador including this new system, certainly not the FED.

[Erdogan]

And now they can print dollars. That's what they have been eager to do all the time.

No, now they make their population BELIEVE that they can print dollars.

The point however, is, that if you want to use these "dollars" abroad, people will want to see REAL dollars.  So or the CB of Equador has a significant stock of real US dollars, or these points they call dollars are just a make-believe.  Now, as every monetary asset has this make-believe in it, there's nothing really wrong with that, but I wonder whether they really "print dollars".

I could do that too, you see.  In my town, I could set up a server to which I allow people to access with their phones, and have "points" on them which I call "dollars" or "Euros".  As long as people are selling stuff TO ONE ANOTHER and use their accounts, they may believe they are actually using dollars or Euros, and adopt prices as if they were.

However, the day that they want to purchase oil from Saoudi Arabia, I'm not sure that the Saoudis will accept points on my server as "dollars" or "Euros"

They might go to a bank, or an exchange, to exchange their "server dollars" into bank dollars, but then an exchange rate will be installed...  So then they will see that their "points on my server" are only worth $0.01 or so
(not 0, because after all, you CAN buy bread at the bakers' in my town with it...)

You are right of course they are not real dollars, let us call them EE (Ecuador Electronic) dollars.

The issuer will say to potential users that they are as good as normal dollars. Then they will peg them to the dollar. They may put some reserves behind them, but if the project is successful, those reserves may start to dwindle. There will be lots of restrictions I suppose, every transaction is connected to a name for tax purposes, there will be volume limits in conversions and so on. But if successful, seignorage will go to the state. In the end, the peg will break, the EE dollars might be pegged to a lower level etc, just like with normal fiat in cleptocratic countries.

Take away point: It is a fiat system, a source of income for the state. The inhabitants may or not find that using them is advantageous.

[calme]

Perhaps civil wars will start breaking out in various countries in the future, as outcomes of rebellions of citizens pressing for separation of money and state.

[Erdogan]

If the new currency is so popular that it takes over for dollars in Ecuador, and they manage to keep the peg, the government will have an income stream which is inflation plus growth. In the current situation, the US government earns that income, and they hate it, of course.

[EcuaMobi]

If the new currency is so popular that it takes over for dollars in Ecuador, and they manage to keep the peg, the government will have an income stream which is inflation plus growth. In the current situation, the US government earns that income, and they hate it, of course.

The US gets the income even now without any digital currency just for the fact we use the actual US dollars in Ecuador.
The FED prints dollars and benefit from it and Ecuador takes their share of inflation.

In the year 2000 the Government published as great news that the US had authorized us to use their currency. Yes, what a surprise they did.

[Erdogan]

If the new currency is so popular that it takes over for dollars in Ecuador, and they manage to keep the peg, the government will have an income stream which is inflation plus growth. In the current situation, the US government earns that income, and they hate it, of course.

The US gets the income even now without any digital currency just for the fact we use the actual US dollars in Ecuador.
The FED prints dollars and benefit from it and Ecuador takes their share of inflation.

In the year 2000 the Government published as great news that the US had authorized us to use their currency. Yes, what a surprise they did.

Exactly. The economic point of this, is not the fact that it is electronic, it is about who manages them.

[polynesia]

If the new currency is so popular that it takes over for dollars in Ecuador, and they manage to keep the peg, the government will have an income stream which is inflation plus growth. In the current situation, the US government earns that income, and they hate it, of course.

The reason they have dollarized the economy is because investors/people need to have faith in the currency.
Why would people trust this any more than they would trust  a fiat currency issued by the Government of Ecuador?

[dinofelis]

I see your point partially, mainly the part that Ecuador can't print actual bills so if they issue too any digital dollars there's a chance people won't be able to redeem all of them. Let's hope that doesn't happen.

However it doesn't make sense to say it doesn't have an agreement with the FED. Of course it doesn't, only US banks need to be authorized by US authorities. Ecuadorian banks are approved by Ecuadorian authorities.

The Government of Ecuador was authorized by the Government of US to have US dollars as official currency and legal tender. And the Government of Ecuador approves all banks in Ecuador including this new system, certainly not the FED.

It is not a matter of "approving".  It is a matter of having the ability to issue real dollar equivalents.  FED-approved banks can do this, because of their reserve at the FED, against which the FED will issue real dollars fresh from the press.  The FED can guarantee certain bank accounts independent of the bank itself.  So people having money there are relatively sure that they will see their actual dollars if they want to withdraw it, even if the bank has problems.

The equadorian gouvernment cannot print "real dollars".  If people want to get out their "dollars", the equadorian government or its bank will have a big problem, and will have to issue limiting rules.  They can only pretend for these points to be dollars under very restrictive conditions of redeeming or paying abroad... which means it are not really dollars.

If I were an Ecuadorian citizen, I would immediately redeem my points against genuine dollars, to be amongst the first.  Like in a bank run.

[sidhujag]

So essentially ecuador is an extension of usa but without all of the social security and medicare help lol

[EcuaMobi]

So essentially ecuador is an extension of usa but without all of the social security and medicare help lol

No. Ecuador just uses US dollars but doesn't benefit from devaluation.

[tee-rex]

This digital currency will still be US dollars. There is no new currency involved.

No, this is not possible, unless your government is going to print fake dollars. What you meant to say is that most likely the government of Ecuador is going to emit some allegedly dollar backed currency, but I wouldn't be so naive (that this currency will be backed up by anything at all).

[dinofelis]

This digital currency will still be US dollars. There is no new currency involved.

No, this is not possible, unless your government is going to print fake dollars. What you meant to say is that most likely the government of Ecuador is going to emit some allegedly dollar backed currency, but I wouldn't be so naive (that this currency will be backed up by anything at all).

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