New bitcoin mining machine 2018
40 comments
Buy plectrum electrum 3rd person
Governments around the world — including the U. But don't expect a bunch of bitcoin clones. Governments have very different priorities, and decentralization — a main feature of most cryptocurrenices including bitcoin — doesn't tend to be one of them. In fact, government digital currencies could herald a new era of centralization, posing serious questions about privacy and the viability of true cryptocurrencies like bitcoin.
There's important differences between true cryptocurrencies and what are generally called "centralized digital currencies" CDCs. One of the main qualities — if not the central feature — of cryptocurrencies is that they're decentralized. This means no single person, government, company, or group can control them.
CDCs, on the other hand, are on the opposite end of the spectrum. They are as centralized as can be. That centralization could provide governments with some world-changing capabilities — some good, some rather scary.
There's the upside of giving people a secure and cheap way to buy thing. There's also serious privacy concerns, especially when talking about authoritarian countries. Russia has, in particular, floated some interesting ideas around why it would want to introduce some form of government-led cryptocurrency. Details are scant, and it's not clear if the "cryptoruble" would be a true cryptocurrency using decentralized ledger technology or if it could be mined.
What is clear, however, is that Russia is interested in some sort of digital currency to get around international sanctions and possibly even allow the government to tax its sizable black markets. One is to try to figure out how to regulate the darn things, and the other is, do we figure out how to make our own? The technology behind digital cash isn't new in concept of execution. Long before Venmo had become a verb, companies were working toward entirely digital transactions. Adoption wasn't terribly quick or widespread.
Nor were the systems that emerged to service digital transactions terribly efficient or cheap. Governments and banks weren't in any hurry to adopt this tech since nobody else was either. The explosion of BTC and other cryptocurrencies have forced governments to take a look at just what these technologies mean for the future of commerce, finance, and centralized authority over the creation and movement of money. Jacob Eliosoff, founder of cryptocurrency investment fund Calibrated Markets, said governments are now seeing the benefits of this technology but are also going to need time to understand it.
There's also some larger conceptual issues at play here. Bitcoin has proven that it's possible to create money outside of government-based financial systems. Ole Bjerg, an associate professor in at Copenhagen Business School, said this is forcing governments and central banks to ask tough questions about their role in the economies of the future.
By many definitions, digital currencies backed, issued, and tracked by a government or central bank would not be a cryptocurrency. You don't have to be against fiat per se I'm not to see it as fundamentally different from cryptocurrencies. To some, the question of what is and isn't a cryptocurrency is besides the point. The mechanism is just a detail.
Whether you do that with a blockchain or you do it with a database doesn't make much of a difference," Bjerg said. Andrew Levin, a professor of economics at Dartmouth College, said digital currencies could cut out middlemen and banks, meaning fewer people taking a cut out of transactions.
If you have a debit card, there's a good chance it says some combination of MasterCard, Visa, Bank of America, Wells Fargo, or any variety of other companies. They're not providing that service out of the goodness of their hearts. They make money when you use that card. Under the new system, you'd pay with money directly held by the government or really a country's central bank through what some call a "Centralized Digital Currency," or CDC.
With a CDC, you'd have a card but it wouldn't say any of those companies. It would say probably say "U. Federal Reserve" — the U.
It wouldn't take any cut, and the U. A CDC, then, is the functional equivalent to using cash, with one big caveat that we'll get to shortly. Governments control the economy through central banks.
The Fed controls the economy through a relatively arcane system in which it tweaks interest rates to control the money supply. And not just that, it could easily turn the interest rate negative — something central banks can't really do now — when it really needed to stimulate growth.
After the financial crisis and the ensuing global economic slowdown, these measures did not prove terribly effective at stimulating growth. Central banks did what they could, lowering interest rates about as much as they could in order to try to goose their economies.
Giving central banks the ability to aggressively push the economy through control of a digital currency would make a major difference in peoples' lives, Levin said. Normal American families have really suffered for the last ten years and part of the reason for that is that the Federal Reserve was constrained," he said.
Imagine that the financial crisis was just a speed bump instead of a giant crater that the U. That's the kind of promise that some economists think CDCs could deliver on. The first is that the promise of decentralization isn't just negated by a central digital currency; a CDC is even more centralized than the existing system.
For people who believe that decentralization is a good thing that will free people from dependence on governments and big companies,. The other main drawback is privacy. Cash is anonymous, giving people a certain amount of freedom to spend money without having to worry about explaining their actions.
A CDC would conceivably remove any and all privacy from your spending at least as far as hiding it from the government. Russia's nefarious goals for its cryptocurrencies point to how governments around the world could start embracing digital currencies for their own ends both good and bad.
Meanwhile, countries like Russia and China — two of the countries most aggressively pursuing their own digital currencies — are the ones cracking down hardest on bitcoin and other distributed currencies. In the near future, not much will change. Governments don't tend to move quickly. There will be any number of tests to see how this could work, as some countries have done with ideas like a minimum basic income.
They could, however, be forced to adapt if cryptocurrencies begin to offer a real, viable alternative to the existing financial system. There's plenty of blockchain enthusiasts who believe that's just a matter of time, though it could be a while. Bitcoin compared to other historical adoption curves. We're using cookies to improve your experience. Click Here to find out more. Tech Like Follow Follow. Russia is working on a government-run cryptocurrency.
And they're not alone. Why should I care? There's a very simple reason a government digital currency could be good for you. It'll save you money. Even the economists are getting excited There's a good reason that economists have been getting excited about CDCs.
OK, so what are the downsides? There's two main drawbacks here. Cache money In the near future, not much will change. The hidden cost of a conveniently connected world.