Central Banks are Competing with Digital Currencies

The New Money — Cryptocurrencies

Micromanagement of the economy allows people to have a certain amount of money to search for and redistribute — this, not the society you want to live in. Governments can monitor everyone’s behaviour. Crypto is essentially the opposite of that. Why would you like to switch to a worse position to take a look at your currency? Governments can use your data and not disclose it. This will cause a behaviour change in people. Governments can program that certain people cannot buy different things or get a 50% tax. We now have Canadian Tether and doing some tax break incentives so that businesses can switch to it.

China has a digital R&D and sees the transaction flow and the intentions to do that.

Most countries that have the capacity have tried to create their digital currency. The furthest along is China.

Many existing digital currencies have not yet seen widespread usage and may not be easily used or exchanged. Banks generally do not accept or offer services for them. There are concerns that cryptocurrencies are extremely risky due to their very high volatility and potential for pump and dump schemes. Regulators in several countries have warned against their use, and some have taken concrete regulatory measures to dissuade users. The non-crypto currencies are all centralized. As such, they may be shut down or seized by a government at any time. The more anonymous money is, the more attractive it is to criminals, regardless of the intentions of its creators. Bitcoin has also been criticized for its energy inefficient SHA-256-based proof of work.

We are using the USD system, and there is no privacy. We have to follow US rules. The national dollar system is auto switched to digital currency and knows everything that happens in the company. In China’s central currency, everything is known by the Chinese government. They know your consumption pattern, locations, and habits. Governments will know your tax information to model people’s behaviour. This is similar to what social media platforms have on you and can model you out.

If you think about transactions with a bank, you have a second layer through WeChat and 1000 transactions, aggregate it, and send it to banks. Banks don’t have information about your bank. From a government perspective, and find out the extra layer and are not happy about the transactions to track people. This will allow for maximum monetary policy. Banks won’t be able to do anything about this.

How will they be able to protect privacy? You can have intimate details on what companies do. Auditing and taxation will be easy for governments. The centralized system of China has a centralized database and no privacy. This will give them complete transparency. This can allow people like you to see transactions from companies like Apple. This has to be forced on people because no one would use this system. There is no military for companies, but governments do so that they can move this on you.

Private or public key is there, but you can know their wallet address, know who is who, and see all transactions that person makes on a shared digital ledger. Central banks can aggregate everything together to model a person and are very powerful than the crypto blockchain data since we can only see the financial transactions. Blossom believes that governments will screw it up. The digital currency in China is helpful within the barriers of China, but it’s impossible to move money outside of the country. If the government owns everything, then it is pretty scary. There will be privacy advocates that will fight people. Governments are supposed to serve people, not the other way around, at least in democratic countries. Elected people will have the same view, and policies will be created around it.

People will pay attention to privacy and their information. Blockchain infrastructure is very slow, and that is why we haven’t seen massive scale yet. All transactions will be recorded so they can knock on your door and see whether or not you pay your tax. Scaling issues will be fixed in 1 to 2 years. Censorship resistance and privacy is the main value proposition of crypto. People on-ramp money to crypto because of the hype, but once governments release the digital currency, people will start thinking about privacy. House Committee Yellen talks about 1 trillion of tax is lost each year, so governments have a considerable incentive to pursue this.

It can take several years to have carrot (tax) and stick (hard for people to interact with the government) incentives for people to the on-ramp to digital currency. Corruption can happen quickly to have governments place bets in the market and see which public companies to have allies in. Governments can operate to handle the entire sector to have everyone have support from the private sector to see who gets involved in developing a cryptocurrency. No company will tolerate this level of transparency. Government governance will have incentives to buy government officials. This will benefit tremendously. It is rent-seeking behaviour. If I have a database underneath me, then I have an incentive to sell the data out. How can we get past each level of transactions? In conclusion, it is a bad idea.

Source: https://medium.com/@thisisanhle1/central-banks-are-competing-with-digital-currencies-23d7b9642703?source=rss——-8—————–cryptocurrency