Fedcoin Rising?

giulioprisco writes US economists are considering a government-sponsored digital currency. On February 3, David Andolfatto, Vice President of the Federal Reserve Bank of St. Louis, wrote a blog post based on a presentation he gave at the International Workshop on P2P Financial Systems 2015 [YouTube video]. The title of the blog post is "Fedcoin: On the Desirability of a Government Cryptocurrency."

Comments

Of course

[Anonymous Coward]

So they have a system that allows you to pass around *coins as if they were US dollars (the exchange rate is pegged) but all the transactions are digitally tracked in real time? Fuck yeah the feds want that!

Re:Of course

[amiga3D]

Not only that but with a click of a mouse they can confiscate all your money. It'll be like you never had it at all.

Re:Of course

[BarbaraHudson]

Unfortunately this is such a bad, outdated idea that the government will probably go for it.

We already have digital currency - those bits that record our current balances, etc in our bank accounts, etc. It's not like the bank takes physical money and moves it from one drawer to the other, or that when you pay with a credit card that the credit card company sends the merchant a wad of cash and some coins.

Re:Of course

[Anonymous Coward]

Unfortunately this is such a bad, outdated idea that the government will probably go for it.

We already have digital currency - those bits that record our current balances, etc in our bank accounts, etc. It's not like the bank takes physical money and moves it from one drawer to the other, or that when you pay with a credit card that the credit card company sends the merchant a wad of cash and some coins.

But we also have a situation where banks only trade those 1's and 0's with other banks they trust, and they (especially in the case of merchant transactions) charge you a handling fee to do it. The difference here is that the currency would be digital and P2P. There is actually a slim chance that there would be competition between payment systems besides just how many "cashbonus buckbacks" a particular provider can confuse you into thinking are valuable.

Re:Of course

[Mr.CRC]

To the government, "it's not your money."

Re:Of course

[rmdingler]

Unfortunately this is such a bad, outdated idea that the government will probably go for it.

We already have digital currency - those bits that record our current balances, etc in our bank accounts, etc. It's not like the bank takes physical money and moves it from one drawer to the other, or that when you pay with a credit card that the credit card company sends the merchant a wad of cash and some coins.

We do already have digital currency, and this is an incredibly poor idea.

What spawns such things from the government, you say? Why, they've seen the recent success of the homegrown crypto-currencies like the Bitcoin, and they want in because they confidently believe they should control all the money. The flaw in their venture is the basic lack of understanding of the principle tenet of Bitcoin: it is outside government meddling.

Re:Of course

[amiga3D]

Right now though if you have money not in the bank you actually control it. If they implement this then you have absolutely no control over any of it. And it's not about greed but about control. If they control all your wealth then you are essentially owned by them.

Re:Of course

[Jane Q. Public]

There is actually a slim chance that there would be competition between payment systems besides just how many "cashbonus buckbacks" a particular provider can confuse you into thinking are valuable.

The potential down side is far bigger than any potential benefit. One of the whole reasons for the existence of Bitcoin was that transactions were supposed to be hard to track, just like cash. That didn't prove out to be true but it was the idea.

If currency ever becomes all-electronic, and/or under the thumb of government, you can kiss any freedom you once had goodbye. It's such a very bad idea I don't know where to begin.

Re:Of course

[Jane Q. Public]

The flaw in their venture is the basic lack of understanding of the principle tenet of Bitcoin: it was supposed to be outside government meddling.

There. FTFY. The government has already meddled.

Re:Of course

[Anonymous Coward]

No, the problem is that they do understand. It is a direct threat to two centuries of manipulation to gain control of the country's currency.
"Give me control of a nation's money and I care not who makes it's laws" -- Rothschild

Re:Of course

[pla]

There. FTFY. The government has already meddled.

Not really - FINRA has issued guidance for those trying to stay legal; the government has made some high-profile arrests; the FBI has confiscated individual wallets through physical seizure of the machines they lived on. But overall, the government hasn't done (and realistically, can't do) a damned thing to substantially interfere with the core functionality of BitCoin.

Sure, they could impose some draconian "death penalty for using or posessing BTC or any of its associated software", but even that would only apply to those under US jurisdiction, and the system itself would keep chugging away merrily.

Re:Of course

[Jane Q. Public]

But overall, the government hasn't done (and realistically, can't do) a damned thing to substantially interfere with the core functionality of BitCoin.

I didn't say they could or did. I wrote they "meddled". And they did.

They've tried to regulate it, they've helped to try to commoditize it and make it available on Wall Street, they've developed methods to track the chain of exchange, etc.

While they may not be able to do too much, they HAVE already meddled. And they were assisted in meddling by the development of exchanges, which weren't really part of the whole intended Bitcoin ecosphere. They probably should have been foreseen, but they weren't part of the originally intended use of Bitcoin.

For example, one of the fundamental ideas behind bitcoin (and one of its touted advantages) was that exchanging them would essentially be free, with bitcoin mining operations taking up the burden of most of the number crunching cost. But exchanges subverted this idea, and started charging for exchange.

That's getting a bit away from government, but the point is: that's the way government wants it to work. Not the designer(s) of bitcoin.

Re:Of course

[Agripa]

Civil assets forfeiture says otherwise.

Ha!

[digsbo]

It's ironic: The existence of a completely untrustable cryptocurrency will dramatically improve the credibility of more trustworthy cryptocurrencies.

Re:Ha!

[Anonymous Coward]

It's ironic: The existence of a completely untrustable cryptocurrency will dramatically improve the credibility of more trustworthy cryptocurrencies.

Yes because the ability for a currency to jump in value 10x from one month to the next and then .5x the month after that has the hallmarks of "trustworthy". I have some ukrainian hryvnia to sell you, and some russian rubles too! I will give you a great price.

Re:Ha!

[donkwich]

I actually can't tell if you're being ironic or not. Which currency is the trustworthy one here?

Re:Ha!

[digsbo]

I'll give you a hint: It wouldn't be the one that's backed by a government that set up a system in which its existing currency lost 97% of its value since 1913, and is guaranteed to lose more because of stated policy going forward.

Re:Ha!

[Anonymous Coward]

If a currency didn't have inflation then their wouldn't be economic growth, just rent seeking from those luck to be born with money. get over it.

Re:Ha!

[Anonymous Coward]

Inflation favors investment. If you are rich and you know that your money is loosing value, you are motivated to invest it into an promising business that could give you a good return. Deflation, on the other hand, favors hoarding. Why spend or invest your money if it just keeping it under your mattress for five years will cause it to triple in value? Deflation means no investment, and no investment means no growth for the economy as a whole. (Try getting a mortgage in an economy with deflating currency.)

This isn't just a liberal view of economics. If there is one thing economists as left wing as Paul Krugman and as right wing as Milton Friedman can agree upon, it's the fact that inflation (in small amounts) is a good thing is something that is agreed upon. (And yes, 33x inflation over the span of 100 years is a small amount.) Only an absolute idiot -- someone who doesn't have the slightest idea of how the money works -- would argue that inflation is bad.

Re:Ha!

[sir1real]

Neither inflation nor deflation favors investment. Inflation does however favor borrowing whereas deflation encourages savings to finance capital investment. You don't understand how real people behave. It's a very rare oddball who keeps money under the mattress or buries it in the backyard. It's true that deflation increases the value of your money but investment does not preclude deflationary gains so why not get both?

Also Paul Krugman and Milton Friedman do not represent the entire gamut of economic thought anymore than Hilary Clinton and Mitt Romney represent the gamut of political thought. Krugman and Friedman are both apologists for the state and they both hold the same basic Keynesian assumptions about the economy.

"Only an absolute idiot -- someone who doesn't have the slightest idea of how the money works -- would argue that inflation is bad."

Don't piss on my leg and tell me it's raining. Inflation favors the political class and the bankers while screwing the rest of us, especially poor people who already have a hard enough time getting by without having their purchasing power diminished.

Re:Ha!

[aBaldrich]

>You don't understand how real people behave. It's a very rare oddball who keeps money under the mattress or buries it in the backyard.

I live in Argentina. We have 40% annual inflation and the vast majority of the upper and middle class buys US dollars in the black market and holds them under the mattress.

Also, there are two ways to study human behavior: one is through science and experimentation. The other is through the opinion of philosophers, magicians, prophets and alchemists. This second approach was used by almost all economists, even those against the State like the Austrian School. Actual scientific experimentation is a very new innovation in Economics and it's still developing a theory. (Search: "behavioral economics")

Re:Ha!

[pla]

I have some ukrainian hryvnia to sell you, and some russian rubles too! I will give you a great price.

You realize, of course, that Rubles count as a pretty damned good deal right now? First, the Ruble usually varies pretty much directly with oil, which has pushed it waaay down on the short term; then Pooty's pissing around has given it another good hard kick down. Eventually, both of those factors will go away, and the Ruble will return to its former level.

"Buy low, sell high" doesn't mean "sell in a panic at the bottom of a dip".

Re:Ha!

[digsbo]

Get over your own extraordinary ignorance. The US experienced unprecedented economic growth in the 1800s when the long-term value of the dollar was tied to gold reserves, and we had mild deflation for about 100 years (yes there were short-term deviations from the gold standard, but every inflationary period was followed by a deflationary period that returned the linkage to its prior value).

Re:Ha!

[digsbo]

Gresham's law is well known. That keeping money under a mattress behavior exists *because* of rampant inflation. That doesn't have *anything* to do with proving that people hoard in a stable or deflationary environment.

Re:Ha!

[david_thornley]

With inflation, I don't want to keep my money sitting there doing nothing, because it will lose value. Most of my non-material wealth is in owning things that aren't really money, like stocks and bonds, and hence I'm investing. If the dollar inflates, the dollar value of my stock goes up.

With deflation, owning things is risky, and keeping money under the mattress just increases its value. If deflation is 2%/year, any investment I make has to earn 2%/year in constant dollars to just stay even with my mattress, in contrast with inflation, where a 0% return in constant dollars beats my mattress.

Therefore, somebody wanting me to invest money has to make a considerably better case during deflation than inflation.

Re:Ha!

[digsbo]

Therefore, somebody wanting me to invest money has to make a considerably better case during deflation than inflation.

Not really. You just don't need to chase risky crap to get 7% returns. You can be quite comfortable taking low-risk investments running 3%, and netting greater real gains.

Untrusted computing

[sinij]

What a great idea, they should branch out Untrusted Computing to add to FedCoin. This will be a welcome addition to custom disk firmware, specialized random number generators, data duplication and retention services and so on.

Brought to you by the same government

[MikeRT]

That arbitrarily seizes cash left and right because it is deposited in "structured deposits" to avoid a policy requiring the transaction information be logged in a government database. I'm sure this will be a real hit--with the IRS.

Re:Brought to you by the same government

[XxtraLarGe]

That arbitrarily seizes cash left and right because it is deposited in "structured deposits"

What are you, some sort of kook? That never happens!

Re:Brought to you by the same government

[Anonymous Coward]

I'm not a fan of these laws either, but structuring deposits to avoid reporting is a felony. And they are not seizing cash left and right. They've seized some accounts.

"On average over the last several years, it's less than 200 cases," Koskinen said. "In 60 percent of those cases, the owner of the asset never shows up, which shows that they obviously had a criminal activity going on."

Re:Brought to you by the same government

[medv4380]

I read your linked articles and I have little sympathy for the paranoid people who structure deposits in the belief they are avoiding taxes. To quote the first of your linked articles.

All of the money came from paychecks, he said, but he worried that when he deposited it in a bank, he would be forced to pay taxes on the money again. So he asked the bank teller what to do.

The teller was wrong, and should be fired, for telling him about how to avoid the reporting, and I don't have sympathy for anyone who's intention was to circumvent the law even if they wouldn't have had to pay taxes on it anyways.

Re:Brought to you by the same government

[Oligonicella]

You're honestly equating helping slaves escape with tax-dodging?

Re:Brought to you by the same government

[witherstaff]

The government has shown they are perfectly happy seizing any asset they can get their grubby hands on. You don't even need to have been charged with a crime with forfeiture laws getting hundreds of millions of dollars. They'd take your cash and fedcoin. http://www.washingtonpost.com/sf/investigative/2014/09/06/stop-and-seize/?hpid=z3

Re:Brought to you by the same government

[ThatsMyNick]

What is wrong with reducing ones taxes? I dont see anything wrong with it. If someone tells me, if I make deposits worth more than 10,000, I will be taxed a second time, I for sure will stop making deposits above 10,000. I would be stupid not to.

You have no sympathy for anyone trying to reduce their tax bill? You have a weird sense of morality.

Re:Brought to you by the same government

[silentcoder]

>You're honestly equating helping slaves escape with tax-dodging?

Libertarians always do. Their logic goes something like:
If I am forced to pay taxes, and my taxes are used to fund a welfare state - then I am basically forced to labour for lazy people ergo I am enslaved by the lazy people.

I'm paraphrasing (accurately) - those are not my views, I think it's as brainfuck stupid as you do, but they really do believe that. It's pretty much Ayn Rand, Murray Rothbard or Ludwig Von Mises in a nutshell.
They really do believe that paying a single penny in taxes more than the bare minimum they arbitrarily made up is the same as what happened to actual slaves.
Then they wonder why they have never managed to get more than 10% of the people to take them seriously.

Re:Brought to you by the same government

[Actually, I do RTFA]

If someone tells me, if I make deposits worth more than 10,000, I will be taxed a second time, I for sure will stop making deposits above 10,000.

Then you are an idiot. Because that person is wrong. 10,000 just means it gets reported to the IRS. And if the money was in paychecks or whatever, it already is, and they cross-reference.

However, it is illegal to try to skirt the 10,000 reporting limit (by making many 9,999.99 deposits, for example). That's prima facia evidence you are trying to avoid reporting... and therefore the funds are likely untaxed. Therefore, taking the advice of someone making minimum wage... the legal advice of a non-attorney and the tax advice of a non-CPA, will cost you a lot.

IANAL and IANACPA, so you probably want to double check a random person on the internet before making tens of thousands of dollars decisions.

Re:Brought to you by the same government

[ThatsMyNick]

Sure, so you have no sympathy for idiots that listen to their bank teller, when they have no reason to not try and make deposits less than $10,000, even when they have paid their taxes correctly. Cool, glad we got that out the way.

They for sure deserve their money to be confiscated.

Re:Brought to you by the same government

[Actually, I do RTFA]

I have no sympathy for idiots who think bank tellers are able to give tax advice. But certainly, if they do, their recourse should be against the bank if they trained the teller to answer like that.

Do I think they should get screwed... no. But am I concerned that they have to prove where the money came from if they are obviously trying to skirt the regulations? Not really. I like the idea of a law that says "don't go out of your way to avoid these reporting regulations."

Re:Brought to you by the same government

[sjames]

If you had ACTUALLY read the articles, you would know that at least the 3rd one had nothing whatsoever to do with avoiding taxes. The guy could only keep so much cash in his place of business for insurance reasons, thus frequent deposits under $10,000.

If you have $9800 in cash, do you hide it in your sock drawer of deposit it?

Re:No privacy at all

[amiga3D]

If you don't have anything to hide you shouldn't need to worry. Big Brother is just looking at...I mean out for you.

Not surprised

[bjdevil66]

If this actually replaced hard currency and became a widely accepted standard, the government would eventually introduce legislation to ban the usage of all non-government cryptocurrencies. I'm not sure what the argument will be ("we can't afford it anymore", "terrorists used cash to commit atrocity X", etc.) but it would fit in with the model of our current system (the dollar is the only legal, federal U.S. currency).

Also, from the article: Understanding this, it is unlikely that Fedcoin will be the preferred vehicle to finance illegal activities. -- This would cast an unfair, "guilty until proven innocent" suspicion upon anyone wishing to still use cash. And there's no way in hell I'd trust the government to not abuse the privacy issues. They wouldn't be able to control themselves with that info...

Re:Not surprised

[MetalliQaZ]

It would be tracked left, right, up, and down. Every movement of every citizen's wallet would get pumped straight into the FBI, DHS, ATF, IRS, Social Security, family courts, DMVs, and local PDs. Screw that. I'd rather pay for my Dunkin Donuts with blowjobs than with Fedcoin.

Re:Not surprised

[bill_mcgonigle]

I'm not sure what the argument will be

Same as for the current fiat currency - "we need to be able to print an unlimited amount of digital currency, but if anybody else does so it's counterfeiting, and your labor* is the collateral for paying back debts against creditors while we give away value to our politically connected friends. Because otherwise terrorists and child pornographers and Muslims."

A primary feature of the currently popular digital currencies is that the politicians can't manipulate it, and so the politicians will never propose one with those features - for the US, holding the world reserve currency is the source of a majority of its power vs. other nations, and it's how political favors are handed out at home (e.g. bankrupting the savings and loan system to benefit the 401(k) regime, driving money out of community savings and investment (stifling bank loans to new businesses, etc.) to benefit Wall Street and the big-box multinational political donors). The money gradient between concentrated and diffuse interests is what powers DC, and currency manipulation is what enables it.

* your labor, your children's labor, your grandchildren's labor, etc.

Re:Not surprised

[Salgat]

If Bitcoin ever competed with the US Dollar on a real scale (hundreds of billions or trillions of dollars in annual transactions) there is a good chance it would be banned anyways. The US Dollar is an incredibly powerful tool the Americans have, and it's hard to believe they wouldn't ban cryptocoins, when they are willing to do the same for far less (like the liberty dollar).

Re:Not surprised

[david_thornley]

You're confusing things. To the Feds, a bitcoin is a rather odd commodity, something vaguely like a stock certificate. It isn't, legally, money, despite the fact that it is used as such. There is nothing illegal about bitcoins.

It is illegal to evade income taxes using bitcoins, and since taxes are denominated in US dollars you have to keep adequate accounting records with values in dollars, and at some point you're going to have to trade bitcoins for dollars to pay taxes. If I were to hire you to do something, and in exchange I'd transfer some shares in Medtronic, then at the time of the transaction I'd have to record any capital gains or losses I'd gotten on the stock, and you'd have to record that you received Medtronic stock worth $X and report it on your taxes (and possibly remit sales tax based on that value). Bitcoin works exactly the same way, legally. It would be difficult at best to ban trading in cryptocurrencies without messing up how the rest of the economy works, a ban on bitcoins would be almost impossible to enforce, and there's already ways to deal with large cash transfers (which have to be reported when they enter the banking system).

The advantage of Fedcoin is that it doesn't cost whole lots to keep up the system. What keeps Bitcoin working is that people keep ledgers, and the ledger with the majority of computrons behind it wins. This means that maintaining the blockchain has to be expensive enough in equipment and power to stop people of nefarious intent who might want to manipulate the blockchain for their own purposes.

Re:Not surprised

[david_thornley]

Bitcoin isn't legally currency, so that seems very improbable.

Re:Guy is a moron.

[gurps_npc]

One correction. I meant to write "The government has no desire to do help people trade currency SECRETLY."

Obviously the government wants people to trade currency, just not secretly.

I hereby declare...

[istartedi]

I hereby declare the number 90185349087539845793845389573985739485739487593857893 in the name of the King of Spain. What will you give me for that?

Re:I hereby declare...

[JustNiz]

I bid .0000001 btcoin.

Re:I hereby declare...

[istartedi]

I would say "sold" but with BTC in the $250 range that works out to roughly $0.000025 so it isn't worth the hassle of setting up an account, and it's too small to withdraw. Besides, agents of His Majesty Felipe VI are the ones who really need to do the collecting.

Yeah!

[seepho]

The future is finally here! Now we're going to have a government-backed currency with a central bank that can control interest rates! Anyone can exchange it at will! Of course, the institutions that monitor these transactions are going to have to follow a set of regulations, and probably have some sort of government-backed insurance for deposits. But it'll be digital! Wave of the future!

Re:Yeah!

[westlake]

Now we're going to have a government-backed currency with a central bank that can control interest rates! Anyone can exchange it at will! Of course, the institutions that monitor these transactions are going to have to follow a set of regulations, and probably have some sort of government-backed insurance for deposits...

You say this like it is a bad thing.

Re:Yeah!

[seepho]

https://www.youtube.com/watch?...

Re:No privacy at all

[donkwich]

As opposed to bitcoin, which also has a publicly accessible blockchain of every transaction?

So endeth the lesson

[Impy the Impiuos Imp]

Will you be able to buy and sell anonymously as with cash, or will this become another eyeball in the already far too massive panopticon?

Re:So endeth the lesson

[Impy the Impiuos Imp]

We already have a digital currency. It's called "dollars". You can convert it to physical chits easily, but rarely do you need to.

And in other news:

[kelarius]

We have the Fed reporting live from the Amazon Rainforest
"These are some really nice trees"

Re:Guy is a moron.

[Anonymous Coward]

1. This is fuckin dumb. Just dumb. High School Econ that nose picking morons need to graduate with a D average tells you that taxing commerce gives the government incentive to encourage commerce.

2. Nobody is suggesting that this would be an un-trackable currency. The long running joke that is bitcoin is proof enough of what happens when you can effectively execute transactions that have zero consequences. (No bitcoin isnt private, but the dozens and dozens of quickly folding scam- err.. exchanges is proof that its private enough)

3. Take off the tin foil hat.

I would be interested in something like FedCoin because I like my above-the-board transactions to have security.

Bitcoin true believers are always so shocked to see that they quickly attract the same scam artists and thieves that turn up when those "stifling regulations" are removed. Ponzi schemes. Investment scams. All the classic shit that's been around since the concept of currency itself was created.

I like this idea

[TomR teh Pirate]

Finally, a way to buy stuff online without cash needing to change hands. You could have some sort of an account id - let's call it a credit card number.

Re:Guy is a moron.

[Anonymous Coward]

> The one and ONLY value of a cryptocurrency is that it can be reliably traded secretly. There is simply NO other reason to use one.

1) Bitcoin is in no way secret. The blockchain (record of all transactions) is public.

2) There are many other values of cryptocurrency... the main one is that you can conduct electronic transactions (over distance, etc) via P2P transfers (without a middleman taking a cut).

Re:Guy is a moron.

[gurps_npc]

There are honest banks in the world (HSBC excluded). Banks let you wire money for free and the existence of cash, credit cards, etc. means it's not profitable to try and charge to send money in/out.

But to be honest, there are a couple reasons to do a cryptocurrency - it is faster than wiring money. But the main advantage is secrecy, which is why it is so popular among criminals, people that think the government is out to get them, and spies.

Re:No privacy at all

[g0bshiTe]

Why this doesn't apply to what the gov is doing is beyond me.

Re:No privacy at all

[suutar]

at least with bitcoin the user ID is not definitively linked with a particular human. Everyone can see what transactions were performed, but knowing who was involved is not as certain. Do you think a government sponsored currency will have even that much anonymity?

Re:Guy is a moron.

[slashmydots]

Wrong! Bitcoins' top appeal is:
- you can use it if you're under 18
- you can use it if the world bank hates your country
- you can use it to accept payments without paying a credit card gateway company a ton of money
- you can use it to take orders over the phone if your credit card processor thinks you're too young of a business to take card-not-present transactions
- it is virtually impossible to use a stolen wallet if the user encrypted it

And it most certainly, absolutely, is not "secret." It's is the polar opposite. It's all logged.

Re:Guy is a moron.

[bill_mcgonigle]

Ponzi schemes. Investment scams. All the classic shit that's been around since the concept of currency itself was created.

So, it has nothing to do with Bitcoin then. Glad that you've proven that.

Oh, and Bernie Madoff. SEC. That is all.

Re:Guy is a moron.

[oodaloop]

The one and ONLY value of a cryptocurrency is that it can be reliably traded secretly. There is simply NO other reason to use one.

Cyrptocurrencies also ensure there are no forgeries. If a bill is printed with the hash on it, it can be verified easily. This is actually an excellent use of the cryptocurrency standards. Having the govt, as well as citizens and businesses, being able to track it publicly would be a benefit. Also, you're a moron.

Re:Guy is a moron.

[Mr.CRC]

What makes you think Russia has to buy the right to sell oil?

Only one question:

[Trailer Trash]

Can I use it over at that darkleaks site?

What if apples were oranges

[random coward]

This whole article seems to be a discussion of "if apples where oranges."

He goes off the rails right from the beginning with his definition of money. He says money cannot be a store of value; when in fact that is one of the most important properties of money. It is from there were he misses why bitcoin is taking off somewhat. He should know this as he points out it is deflationary and thus a good store of value. So he completely misses why it is cryptographic, and why that matters. Talks about the fed controlling the exchange on the one hand yet talks of mining or the fed mining on the other, so he obviously doesn't understand that the mining is the how of the supply of bitcoin, nor that the idea of bitcoins is to work without a trusted third party, which he puts back in as the FED.

Without that cryptographic underpinning that is impossible if the FED controls supply what is left? The fed distributes signed serial numbers that they generate with their special random number generator? And at any time they could release a near infinite supply of them and crash the market. Think of the possibility to perfectly counterfeit FEDCOIN if someone hacked the FED's key!

This would surprise me if the FED actually did this. Not even they are this stupid.

Re:What if apples were oranges

[david_thornley]

Bitcoin, currently, is a lousy store of value since it's pretty volatile against the dollar. The dollar varies somewhat against real wealth, but it's not that much and it's reasonably predictable, so I have a fairly good idea how much $100 will buy next year, and a very vague idea how much 100 BTC will buy. This means that exchanges and other institutions have to have ways to charge for the risk they take by holding enough Bitcoin to operate.

The centralized nature of Fedcoin has good things and bad things. Fedcoin is subject to really serious attack if somebody hacked the Fedcoin key, more so than if somebody cracked the Bitcoin computation. On the other hand, the authoritative record of ownership is with one entity, not whoever spends the most money on processing the blockchain.

Re:What if apples were oranges

[random coward]

You realize your not arguing that I'm wrong; Your arguing that Federal Reserve Notes aren't money?

Biblical Prophecy, Anyone?

[Anonymous Coward]

Okay. So, I realize I'll probably get modded down for this, but can anyone here at least admit that this seems to be leading more and more toward Revelation 13:17, regarding buying and selling?

We've had the technical means for years, but of course it would take the will (or complacency) of the people to allow the wheels of the Anti-Christ to spin; possibly in the name of security.

For personal transactions, wouldn't the most secure means to have be some sort of programmable device implanted directly into the body (hand or forehead maybe)? And, somewhere in the ID of that device is an encoding of '0110 0110 0110' (666 for you non-BCD users)?

Not proselytizing. Just wanted to open for discussion.

Re:Biblical Prophecy, Anyone?

[ConceptJunkie]

I would believe that prediction even if I weren't a Christian.

Re:Biblical Prophecy, Anyone?

[witherstaff]

Revelation 14 says only 144,000 will be saved, and those 144K were those who were not defiled by women. So unless you're a virgin and one of those incredibly lucky few what's it matter? Well maybe women could not be virgins as it doesn't explicitly exclude them unless they're lesbians?

Of course if there is an exact number for the end times then everything is all pre determination and there is no free will. If the end has already been written, as a guy after you've been 'defiled' why should I bother with religion whatsoever?

As to fedcoin this makes me think of Microsoft's attitude towards Java of embrace to extinguish.

Re: Biblical Prophecy, Anyone?

[pla]

The 144k is symbolic.

Jesus is symbolic.

Where do you draw the line?

Re:No privacy at all

[kuzb]

...until someone asks for your name and makes the connection. It's not a very big jump to go from one to the other.

Re:Guy is a moron.

[kamapuaa]

Speaking Empirically:

1) People thought bitcoin was anonymous, and therefore a good way to buy drugs/steroids. If people didn't believe this, other people wouldn't have to constantly be pointing out that Bitcoin isn't anoynmous. Nobody points out that American Express isn't anonymous, because it's COMPLETELY FUCKING OBVIOUS. Even Ross Ulbricht apparently didn't think through how traceable bitcoin is.

2) There isn't a company that is able to block/refund payment to drug dealers/steroid users. Once the money is transferred, it's as good as cash.

3) There is a fair amount of self-sustaining hype about bitcoin, where people just get one or two as a fun investment, or they're curious to check out what all the talk is about.

Give me a fucking break. You really list "17 year olds can use it!" as your first reason why it's popular? Children are not the driving force behind crypto-currencies.

Re:Guy is a moron.

[Richard_at_work]

2) There are many other values of cryptocurrency... the main one is that you can conduct electronic transactions (over distance, etc) via P2P transfers (without a middleman taking a cut).

Except a middle man does take a cut, because you pay to have the transaction written into the blockchain...

Re:No use case

[gnupun]

But digital currency is so easy to hack and steal. If you want to secure something, you usually disconnect it from the Internet. Everyone loves the convenience, but what about security of this currency? There are no known servers that are unhackable. Why should we trust our hard-earned money to this bitcoinesque technology?

But perhaps a govt cryptocoin can be more secure than bitcoin as it would run on centralized servers and not be distributed like Bitcoin. So if someone steals another person's money, it would be easily traceable via transaction logs indicating which accounts the money went to.

Just say no

[Anonymous Coward]

The gubment has enough overreach as it is.

Re:Guy is a moron.

[crtreece]

1) Bitcoin is in no way secret. The blockchain (record of all transactions) is public.

Except, there is no requirement to tie a receiving address to a specific person. Not truly anonymous, but by using best practices, you can reasonably obfuscate what YOU are doing.

Re:Guy is a moron.

[david_thornley]

Except that the Bitcoin middleman is doing quite a bit of expensive computation (if it weren't expensive, Bitcoin wouldn't work), and therefore either gets costs plus profit for this or will go out of business. Up to now, it appears that most of this compensation has been in the form of new Bitcoin, but that's going down while the size of the blockchain is going up, and the middlemen are going to have to charge transaction fees.

The banks, on the other hand, have to move numbers around somewhat securely*, without additional computation, so banks can transfer money at a distance less expensively than can be done in Bitcoin. Currently, in the US, they charge more money because they think it gives them greater profits, but if Bitcoin transfers get popular enough the banks will lower their charges to be similar or less than Bitcoin, and they'll make money on it if the Bitcoin processing is just breaking even.

As long as cryptocurrencies are relatively rare, they can undercut banks for money transfers, but they can't scale up and still undercut.

*A lot of bank fraud is dealt with by letting it happen and catching and reversing it later. It's hard to do large-scale bank fraud and keep the money. You can withdraw amounts under $10K in untraceable cash, but any transactions over that, or series of transactions over that, are recorded and sent to the Feds (in the US). You could transfer the money to uncooperative foreign banks, but bringing that money back to the US will require transactions to get it into dollars. Presumably, the ability to catch and reverse reduces the effects of lack of strong and expensive security.

Re:Government sanctioned monopolies don't want com

[Actually, I do RTFA]

They certainly would love to shut down bitcoin like they do with other competing currencies

Dude, there are tons of competing currencies. You just cannot call them things like a "dollar" or a "quarter". You can also make a soda. You just cannot call it a "Coke" or a "Sprite".