Digital Money Across Borders: Macro-Financial Implications
imf.orgWe already have a digital Euro/Dollar/Yen, just look at the banking app on your phone or the transactions you do with a bank or credit card.
But I'm very scared to see what those digital wallets for CBDC will turn into. If central banks get control over money flows they can do horrible stuff:
* set a maximum limit on the amount of money you are allowed to have/save in your CBDC wallet.
* give you an x amount of money and force you to spend it (by taking the excess away at the end of the month or topping it up to a limit). This will erode all incentive to save. If forces consumption instead of preservation.
* work with a whitelist of acceptable ways to spent the money. You want to sent some money to someone who is not a legal resident/lives abroad/is on a black list for xyz reason? Though luck...
* set a "transaction" price / hidden tax on less trustworthy or less "wanted" persons or company's. Like when you want to buy liquor/a gun/give to a church you pay 5% transaction costs, but when you pay your rent the transaction costs are 0%.
* in a very real sense untraceable money is privacy and making money traceable is taking privacy away. We may not have something to hide but there is nothing I want them to see either...
Revelation 13:16,17 says "It puts under compulsion all people—the small and the great, the rich and the poor, the free and the slaves—that these should be marked, and that nobody can buy or sell except a person having the mark"I would argue that all of that is already more or less the case with the central banking system as we have it now: negative interest rates, money only insured up to 100k per person in EU bank accounts, massive decrease in buying power (look at the price of real estate/gold/crypto expressed in EUR/USD over the past 10 years), Dutch citizens pay "capital tax" over any capital over some 30k EUR (literally: spend it or we tax you).
About the whitelists? Already the case. My bank account in Portugal just got frozen 2 days ago for trying to buy crypto through Coinbase (we're talking about less than 100 EUR transaction here). This involved transferring money to an Estonian account, which according to support is "a blacklisted country" (even though it's an EU member state and an attractive European country for tech related businesses). I tried transferring money from my other EU fintech bank accounts which worked perfectly fine and almost instantly (so the blacklist excuse is bs). I still can't access my funds in that account 2 days later. Computer says no. Support can't help. I'm strongly suspecting this has nothing to do with Estonia and everything to do with banks not liking crypto.
So for everybody who wonders what problems crypto currencies are solving? Well, there ya go...
The difference, is that the CBDC will be even more centralized. To control currency flows requires the participation of many separate entities. With this new 'digital money' it requires only the participation of those who control the blockchain. ie political policy can be achieved programmatically, by having complete control over all currency transactions in a nation. This is very different from the status quo. It should be noted that cash will soon be eliminated.
The potential for abuse here is enormous. If you think shadow banning is problematic from a free speech perspective. Imagine being silently shadow banned from your local grocery store. Imagine not being able to donate to a particular cause/political party. Imagine not being able to give a friend in need financial support because their social score is too low.
People have no actual freedom without economic freedom, and this system will create a sword of Damocles that will hang over each and every person.
> People have no actual freedom without economic freedom, and this system will create a sword of Damocles that will hang over each and every person.
You cannot use technology to fix a people (in this case, political) problem. Codify your rights in statute and executive governance authority. Using a distributed ledger ain't gonna fix your laws and courts.
to be fair, crypto purchases have a high incidence of chargeback fraud. this is expensive for banks.
edit: i chuckled at the little britain reference :)
The risk of charge backs for banks is not really a good argument, charge backs for SEPA (eurozone) transfers initiated by the account holder himself are not a thing that exist as far as I know. You can't reverse a small erroneous transfer if you initiated it as the account holder (in contrast with credit card payments in the US for example).
Furthermore, I'm not exactly the first person to buy crypto through the largest crypto exchange in the world (Coinbase) with such a Portuguese bank account. They know this Coinbase bank account, they know what it's for (buying crypto) and they know it's not a scam.
They could easily decline a single card payment instead of suspending the whole account.
Attach those digital wallets to biometrics and just like that, we have the nightmare to which you are alluding.
Going against the zeigeist again but if something gets pushed onto us for something silly like "pandemic preparedness" or "contact & trace" like 9/11 has brought onto us...that offers identity management that can be expanded into a system like this...
If that happens, can we please stop pretending like something about biology and infectious diseases has fundamentally changed because of COVID for a second and get back to our senses...
We as a global society are clearly prone to collective hysteria whether we have been brought here by a series of unfortunate events and coincidences or by malice pushing their agenda.
Science loves being proven wrong, science loves getting to the bottom of things. There is nothing wrong with worshiping science but scientist worship is a part of it. We are all humans with our egos, trouble admitting being wrong, or simply personal gain from acting a certain way. Many of us just go with things to fit in, or have a career or just to make ends meet.
Numbers can be fudged. Everyone should have the stance of "show me" before believing. And you can't just take what media shows you at the face value. Reenactments, B-roll footage, the whole thing is a lot less "real" than we are lead to believe.
It is not a pandemic if you need to be told it is a pandemic.
You are losing your rights and freedoms because people are scared.
If you were alive during 9/11, doesn't this feel eerily familiar?
Doesn't it feel exactly like it feels when the second plane hit on 9/11?
Scare me and take my rights and freedom.
Can't you see people have the same emotional reaction when you try to get people to question the official COVID narrative that you see when you try to get them to think outside the official 9/11 narrative?
We are a lot less free now than we were before 9/11. And we are not any safer.
The same is about to happen if not happening right now.
We are all being played. Open your eyes and question even the sources you trusted for years. Just because your views aligned with a source for years doesn't mean they are on your side. They can be fooled too. This isn't about intention. We are all human. We are all fallible and this is about to get worse unless we all open our eyes and stop repeating the narrative the media is feeding everyone.
"It is not a pandemic if you need to be told it is a pandemic."
I'm using that, thanks.
Thank you. Check out this recent AMA from a Professor of Medicine at Stanford University: https://www.reddit.com/r/LockdownSkepticism/comments/jcxsb1/...
> set a "transaction" price / hidden tax on less trustworthy or less "wanted" persons or company's. Like when you want to buy liquor/a gun/give to a church you pay 5% transaction costs, but when you pay your rent the transaction costs are 0%.
That is what happens already today, you just don't notice it as a consumer as the vendor pays the CC bill.
All of these could be circumvented though. For instance, you are given X and have to spend it by the end of the month. So you sell your X to someone who does want to spend money and they give you something in return (e.g. cryptocurrency) that you can save. Or you just buy some object such as gold jewellery that has a measurable value.
This kind of direct interference with money never works. People just find ways around it, and if they can't, then the money loses its value.
>So you sell your X to someone who does want to spend money and they give you something in return (e.g. cryptocurrency) that you can save. Or you just buy some object such as gold jewellery that has a measurable value.
presumably if they're going through that much effort to implement this, they'll prevent this from happening. eg. https://en.wikipedia.org/wiki/Executive_Order_6102
>give you an x amount of money and force you to spend it (by taking the excess away at the end of the month or topping it up to a limit).
that could be an interesting one for Universal Basic Income .
It's not, and doesn't work. Firstly, it'll just get turned into something else (by spending/buying with it) that holds value and is sought after/tradable/fungible - Eg. Alcohol, gold, drugs, x_equiptment. Plus, if the money deletes after say 30 days it's worth less on day 29 than day 1. If it doesn't disappear after the transaction, it'll just be funneled through business for the 2nd tier 'money' described prev.
They are unlikely I think to put more restrictions on central bank digital currency than they do on regular fiat currency. Though those are getting worse - I just got a demand from a brokers of proof of "sources of wealth' ie. where my money came from, which is the first time that has happened in 40 years of having banks accs & stocks. How many people have documentary proof of how they got money 35 years ago - in my case? And that's not because I'm dodgy - IB UK are doing it for all customers - coming to a financial institution serving you soon probably.
>give you an x amount of money and force you to spend it. This will erode all incentive to save. If forces consumption instead of preservation.
Arguably money should not be used for savings in the first place. Some problems of the modern monetary system arise from the fact that money conflate two functions: medium for trade and tool for savings. After doing something useful for economy and acquiring money for it, you have two options: either you buy someone else's work or you invest somewhere (effectively you lend your useful contribution to someone). The first option is a relatively short-lived, think of money as a reputation system, you are more likely to care about a favor done days ago, not decades ago. Another way of looking on it is that it is easier to compare merit of deeds which were done close in time. But the second option has all the risks and difficulties associated with investments.
If you are interested in this topic, I recommend works of Silvio Gesell, it's somewhat outdated, but still quite interesting even in modern times.
I find it interesting that the paper focusses on Central Bank Digital Currencies and Global Stablecoins, but pretends not to see/prefers not to deal with the elephant in the room - Bitcoin. If anything is a candidate for a potential Reserve Currency, BTC is it, imho.
Deep in the footnotes comes the contorted logic,"According to the IMF Treatment of Crypto Assets in Macroeconomic Statistics, crypto assets such as Bitcoin do not meet the definition of a financial asset—and hence currency—in macroeconomic statistics." and presumably that's what lets them off the hook, nevertheless, the ONE payment-rail that BTC fits perfectly is precisely that of international settlements between Central Banks/countries - such settlements typically involve the large-scale transfer of assets, they're not especially time-sensitive, and the transfer cost is inconsequential (and in the case of BTC negligible against the values transferred).
So I'm still left wondering: Why the aversion?
Fear? Lack of control by recognised "authorities"? Their argument that it's "too volatile" is largely untrue over the past year or two, with Bitcoin showing no greater volatility than any of the world's fiat currencies, so I doubt that's the factor at play.
What do you mean by "Bitcoin showing no greater volatility than any of the world's fiat currencies"? I pulled up BTC/USD and EUR/USD https://www.xe.com/currencycharts/?from=XBT&to=USD&view=2Y https://www.xe.com/currencycharts/?from=EUR&to=USD&view=2Y In the last 1 year, I see BTC low of 5000 and high of 12000, a 40% difference. And EUR at 1.06 to 1.20, about 12% difference. The year before was worse for BTC and better for EUR. 3x the volatility is quite considerable.
Not that bitcoin is not volatile (it sure as hell is), but you're picking the most stable currencies in the world and comparing them to a crypto asset that is younger than a kindergarden class. Try building the same graphs for 3rd or even 2nd world currencies and observe that they might have even worse volatility. I live in a country whose currencies devaluated in order of trillion times in 20th century if you count multiple "monetary reforms" and "denominations".
> you're picking the most stable currencies in the world
OP tried to compare Bitcoin to reserve currencies. Reserve currencies are more stable than average.
Sure, but nobody is pretending that the likes of the Venezuelan Bolivar show no more volatility than any of the world's [other] fiat currencies as they breathlessly hype its potential as a global reserve currency.
The thing is that it's not that bad given its age, and it's improving.
You have to approach it with a pretty wide angle lens, but the better analogy IMHO is comparing BTC to other early day currencies.
Have you looked at USD vol in the 1800's? Reichsmark vol? From that angle, vol of "proper currencies" in their early adoption days tend to start looking a lot like BTC vol. At a minimum, BTC today to USD today isn't an apples:apples take at all.
In my mind, this starts to damage vol = bad BTC arguments in terms of analyzing BTC's adoption. potential.
> Why the aversion?
Students of central banking are familiar with central banking in the era of gold and why it was almost universally a disaster. (Most of Bagehot [1] concerns itself with bank runs.)
This paper’s audience is familiar with that history. Talking about Bitcoin would be like addressing why machine language wasn’t used in a CS paper.
[1] https://en.m.wikipedia.org/wiki/Lombard_Street:_A_Descriptio...
I doubt if anything made changed since the era of gold, just sizes of economies went up dramatically, more common people are banked, and there are more option to do bank run against.
Gold [https://goldprice.org/charts/history/gold_6_month_o_usd_x.pn...] is of course one of them, but costs of many other liquid commodities have shot up counterintuitively this time as well.
There is nothing "magical" that has happened to banks when they switched to fiat money.
> There is nothing "magical" that has happened to banks when they switched to fiat money
Of course there is. Deposit guarantees are enabled. That and the central bank’s credible power to influence money supply and borrowing costs as well as act as an unconstrained lender of last resort.
There is a lot of scholarship, originally from the turn of the last century but perennially refreshed, on the inherent failure modes of fixed-supply money systems amidst a growing, industrialising or industrialised economy.
Fixed-supply assets are good. Fixed-supply currencies cease, quickly, to be currencies.
> Of course there is. Deposit guarantees are enabled. That and the central bank’s credible power to influence money supply and borrowing costs as well as act as an unconstrained lender of last resort.
So it was at the time when the king could've simply set the gold rate for the currency, and do the very same thing with borrowing, and lending on behalf of the state. Just before, it was much more likely led to more angry people with pitchforks than today.
> So it was at the time when the king could've simply set the gold rate for the currency, and do the very same thing with borrowing, and lending on behalf of the state
No. The de facto currency was estimated mass of precious metal. The king could default, of course. But that is selective; inflation is not. Re-basing happened, but just as with money printing, it is tracked and accounted for and, in extreme cases, fled from.
Equating modern monetarism with gold-standard economics betrays, fortunately, a terrific opportunity to learn from works that have been peer reviewed, in many cases, for over a century.
Yes the system that lasted for thousands of years, which was fine until politicians turned the system into a polítical utility making promises they knew they could never keep, and which was replaced by another system that is falling apart after 50 years.
If a gold standard was a disaster, I don't know what our current system is.
If Central Banks were to get into Bitcoin, they would make early investors in Bitcoin very rich. Like 1 person would own 25% of all the world's wealth.
That wouldn't be proper Central Banking :)
If that's true, then the longer they wait, the worse it gets. That's not good.
What I love about the Bitcoin enthusiasts is how they picture it to be the be all/end all magical money that will solve everything
Meanwhile the real big money-movers (legal or illegal) are still using bank accounts and paper companies in "business-friendly" jurisdictions.
The "market" is always active and always looking to select the best of everything, including money. Bitcoin isn't be-all/end-all magical money - but it is a massive, order-of-magnitude improvement on history's greatest "hard money" (gold). The markets of the world are slowly coming to understand the value of this "best reserve asset and best collateral asset ever seen" (Raoul Pal).
A new digital, internet-native asset with the greatest monetary properties in history is monetizing before your eyes; meanwhile you're relying on your understanding of an old world to convince yourself it doesn't matter and the people who see something deeply interesting are kooks.
This is the history of all revolutionary technologies. At first it seems like a useless toy, then the establishment laughs at and denigrates it, then it's fought aggressively, then it takes over. I would say we are almost past the "fought aggressively" stage, at least for Bitcoin, and into the "taking over" stage as smart institutional money begins to get exposure.
It's very interesting that a large contingent of smart software people on HN heard about Bitcoin extremely early, said it was a useless failure, and then had to re-justify their position for a decade as Bitcoin marches on. It's impossible for anyone to claim Bitcoin has no value at this point, but on every blockchain post on HN there is a core of haters that will make the same tired arguments against it. Meanwhile, no one cares!
They said the same thing about Theranos, too...In fact, the only time I've ever heard that quote is in reference to failing technologies and companies.
You'll never hear that quote about actually revolutionary technologies, because their revolutionary nature is immediately apparent, even if the economic case for the technology is not (at the time).
Cryptocurrency isn't revolutionary. There isn't any use case for cryptocurrency that wouldn't be easier to address with normal cash or credit payment. Cryptocurrency solves none of the actual problems in the current financial or banking systems but introduces a host of new problems that weren't issues in the old system. It's a solution in search of a problem.
You keep repeating the same tired arguments, then can't explain why Bitcoin went from 0 to $240 billion market cap in 10 years. There is clearly a lot of value here, even if you refuse to acknowledge it.
Theranos had a high market cap to, right up until the WSJ reporting revealed it to be a fraud. And on that note, there's strong evidence that multiple parties have been manipulating the value of cryptocurrencies, including especially Bitcoin, through various fraudulent mechanisms (see, e.g., Tether).
I also used to be heavily involved in cryptocurrency, when it first started, and what I saw then is a large part of why I don't see any usefulness in cryptocurrency now and why I'm convinced that it will never replace any part of the financial system.
You truly believe that some scandal will result that drives Bitcoin from $240 billion to 0? And you were "heavily involved when it first started"? A lot has changed in 10 years, I don't think you understand this industry whatsoever.
I don't think a scandal will drive Bitcoin from $240 billion to 0. There's enough interest that Bitcoin will retain at least some value even when it's clear that it will never be picked up for general use.
A lot has changed in 10 years. Crypto has gotten worse. Multiple exchanges were hacked, or turned out to be entirely fraudulent. Black markets came and went. ICOs for non-existent and useless products. The discovery that major participants in the system were manipulating coin values and were engaged in multiple types of financial fraud. The uptake of cryptocurrency as the primary means of paying ransoms to hackers who have encrypted your website, database, or computer. Facebook attempting to introduce its own cryptocurrency. The Bitcoin Craze where awareness of bitcoin hit the general public and the techies who got in first exploited the rubes for everything they were worth(and cryptocurrency industry's response to the criticism: they should have known better!?!? That tarnished all cryptocurrency in the eyes of the public and they learned to avoid all of it, not just Bitcoin. That on its own was a fatal blow to the uptake of cryptocurrency in general use, anywhere, and it was only a few months later that Bitcoin started getting removed from e-commerce sites).
All in all, I'm glad I got out when I did.
I appreciate your perspective. I feel like I'm taking crazy pills these days on HN concerning BTC. This idea (early rejection, re-justification) is a helpful heuristic for understanding some of it at least.
What you're saying applies to crypto-currencies in general, but not necessarily to Bitcoin, which has some thorny issues.
Yes, maybe the popularity of BTC will overcome the issues, but I doubt.
No, it doesn't. Money, perhaps more than anything else in human society, exhibits network effects that incline it toward winner-takes-all dynamics. Every money implicitly competes against every other money.
I recommend taking a look at something like https://bitcointreasuries.org/
And don't just glance at it - try asking some probing questions, like "What does this mean?" and "What might I be missing concerning the underlying dynamic at play?"
You can also try reading The Bitcoin Standard for a good analysis of the dynamics and history of competition between different forms of money - the central thesis being: History has shown that you can't protect yourself from someone else holding money that's harder (better) than yours. Bitcoin is better money than anything else we have or have ever had.
Money, perhaps more than anything else in human society, exhibits network effects that incline it toward winner-takes-all dynamics.
That's not how money works, if by money you mean a currency. Currencies are issued by sovereign governments, and don't exhibit network effects within that sovereign jurisdiction, because they don't need to. They're legal tender; you're required to accept them, and everyone needs them to pay taxes.
If you mean money as in wealth, that's an entirely different topic.
Microstrategy was a public company that recently put its treasury reserves into 100% BTC from USD.
Why is this important: note "public." To do this legally, they had to convince: - external auditors - internal compliance - external/internal legal - and where it gets interesting: the institutional investors who are large enough to matter, i.e. your big-money movers. This party says no at a shareholder meeting, the conversion isn't happening.
CFO who led this found that last party were all ok with the move given explanation, and most owned BTC already. 1 holdout took some convincing. These big money-movers hold BTC already, in short. Yeah it's not 100% of their assets, but this isn't an argument about that.
> Lack of control by recognised "authorities"
Ding, ding, ding!
Yeah that's sort of silly. The implications of a non-BTC-based standard with the intent of enabling cross-border more effectively is: - IMFcoin, UNCoin(and the conspiracies around global banking cartel actually take flight because yeah actually that would be nuts) - EUcoin, USAcoin, ChCoin (imagine the geopolitics...)
A digital currency that directly fits the digital use-case being described by these papers written by central banks, that is in turn ignored by these papers, is sort of like talking about WW2 without mentioning Germany's role.
I can definitely understand the aversion given the implications of a non-CB controlled digicoin, but just ignoring its existence really blows a hole in the intellectual rigor of these whitepapers.
Ultimately, the network adoption will play out as it plays out. We don't have USAweb and RUSweb (maybe moving toward that, but different topic), we have the decentralized, multi-party, ICANN/IETF/private sector/public sector-led The Internet. When you track how the Internet came to be, and how it's actually controlled now, it starts to look a lot like the Bitcoin network's growth plan at the moment. What will be will be. Once it gets analyzed as a network protocol with digital native payments, vs. a digital currency on the regular internet, the blind spots in BTC criticism start to show.
Maybe because whatever entity created bitcoin controls what, like 9% of all bitcoin? And nobody knows who or what they are? Why would anyone want to be involved in a financial system that functions that way?
BTC has no benefit over central counterparty clearing and settlement.
Even if the technology would adapt cryptographic ledgers, there is no reason to use another currency for that. You use sovereign currencies as before.
> BTC has no benefit over central counterparty clearing and settlement.
I can think of a few huge practical benefits:
1. Try to transfer money cross border within the EU/SEPA zone on a Friday. It'll be in the receiving account on Tuesday (and usually not in the morning). That's around 96 hours between sending and receiving. During weekdays this goes to 24 hours. Not even talking about intercontinental transfers. And this is assuming there are no national holidays in either the sending or receiving country during that period. And then there are people that complain that Bitcoin's < 15 minutes is slow, lol.
2. Transfers through central counterparty clearing and settlement sometimes get rejected/delayed for absolutely no reason at all. They can also be rejected/delayed for political or other (good) reasons. BTC doesn't suffer from this.
3. Transfers through central counterparty clearing and settlement can get stolen by attacking the IT systems themselves. Example:https://www.bankinfosecurity.com/another-swift-hack-stole-12.... BTC doesn't suffer from this. Yes, BTC can get stolen through phishing or by attacking end-points, but so can those transfers.
4. Going through central counterparty clearing and settlement requires both the sending and the receiving party to have some type of bank account in the locations that they want to send or receive money to/from. This means dealing with very time consuming local bureaucracy. Especially when the receiving party (for example) wants to receive money in a "new" country that they're not "set up" in yet. Setting this up can take days/weeks of turn around time and hours/days of man-hours. BTC doesn't suffer from this at all.
5. Transfer costs and high exchange rate spreads.
There are probably more issues that I didn't think of.
As a traveler only dealing with relatively tiny amounts of money across borders, BTC has already saved me a ton of time, money and frustration in trying to access my own money across borders. Even I as a nobody can see the benefit, I imagine those benefits only get greater for people dealing with larger amounts (as I assume the bureaucracy and problems go up with the amount of money transferred).
Thank you for the time-scale comparison on a level with money transfers as opposed to POS Credit/Debit -- it is a more appropriate comparison IMHO.
Here's one interesting angle in POS comparison that I never see mentioned anywhere:
VISA, MC, AMEX set a high-standard being able to very quickly process transactions even under high-load times like holidays.
But they did this in part, because they practically had to...Think of holidays shoppers at physical retail stores lined-up at a cash register -- they need approved or denied answer ASAP.
But with that sales model is dying a noticeable death -- no one doubts it will soon be gone -- which brings me back to BTC and and me finally making my point
If you're making a retail purchase from Amazon and choose Next Day for delivery, does it matter that BTC is going to take 15 minutes or even 30 minutes to clear?
Obvious difference that no one entity can control supply. If that's good or bad is another long academic discussion
Obviously, if you are a user of the currency and don't want it to be inflated by the central bank, there's at least one thing in bitcoin's favor, as it has a fixed maximum supply.
You can argue that's a bad thing if you want, but just ignoring that it exists doesn't make much sense.
I wrote the same message before seeing yours :)
I see, happy to have someone who agrees with me. I don't know why so many people ignore the fixed supply issue with bitcoin, it seems like the "elephant in the room."
The USA is super strict on making sure every transaction they can control gets monitored and tracked. Any financial firm that touches dollars must comply or they'll get fined literally billions. There is no way BTC will be allowed to go mainstream unless the US regulators can track every user on the blockchain.
Our "exorbitant privelege" is not going to last forever. When the imf called. For a new Bretton woods moment last week, ending that system is what they were talking about.
Yeah check out where IMF headquarters is and who pays for it then tell me again that the IMF is going to let BTC take over from the dollar.
The IMF already doesn't have a say in this. The USA isn't going to have a say in it either if 30 year yields go down any further.
Also I'm not claiming that the BTC will take over the dollar, I'm saying dedollarization will occur in general. This isn't a particularly controversial opinion at this point in the finance world. The average CNBC guest is willing to admit this at this point.
> I'm saying dedollarization will occur in general.
US Feds have gone overboard on tracking financial crime, but I really dont see people thinking Euro, Yuan or Yen is safer. Certainly non-CB cryptocurrencies are worthless as soon as sentiment turns.
> The average CNBC guest is willing to admit this at this point.
That really doesn't hold a lot of credibility with me though. :)
You keep responding to things I haven't said . I'm agnostic to how dedollarization will occur. I'm not claiming that it will be the Yen, the euro, the sdr, gold or bitcoin specifically.
you too.
It becomes an asset that eats dollars. Print more dollars and BTC goes up. Just like gold sits in vaults, Bitcoin can sit in cold storage.
BTC is also something that individuals can buy in extremely small increments. It is an escape valve for people in Argentina, Turkey, Venezuela, etc. to protect their wealth from horrible and corrupt central bankers.
I was in many crypto presentations during the 2018 BTC rise. The crypto-anarchists (left and right leaning) were getting their spotlight and laying out their "dream". Basically an updated version of Kropotkin's and Bakunin's work for the blockchain-era.
I really don't get what is the hate with the central banks getting control over the money. Yes they are not appointed by the Government but it does not matter, the moment they gain such power, they will become political.
At least, at allows countries to have complete control over their currency and cut the middleman when it comes to monetary policy. ECB and FED throw all this money into quantitative easing now, and the real economy gets nothing.
BTC as a global reserve is a pipedream, the only global and eternal reserve are big guns. BTC as a means of transaction is a dystopia ready to happen. No country is able to increase BTC supply, hence its a highway to unbelievable inequality, and no monetary policy control. Also, good luck enacting fiscal policy in an economy purely based on untraceable cash.
Look, there was a gold-pegged currency without any digital equivalent, all in the form of untraceable cash. It was, for instance, the US dollar as late as 50 years ago. Back in 1950s people in the US were economically secure at currently unbelievable levels. Or, say, 100-120 years ago the US experienced colossal economic growth, while levels of inequality were lower than today's.
I would rather posit that central banks doing monetary policy tricks with fiat money are increasing inequality and give rise to crazy and detrimental financial schemes.
I agree about the big guns, though.
Statists forget that insane monetary policy and extreme wealth inequality happened under their own fiat banking system. We are in a debt-based world where savers are punished for trying to improve their lives. It’s absurd.
> I really don't get what is the hate with the central banks getting control over the money
Because every single CB in the world devalues the currency they govern.
Bitcoin and other coins, on the other hand, are deflationary by design. Which means, while they can drop in value, they will not do so because somebody decided to turn the printer on and print a few trillion BTC. BTC is capped at 21 million coins. And some of it gets lost every day, so its cap is actually shrinking.
(not all cryptocurrencies are deflationary by design, in case I wasn't clear)
Bitcoin is not deflationary, it is disinflationary. The Bitcoin supply is still inflating, currently around 1.8% per year. However, that inflation rate will continue to fall to 0%.
Since the cap is known, that's already baked in. And since the coins are constantly lost, it is de facto deflationary.
Care to elaborate how is bitcoin untraceable exactly?
I don't understand why BTC as optional means of transaction is dystopic
It is going to be interesting in a few years to see how mush they will push the digital wallet for every person.
All of the people talking about bitcoin here are misunderstanding how central banks are using the term digital currencies
The CBDCs themselves have 0 to do with crypto. They are no more digital than your bank account in 1985 was and not using any technology newer than that. They are just normal dollars held directly by citizens at thhe central bank which is useful as a monetary policy tool.
Sure you can tokenize something to create a stable coin but that still had none of the interesting properties of a Blockchain. It just makes itt marginally easier to interact with that ecosystem.
The traditional capitalist economy with gold and then dollar bills was adequate for a long time. Still ground to halt during great depression.
I argue that it is on it's limits now. Long-term prosperity now depends on central banks making right decisions every time there is a hiccup. This should not be like that.
It should be more automatic. Ubi or not, relief funds should be in place when they are truly needed.
Short-term projects should be funded without borrowing excess funds from future generations.
Ultra long term projects should be possible without some crazy political effort.
Central banks can do all of above, if they have better visibility and, yes, control of how money moves, what ownership structure is