Campbell R. Harvey, finance professor at Duke University’s Fuqua School of Business, writes in The Washington Post:
Fedcoin...would be decentralized to various Federal Reserve banks. There would be central control over the money supply, just as we have today, but meanwhile, the technology would offer vast improvements in transaction efficiency. Digital transactions are quick, cheap and potentially a lot more secure than the system we have today.
If the Federal Reserve does adopt its own cryptocurrency someday, it will become a major — and far less volatile — competitor to bitcoin and other digital currencies. In fact, it’s not clear whether fedcoin would want that competition, and the Fed is in a position to impose a regulatory environment that tilts the playing field. So watch out, bitcoin.He also notes that:
We are seeing an important proof of concept in real time — the meteoric rise in the popularity of bitcoin.This is precisely the problem. Bitcoin is focusing the Fed on e-currencies and how they could be used for exchange. If and when the Fed decides to launch its own e-currency, it will be all over for Bitcoin,
This is why I have argued, The Anarcho-Capitalist Case for Supporting the Government Smashing of Bitcoin and Other E-Currencies.
If e-currencies are smashed now, then there is less of a chance that the Fed will be in a rush to develop their own e-currency, but the more the Fed sees Bitcoin as a competitor the more they will focus on developing their own e-currency.
I would rather see Bitcoin crushed by government now so that e-currencies are at least out of sight and hopefully out of mind because a Fedcoin would be a remarkable tool of totalitarian control.
If physical money is replaced by Fedcoin than all transactions would be tracked and, indeed, if the governemnt wanted to prevent purchases of some items, say guns or radical books, it could do so.
Bitcoin enthusiasts don't get it. They are not going to win and are laying down the early tracks for an oppressive move by government to control all transactions via its own e-currency.
-RW
Bob -
ReplyDeleteI agree with the logical progression you're making here, but I think the premises are wrong. You say that if the government smashes private cryptos now, the Fed won't make its own Fedcoin, or at least it is less likely. But if they don't, the Fed will, and other cryptos will be outlawed. What I see as problematic is the first premise. Won't the Fed eventually make its own Fedcoin anyway, knowing that it will enable absolute control over monetary transactions? Won't it be better to have a parallel market in private cryptocurrencies, even if it's a black market? Your argument ignores the nature of technological advancement I believe. Now that the blockchain cat is out of the bag, government control of it is inevitable. Fedcoin is coming regardless, and the more people that own cryptocurrencies until that time, the harder it will be for the government to stamp it out. Where am I going wrong here in your opinion?
I think the premise you start with, that cryptocurrencies will be a kind of money, is wrong. Hasn't happened with any cryptocurrency yet, though bitcoin has been used in some exchanges.
DeleteAnd maybe "...the more people that own cryptocurrencies until that time, the harder it will be for the government to stamp it out", but if most ownership of cryptocurrencies is for speculation, they will not object very loudly.
There are a few holes in the premise. We already do business with Mastercardcoin and centralbank coin already. but current processes are not seen as a direct competitor to Anycoin but it already is. If fedcoin comes at all it will be dictated with an iron fist and the only thing that will mitigate it is cash. If finance pulls off banning cash its all a moot point and time to build your local community and barter where possible.
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