The Fed Remaking the Dollar (Digital??)

[MrMuppet]

Pointless. The USD is mostly digital now anyway. The whole point of crypto is ANONYMITY. It's supposed to function like ca$h... untraceable.

Every penny of every USD digital-dollar transaction will be logged into a host of databases, hashed, re-hashed, analyzed, taxed, and sold.

No, it's 100% not anonymity. If you still think that you have your information off of the yellow press. It's about frictionless transactions and getting rid of several peels of the current transaction banking onion.

Crypto was never anonymous. All it takes is figuring out one single name that is attached to one single key. That enables you to get access to all this guys transactions and the transactions of his counterparties.
Do you really think the authorities don't use the mixers they have seized as a honey pot? That's a golden opportunity for them to collect adresses and figure out the connections between different illegal transactions

 

[2rosy]

Pointless. The USD is mostly digital now anyway. The whole point of crypto is ANONYMITY. It's supposed to function like ca$h... untraceable.

Every penny of every USD digital-dollar transaction will be logged into a host of databases, hashed, re-hashed, analyzed, taxed, and sold.

crypto isnt anonymous; everything is tracked. if usd digital dollar every happens I bet barter systems will spring up. What's old is new again

 

[kmiklas]

crypto isnt anonymous; everything is tracked. if usd digital dollar every happens I bet barter systems will spring up. What's old is new again

Barter systems are a myth. They never actually happened.

 

[Specterx]

It's really baffling me that people don't get the difference between a venmo, PayPal, credit card and a currency that is running on a distributed ledger...perhaps because so few understand what's really going on in the backend.

My post is from the standpoint of the end-user. Of your "three major advantages":

1) No onboarding - doesn't apply to CBDCs as the issuers will surely want to link wallets to identities, and exclude criminals from the system;

2) Instant (and nearly free) transfers - a red herring as this is already available in many countries/regions (eg IDEAL in the Netherlands) without any use of blockchain;

3) Ease of tracing - certainly not an advantage for the end-user!

So to repeat, the "digital dollar" seems to offer no practical benefit over existing systems - with the exception of the badly outdated U.S. Fedwire system, which is slated to finally be upgraded to allow instant payments. On the other hand, it sure gives the government and the Fed significantly more control over the monetary system.

 

[MrMuppet]

My post is from the standpoint of the end-user. Of your "three major advantages":

1) No onboarding - doesn't apply to CBDCs as the issuers will surely want to link wallets to identities, and exclude criminals from the system;

2) Instant (and nearly free) transfers - a red herring as this is already available in many countries/regions (eg IDEAL in the Netherlands) without any use of blockchain;

3) Ease of tracing - certainly not an advantage for the end-user!

So to repeat, the "digital dollar" seems to offer no practical benefit over existing systems - with the exception of the badly outdated U.S. Fedwire system, which is slated to finally be upgraded to allow instant payments. On the other hand, it sure gives the government and the Fed significantly more control over the monetary system.

See, that's what I meant. Nobody cares about the little ailments of a few hundred million people. If you were right, there would not be billions in cryptocurrency transactions every single day since you cannot build a market on speculation only without the participation of paper.

In Asia, almost 8% of all remittance business is almost exclusively done in crypto and that is only 4 years after BTC had its breakthrough.

Saying instant and nearly free transfers isn't necessary because a few boomers already have access to it is like saying they should eat cake if they cannot afford bread. It takes almost a month to wire money out of Angola and you pay almost 30% in fees for that. Tell these guys they should just use Visa.

What is a red herring though is being worried about privacy. Your IP is tracked on ET, the apps on your smartphone send your personal data to dozens of private companies 24/7 who share it with government authorities by law. As someone who had hands on experience with international money transfer I more or less guarantee you that every single transaction you do on your bank account is tracked, reported and stored. And once you send money out of the western monetary system there is a guy in your bank who is obliged to report your transaction if he just thinks it is out of line with your usual behaviour.
No dude, your privacy is long gone and thinking that you can keep it by sticking to a bunch of paper notes is ridiculous.

There is a race to "onboard" the other 6 billion people who still deal with an average money transfer fee of 6.8% worldwide, because controlling and monitoring money movement is power.
Crypto has a meteoric rise for these exact reasons and there is more than enough data to support that IF you are willing to look it up. And no government will let go of the chance to play a major role in payment. CBDCs will come, if you like it or not

 

[DiceAreCast]

The exact same bs as cryptos.

I don't see any practical difference between "digital money" as used in this article, and the "digital money" I already send/receive with Venmo, spend on my credit card, or see in my bank account. Less still once Fedwire is finally upgraded (supposed to be 2023) to allow cheap instant transfers. It seems like a bunch of BS wherein the primary goal is to expand government control - giving the Fed the ability to 'cancel' dollars thus circumventing the ZLB, and also to convert untracable cash to fully tracked "digital cash".

 

[DiceAreCast]

Because there really is no perceived benefit, else it would be very easy to explain.

It's really baffling me that people don't get the difference between a venmo, PayPal, credit card and a currency that is running on a distributed ledger...perhaps because so few understand what's really going on in the backend.

 

[DiceAreCast]

1. The whole point of on boarding is kyc. And that makes perfect sense for anyone without criminal energy.

2. Most small transactions are instant to the frontend User. The settlement in the backend is handled by banks and other financial institutions. Makes no difference to the client who sends and receives small payments near instantly today. Larger payments don't matter whether they settle instantly or at t+1 or t+2

3. That is not a perceived advantage to any normal client. Law enforcement already can trace payments with the current system.

I can see the benefits for third world countries but not for 95% of the world's financial wealth.

So,again, what's the perceived advantage of cryptos or a digital dollar to anyone in Europe, America, and developed Asia? None so far as I can see

Well that's pretty simple when you know how transaction banking works.

Venmo, PayPal et al are basically internalizers, which means they are using a private ledger and most transfers are internal bookings that are instantly cleared. In order to get access to the system you have to onboard to the payment provider and that is a major hurdle for everyone who does not have a bank account.

Instant bank transfers work slightly different. When you see the money on your account a couple of minutes after your counterparty sends a transfer, your bank basically gives you a credit line for the amount because banks settle after t+x. Wires, ACH, SEPA or Tipanet would be way too slow for instant settlement.

And here you have three major advantages of a distributed ledger which basically are the basis of the success of cryptocurrencies:

1. You don't need to onboard anywhere. You only need internet access (smartphone) and a public key to participate in transactions. This is true for the redneck who only deals in cash as well as for the dude who usually has to exchange his local currency into USD on the black market in LatAm. No need for the black market anymore as well as for payment providers.

2. Transactions are instant because there is no settlement. It takes seconds to send millions of US denominated stablecoins and this is true for the payment to Starbucks and to a dropshipper in Thailand.

3. You can follow the money endlessly without any interuption as every single transaction is recorded forever on the distributed ledger, which is a major advantage for law enforcement, the IRS and secret services. Think about how much effort it is to follow a guy who collects terrorist financing 50$ wise just to send an international wire from his bank account to some guerilla group in Irak. It did not take too long to figure out how many BTC the Hamas received since 2019 because the adresses were known and they cashed out via Binance. This probably was found out by only a handful of analysts.


Transaction banking today is a dumpster fire of layers upon layers upon layers of middlemen, clearing services, internalizers, transaction reporting companies, local and national banks. Banks today spend more money on backoffice and administrative staff than they do on trading or creating new products.
The entire system is just incredibly clogged and inefficient. Average Joe doesn't realize that because all he can see is...well, a couple of colored buttons on his iPhone

The thing that most crypto haters fail to see is the fact that it's not about making an existing system better. The average American guy is so integrated into payment systems that he probably even won't see a difference between distributed ledger technology and his good old PayPal. But the focus isn't on first world blue colar slaves.

It is on including the average Joe of 2nd and 3rd world countries into the USD currency system and at the same time being able to follow all that money around no matter where and when the transaction took place

 

[bone]

“A rough estimate for the absolute size of the eurozone underground economy would be $3 trillion.“

Milken Institute Review, January 31, 2019