Eventually, the US will figure this out and make a USD crypto that will be used as THE stablecoin.
It seems obvious to me that a stablecoin needs a solid governmental backing, since there is no profit in it and you need unlimited deep pockets in case of a run.
The advantage is then that the USD remains the world's premier reserve currency, even into the digital age.
What could you do with a USD stablecoin that you can't do with a regular old dollar? Other than let everyone see your transactions and account balances.
Many things. A stablecoin that implements ERC20 interface can be used across Ethereum ecosystem and it’s smart contracts. You could even program your own smart contracts around the token, such as to setup a time lock or auction.
Examples: converting it to another token on a decentralized exchange, purchasing an NFT, holding the token in a non-custodial wallet, holding the token in a multi-signatory wallet, participating in DAOs, using a smart contract to handle decentralized escrow, interacting with decentralized lending protocols and liquidity providers.
A government-backed crypto currency would come with a wallet. The central bank becomes both the issuer of money as well as host your account. This makes other banks largely obsolete.
Assuming it to be the main and only currency, transaction privacy fully ends. Transaction blocking and censorship would be the push of a button, pretty much your entire digital existence and access to things can be wiped out at will. Given that the majority of the world lives in an authoritarian regime, not at all a far-fetched scenario.
Money would also be programmable. The central bank can apply its monetary policy directly to your wallet. Stimulus money. Interest rates based on your behavior. The blocking of purchasing particular categories of products. Anything, really.
Algorithmic enforcement of social norms to confer an ideology of the state. I recall a historical tiff between Jefferson and Hamilton on the powers of the central bank a few years ago. Unfortunately CBDC is how a majority of humans will transact in 2030, history has demonstrated this. What we have up our sleeve is specific codified internet protocols that allow state-less money. Really, this point is still lost on most people, in that they have the ability to transact over the internet with no trusted third party. Blows my mind every day.
This point always comes up, and it typically shows a lack of knowledge about what you can do with a smart contract. E.g. with a smart contract, you can implement an option on anything and sell the option to a counter party with very little work. How would you do that without a blockchain? One way would be to sell an option on a listed security through your brokerage, but the blockchain democratizes this ability and makes it so anyone can do it for a different set of assets then would otherwise be possible.
Like why have digital banking infrastructure at all? What new thing was enabled by digital banking infra? The answer is that nothing new was enabled, but the tech made banking operations faster and more accessible to more people. The same thing applies to blockchain tech.
I would guess that you have never been made to remit money to someone living in a different country. There are multiple uses for a CBDC but this one is a low hanging fruit example. I have had headaches doing because of existing infrastructure. Wire fees + exchange fees
We do you need to seek permission by default to save, spend and transact over the internet? Do we need permission to send TCP packets? To send an email?
Consider that the internet works because it is permissive in what it accepts. What if money was abstracted from the states monetary policy, and it was as frictionless as any other internet protocol. The internet experiment changes our lives every day, in ways we cannot fathom.
I'm old enough to have lived in a cash society. We got paid in cash and paid for things in cash. You can send cash to others. Without a cap. We didn't own some government an explanation on what we do with our money, as it's none of their damn business. "Guilty by default, prove me that you're not" is to be rejected.
Society had less crime not more. Moreover, things like capital controls do nothing at all. Criminals with half a brain are quite obviously going to work around publicly known limitations.
Citation needed, at least if you're defining crime in the sense of what's experienced by regular people. Being a victim of violence was much more likely in those days, and the fact that you could easily spend the money of someone you mugged was a significant factor in that.
> Moreover, things like capital controls do nothing at all. Criminals with half a brain are quite obviously going to work around publicly known limitations.
The point isn't to eliminate it entirely but to make it more costly, and in that regard they seem to have been quite successful.
Only if you believe anything done without permission of an authority is criminal, which IMHO is no way to live the finite days we have trapped on this rock.
Peer to peer and permissionless does not mean criminal. It is how the web, email, end to end encryption protocols work. Most of HN would probably agree that E2EE and open source communication protocols are a good thing despite these tools also giving criminals an easier way to communicate without oversight.
Decentralization is not a goal of the modern financial system. Indeed for many reasons, decentralization is not desirable, as crypto-bros are about to find out when Tether blows up and takes out 3/4 of the market.
Tether is hardly decentralized and it blowing up will not have impact on the network. Who cares if a high-risk stablecoin crashing takes out the market price of ETH so long as the chain continues to fill blocks and protocols like DAI, RAI and USDC continue to operate as intended.
> Decentralization is not a goal of the modern financial system.
Many people in the world do want a broader range of options than “fiat in centralized digital bank.” Even the HN crowd sometimes praises cash and its peer-to-peer and censorship-resistance attributes.
The ability to have a smart contract perform operations like atomically and trustlessly swapping two assets without human oversight is interesting. Maybe not to you, but to many users and industries.
Auctions already exist. Time-locking your own money is a very niche case but I'm sure you could find a way to do it with regular dollars. You can buy other tokens with dollars. You can set up trust funds, corporations, and non-profits in dollars. Escrow exists. Loans exist.
The difference is the decentralization of it, but why is that an advantage? We've had hundreds/thousands of years working out the kinks of, say, how to operate an escrow provider. Replacing that all with "smart" contracts just opens you up to hacks of poorly written code, of which Ethereum itself is a prime example.
Crypto does not need to replace all financial activity. But it may be used in place of some activity, and opens up some new use cases that we did not have before. Somebody can purchase their coffee with fiat and their NFT (which may be an ENS domain) with an ERC20.
Take decentralized escrow, which underpins auctions, crowdfunds, markets, atomic swaps and more: it does not require a private third party.
Most traditional escrow are companies that will do data collection, long settlement windows, arbitrary thresholds, high take-fees, and restrictions based on locale.
A decentralized, open source, forkable, global, instant-settlement, ownerless, and feeless protocol to handle escrow of digital assets is rather novel.
ERC721 is a great example. A group of people defined an open source standard, and then a variety of clients began to support and build on top of it. It is now a multi billion dollar industry shaking up the art world.
If you think you can write a better spec for a transferable non-fungible record of ownership, like a domain name asset, that works across any EVM blockchain, go for it. It’s an open system, hence why other specs like ERC1155 exist and find traction to meet different needs.
These kinds of open source and decentralized standards and protocols is also what gave us the web. It is valuable to have a system that is built on open protocols rather than a closed and highly permissioned infrastructure.
"When in a gold rush, sell spades" is old hat. Now it is "sell spades but also denominate everything in the SpadesRUs Prospecting Emporium in SpadeCoin scrip" and relieve people of their dollars at the door before they've even laid hands on a spade.
> If you were trying to complete a transaction on the Ethereum network last night, you might have been taken aback by the ridiculously high gas fees you saw. For example, one user purchased a $25 NFT on Saturday evening. Their total price? $3,325. That's $3,300 just in fees.
Zelle has strict limits on how many transactions you can do and how much you can transfer.
Yeah, ETH has high fees. Don't use it directly. Use an L2, Polygon, or something else where fees are pennies or less. ETH is not a good chain to be on for the average user, unless you have a lot of money to waste on gas.
Those "L2s" are the same kind of entity as something like Zelle, and equally able to exercise controls on what kind of transactions you can do and for how much.
W...why do you want something more digital than the existing system ? I dont want each dollar to be tracked from its infancy to where I spent it, I m quite fine with withdrawing my digital money back to cash at the ATM and spending it anonymously thereafter.
The system is perfect, why change it to liquefy the dumb investment a few crypto lunatics made ?
The existing system would stay the same. A USD stablecoin would be something new - a cryptocurrency that is backed 1:1 by the USD and the US Government.
It's too big of a job for private finances and too prone to corruption because there is zero profit if you do it properly.
But why should the US government build something just so crypto folks have something to gamble with? Why does the government need to enable their habit? What benefit is there to its people?
What value does "cryptocurrency" add to a centralized currency? I can see that we'd be better off with a standardized protocol for sending money around, but plenty of countries have done that fine. The US is stuck in a technological backwater, yes, but I fail to see why "cryptocurrency" would decrease the number of problems.
> W...why do you want something more digital than the existing system ?
> The system is perfect
Still amazes me how conservative the HN crowd is when it comes to finance. Move fast and break things... except not the monetary system; that, is perfect.
It seems obvious to me that a stablecoin needs a solid governmental backing, since there is no profit in it and you need unlimited deep pockets in case of a run.
The advantage is then that the USD remains the world's premier reserve currency, even into the digital age.