Are you sure you want a government crypto-currency?
In an article by Wendy McElroy from bitcoin.com in 2017, Ms. McElroy took on the hazards of a digital currency issued by the U.S. government. Back then, it was referred to as Fedcoin. The subject has been on the down low, but the recent executive order by President Biden to study the creation of a U.S. government cryptocurrency brings the subject to the forefront, as a recent NBC news article reports.
The Biden administration is putting its support behind the research and development of a "U.S. Central Bank Digital Currency," or CBDC.
The move is part of a sweeping executive order President Joe Biden signed Wednesday instructing the federal government to explore possible uses of and regulations for digital assets like cryptocurrencies.
Most people regard cash as slightly cumbersome. I often take note of people's choice of payment options at convenience stores and drive-thru windows. Most prefer plastic. It is speedy, purse space-efficient, and tight-budget flexible.
Can the government be sufficiently persuasive to motivate people to give up cash to a rectangle made of official government plastic? I admit that I have assumed that a transition to plastic currency would fulfill the predictions of futurists and sci-fi writers. With the invention of blockchain, it struck me as inevitable.
Such an inevitability now seems frightening against the backdrop of a cancel culture and the Edward Snowden realities of everyone's private internet and cell phone communications being stored on NSA server farms. Trudeau cutting off the bank accounts of Canada's protesting truckers was the final nail in the coffin for me to oppose a cashless future with only a plastic Fed-coin-type card.
Monetary gurus Doug Casey and Wendy McElroy also answer the how and why of a government, Bitcoin-style currency.
Why would people use the cryptocurrency? Fedcoin would almost certainly emerge as a parallel currency which would be adopted due to government requirements for its use in paying taxes or accessing entitlements such as Social Security. Increasingly, however, Fedcoin would become a tool to push toward a cashless society because physical money provides a privacy that prevents government control.
The God-like power to control and cancel personal bank account transactions is the stuff of serious totalitarian control.
With cash replaced by a Fedcoin, the government could ctrl/alt/delete one's ability to spend or generally function until the person got vaccinated, for example. Because of government access to every financial transaction, it could fight obesity by limiting one's Snickers Blizzard purchases.
The government keeping track of ice cream treats might seem a bit over the top. Don't forget that banks now must report transactions over six hundred dollars. The government didn't used to care, but it does now.
Cryptocurrency uses the high-profile moniker "block-chain," a system of verification algorithms. Each Bitcoin transaction has a permanent ID tag — in computer lingo, a "nonce," a genesis reference that acts as an authenticator, creating a non-changeable transaction history. Thus, it does not permit falsification by a bad actor. Blockchain is decentralized, so no one entity has majority control over the transaction history to fraudulently change it. A U.S. central bank digital currency could change that.
Financial writer J.P. Koning speculated in an article entitled "Fedcoin."
The Fed would create a new blockchain. ... There would be an important difference between Fedcoin and more traditional cryptoledgers. One user — the Fed — would get special authority to create and destroy ledger entries[.]"
The government could become the bad actor precisely because of its majority control over the blockchain ledger history. The ledger would go from being decentralized to centralized. With that comes the ability to program and reprogram, putting your financial privacy and independence in jeopardy. Of course, the government would promise not to do that.
Once a society goes cashless, a socialist, ever-voracious government with the crypto-algorithmic keys to control an individual American's financial assets is a most frightening prospect.
Spruce Fontaine is an artist and retired college art instructor.
Image via Pixabay.