Should the Fed Create ‘FedCoin’ to Rival Bitcoin? A Former Top Official Says ‘Maybe’

Probably work out as well as the Petro

Our government is incapable of stopping a robo call....

Not just no but hell no. Such cryptocurrencies can be cracked. Like lotteries that are theoretically completely secure (until someone hired to check for hacking inserted a few lines of his own code!) a cryptocurrency will eventually be hacked. Furthermore, cryptocurrency is extremely open to manipulation. Non-governmental cryptocurrencies are usually more profitable for a business to run without such manipulation, at least in the long term. Governments act differently, so they will manipulate.

Rather interesting that such an article about cryptocurrency would include a reference about 'blockchain' without comparing and contrasting blockchain with 'hashgraph'.

It's a good thing this idiot didn't become head of the Fed. I think he just figured that cryptocurrencies are 'cool' and therefore the government should have them. Problems include: 1. The dollar is US currency. Why would the Fed compete with itself? 2. One of the big ideas behind cryptocurrencies is that nobody owns them. So even if the Fed started one, unless it broke the normal rules it would immediately fall out of their control anyway. Now, blockchain technology (the basis for cryptocurriencies) can be useful for many entities, possibly even including the Fed. If he's talking about that, fine, but he should be more clear.

The purpose of bitcoin was to keep the government and big institutions out. They already run the Centeal Banks that control the currencies. If you let them in the door, or let them set up their own rival currencies, you are just helping everyone else go broke faster and transferring all mediums of trade into the hands of the already wealthy.

Can’t see this happening- the big attractions of Cypto are 1. Its “crypto”-ie transaction NOT visible to government, banks etc. 2. Not reliant on banks for record keeping, etc (but banks-huge lobbyists by the way- woudl fight this disintermediation hand and foot

i think the central bank of switzerland is reviewing "swisscoin".

For over one hundred years the United States enjoyed the benefits of an uncontrolled, market-driven currency (or salad of currencies) and the result was repeated periods of chaos. That's why we now have the Federal Reserve. The push for "free" currencies is just one more example of our determined march forward in the direction of the ninth century.

One of the primary benefits of cryptocurrency is that it is not controlled by a central bank. It's a new gold standard, and the transactions are all on the ledger that everyone has (as part of the system).

The U.S. dollar is backed by the full faith and credit of the United States government. That's a given. Okay, so why does the United States Treasury need a blockchain? And why can't cryptocurrencies do something more constructive with their "mining" than to waste a whole lotta electrical power?

When the Fed, a private organisation, becomes transparent and independent audits are publicly released every quarter (going back several decades), then we, the People, should get to vote on whether or not we trust the Fed to make a FedCoin. After all, the Fed uses the People (current and future taxpayers) as collateral. If you are wondering, the demand for transparency and independent audit will never be allowed by the Fed. Since a foundation of trust is needed for everyone to agree on the value of any blockchain currency, then I would argue the Fed has already failed the litmus test. "Central banks have spent hundreds of years learning how to keep the value of money stable". Obviously the writer has forgotten every single crash, depression, recession, run on banks, and scandal of rigging by central banks. It is amazing as the last major disaster was only 10 years ago and the Central Banks simply added a zero (which devalued everyone by 90% and allowed the wealthy to quickly recover but which will take the average person more than a lifetime to recover from). So now the same mismanaged system is the one people want to trust with a new blockchain coin? Sorry, the whole reason blockchain has grown since the Global Financial Meltdown was because none of the bankers at the major banks or the Fed were held accountable for their role in the collapse. People don't trust the Fed because it isn't held accountable, isn't transparent, and isn't addressing rising inequality.

This story has knocked Ethereum down almost 10% today. I suspect as the speculators noodle over how the USG might offer a cryptocurrency that serves basically the same purposes, there will be significant further erosion of confidence. Sure, criminals, anarchists, and techies have reason to stick with current blockchain, but everyday Joes are only going to adopt what they trust and what's backed by someone pretty big. You know, like the US, the EU, the World... guys like that.

If you believe the utter foolishness of relying on the private software called blockchain may I suggest you read two very provocative articles in today’s New York Time Magazine on the “cracking” of the lottery and the theft of money from the Bank of Bangladesh. So despite what some may think no software system is ever truly safe from hackers, whether it be run by the government or especially by private entities. Moreover, software such as blockchain make it too easy for criminals to operate undetected. Need an example, just ask our white suprematists “friends” how they benefit from bitcoin.

Fedcoin exists! It's currently called the 'dollar'. Dan Kravitz

Backwards. Totally backwards. The public still doesn’t understand that Bitcoin is authentic and verifiable in digital terms due to its decentralization. This is how unique units are created i.e. Bitcoins. If the fed, definition of control freaks, made a Fedcoin it would be centralized. Meaning, the fed would control value, total market capitalization and distribution. We already have that - it’s called cash. Cash is the most used form of payment for tax evasion and criminal activity in the world. Just like all the banks, the fed wants a piece of the action and is in denial about the Decentralized power of bitcoin to become the default currency of the world. No one believes the banks anymore - they have robbed all of us. The only way they can destroy bitcoin is if everyone just loses interest and sells. Not going to happen

How stupid can you be. We could all use Monopoly money!!! We might also consider getting rid of all kinds of industries or at least bar them from "trading" on Wall Street. I am thinking about the drug company mafias whose profits are paid for by the taxpayer (Medicaid, Medicare, ACA) and whose products kill 40K people per annum. HUMMM. What the heck is block chain technology anyway? And what is this really all about? Currency trading - ForeX or whatever Soros made gazillions on?? Don't get me started. (Luxury tax again now!)

So some guy who thought deflationary monetary policy during the Great Recession was a good idea also likes cryptocurrencies? Shocking!

There's nothing remotely crazy about this. What's the difference between having $100 in electronic form today, where it can be wire-transferred etc., and having it in an electronic form that also carries an electronic proof of title, as it were? The best thing about having the Fed do it is that you don't have to worry about the blockchain exchange disappearing overnight, nor about the currency being ruled illegal etc. It's a good idea. Better than paper in this day and age.

At this time, the FED has quite enough of a challenge figuring out how to respond to and anticipate the demands of our economy. Obviously - we need experts on blockchain tech, and bitcoin-like "currency" systems. There IS however a GOOD reason the FED moves slowly. The unintended consequences of even small changes are a often magnified in the market -- and in people's lives.

The only reason bitcoin fluctuates in value is because it’s still in a very early phase of adoption. Each usd has 2 decimal places. Bitcoin has 8. When bitcoin reaches real market value no one will think of bitcoin in single units. It will be in Satoshi - 1 hundred millionth of a bitcoin.

Here's the threat; allowing cryptocurrencies to be exchanged for the dollar. This would destroy the monetary sovereignty of the United States. The dollar exists because the federal government constitutionally has the ability to tax and a monopoly over the currency which is the only way to pay the tax. Allowing cryptocurrencies to be exchanged for dollars would give those currencies the full faith and credit of the Treasury. To be brief: That would be extraordinarily stupid.

They could try but it might end up like en.m.wikipedia.org/wiki/MintChip or xoom(was a joint venture by canadian wireless accociation) both useless due to their limited reach I guess they could go the ugo hce way

Some folks even bet on jumping fleas.

This is actually a story about the Hoover Institution.

Kevin Warsh? About as unqualified a Fed Governor as ever existed. And a hard money nut too, which is why he likes Bitcoin.

Good Lord. Maybe the Fed should just go ahead and open a casino.

The point of blockchains is decentralization. A FedCoin would be centralized. How is that different from a greatly expanded FedWire?

Pure genius. This is why the US leads the world

Yes except .... I have no interest in being involved in or supporting another currency that is attached to this country. Unless I have to. It's much more appealing to use a blockchain type of payment/currency, one that sidesteps any national governments.

NO!!!! once again NO!!!! Stick to what you DO. The "federal reserve" does not need to "EXPAND" in order to grow.

We already have a FedCoin. It's called fiat. Bitcoin's functionality removes reliance on centralized state monopolies and places the power of creation and movement into concensus. "...decentralized record keeping of transactions, could be useful in the payment systems operated by the Fed, which enable the transfer of trillions of dollars between banks." Where do the regulators end and the banks begin?

Having worked on the administrative side of a massive bitcoin seizure brought in by ICE against a Dutch drug dealer some years back, I know one thing about bitcoin. It's a very convenient method for human traffickers, drug cartels and their criminal ilk to launder large sums of money without too much outside observation. Any move by the Fed would of course bring transparency to the use of this alternative currency, thereby making it non-crypto. Criminals and their organizations will continue to thrive by stashing their boodle in bitcoin, and luring the greedy straight people into doing the same to give their transactions a semblance of legitimacy. The Fed and the Treasury have merely tipped their hand to indicate complete desperation in the face of this diabolical fiscal device.

Hmmm.... Interesting concept. A crypto currency run by a nation state. New Coke? Old Coke? Bud? Bud Light? LOL!!! Seriously though. This has great potential but also, on a broader level, goes against what these are. Not controlled by a Nation State. We need to acknowledge that the USD will not be the benchmark currency forever. This is especially true with the completely irresponsible spending habits the electorate has been voting for for the last 50 years or so. So having something not tied to a Nation State might actually provide more stability in Financial Markets over the long run. Especially since they are such an integral part of the Global Economy.

We already conduct most of our transactions using debit cards or electronic bill payments that are denominated in US dollar bank deposits. Why would we need FedCoin? I don't get it.

Yes, there should be sovereign digital currencies, and there will be. Cryptocurrencies used for tax evasion, money laundering, drug trafficking, evasion of sanctions, unwise speculation, and cyber-crime must be made illegal in every lawful nation.

Bitcoin is good for two things, making the filthy rich even richer and criminal payoffs. Or is that one thing? The fed's should have made Bitcoin illegal on day one. Now, it's too late. And I don't think it's a good idea for the federal government to enable white collar criminals more than they already do. They should have called it PandoraCoin instead.

Wrong question. Should the Federal Reserve even control our economy? That is the question and I believe the answer is a definite NO!

Sounds like a smashing idea! I would really like to see a fed coin and read up about their monetary policy.

If I win the next Powerball Lottery I’m gonna buy my wife a sewing machine, pay off the $728.55 I owe still owe VISA for my Christmas shopping and invest the rest in Bitcoins. President Trump and Paul Ryan are our leaders. These are perilous times. One cannot be too careful.

Banks may find some applications of blockchain useful but for central banks to fully embrace cryptocurrency seems very far fetched. The central banks don't need to electronically mint currency; it's much easier to just print more and far less costly from a computational and environmental standpoint. Can you imagine how much energy the world would need to create current levels of currency in cryptocurrency format? Secondly, creating cryptocurrency is basically reverting back to the equivalent of the gold standard. Not something central banks would be keen to do.

paper notes are easier to print; electronic money (denominated in US$) is also easier to generate. they also have the backing of the US treasury department, whose secretary is appointed by a democratically elected official. this implies trust or faith, at least for most people. counterfeiting and secure transactions are issues for all kinds of money, and faith in a currency and the willingness to use it are related to these issues. ... "If cryptocurrency and blockchain technology really are the future of money..." notice this clause is conditional. it is also speculative (pun intended). in my opinion, a more important issue for the central bank is how much of the money supply should or could be electronic versus in paper notes and coins. in the modern world, we can do much of our spending without ever having to withdraw, to carry and to count paper notes and coins, but we also need to rely on an electronic infrastructure to make this happen.

There is more than one reference in this piece identifying the current bitcoin advocates as almost altruistic (motivated by a distrust of banks) I can't be the only one who thinks that's funny.

A government centrally controlled digital currency misses the point of bitcoin.

anything can be used as money. beads, shells, stones, gold, paper money etc. it is all a faith game as people have noted. as long as some people consider bitcoin to be money, it will be. and as a general rule the hardest money to produce generally kills out the easy money. this is why gold replaced shells, beads and other monies -- it was harder to produce and to inflate the currency and people preferred it because of these inherent qualities. of course our paper money was originally backed by gold but the people have forgotten and now the government has a license to take on ever growing debt. bitcoin, with its hard limit of 21 million is the most scarce money and this is why people accept it as a superior money to the dollar as well as gold. 'Fedcoin' does not stand a chance for many reasons. first of all they don't need a blockchain, they can just use a regular database since they are going to be centralizing control anyway I would assume. Secondly people who are adopting bitcoin already understand the problems with paper currency, that it can be printed at will to debase our currency and steal from the holders of that currency. the thought that they would drop a superior harder money for one that could be printed at will is quite laughable. this is the main point in saifedean ammous's book, the bitcoin standard, his ideas not mine. it explains how bitcoin could replace the dollar as the world reserve currency. fedcoin doesn't stand a chance against bitcoin

As with all articles on crypto, Bitcoin is mentioned as the only option. Far better, and tuned to wholesale payments, is Ripple. Bitcoin is a highly entropic energy waster whose day is past.

The Bitcoin, a coin as valuable as people wish to believe it is because it is dead soft, without even shrinking percentage precious metals supporting it. Its only real use is as a method of laundering cash, and to those who oppose the Internet capitalists’ total disregard for personal privacy. I don’t have the cash or the need for bitcoins, but there are times - like when buying books about politics, I prefer to pay with greenbacks at a retail store, cutting out one small place privacy can still exist. The Internet was simply not set up as a tool for sales and the misuse of easily collected information, that legally, or not, provides your life history to anybody with the cash to buy it. A government digital currency would, by the system’s very nature, be designed to track, rather than hide one’s spending. It would be the antithesis of the system’s reason for existence. Also, the same system that allows anybody with a lot of cheap computer power ‘mine’ fresh Bitcoins would provide economic enemies from destroying each other’s currencies. If measuring computer power by teraflops - trillions of floating point arithmetic operations per second, China currently has the world’s fastest computer. Not by much, but ... Do you want your spending trackable by the nation issuing your currency? I didn’t think so.

The price for adopting to a blockchain-type technology to generate cryptocurrency is huge: By removing trust from the system, we pay for it by a colossal use of energy, which the world can ill afford. And yet, the technology as it is without tied to any cryptocurrency is definitely worth developing to support distributed immutable national archives to protect vulnerable resources like individual identities and encrypted trade-secrets.

This isn't about bitcoin, it's about blockchain currencies. Bitcoin is the first but won't be the last or the best. The beauty of blockchain based currently is that suddenly you don't need a trusted intermediary like banks, VISA, western union, or even the Fed in order to exchange/transfer value securely and without the "double spend" problem. To respond to the environmental concerns of bitcoin raised by some, not all blockchain based currencies operate on a "proof of work" basis like bitcoin and therefore don't necessarily suffer from the same problems of exponentially increasing energy demands simply to keep the system running. The fed should highly consider creating a cryptocurrency that works synergistically with the dollar. It should supplement the dollar's deficiencies such as durability and physical transportation, and it should provide a secure method for creating legal, anonymous financial transactions on a small to medium scale just as the dollar does. Large or otherwise unusual transactions could be flagged just like a suitcase full of $100 bills. The biggest problem here is that the banks always want a cut, and a system where consumers could make transactions and keep money securely and safely without them (including loans and other financial instruments), they're out of business. No way they let that happen, sadly.

A big reason people even go bitcoin et al. is the ability to hide transactions from e.g. the Tax Man, at least until someone connects the dots of their wallets and transaction IDs and times, or catches them cash the coin in for US dollars (and since the typical bodega or mom-and-pop local shop frankly doesn't even know what a bitcoin is, let alone how to take 'em, there's always a need to cash 'em in). Such people are just as wary of the easily-found "FBI-only" backdoors for the government to eavesdrop phone and internet communications that the FBI is so eager to have in iPhones and such, as they would be for what backdoors they'd add to a FedCoin, so FedCoin acceptance should enjoy a meteoric rise. (Meteors don't tend to rise.)

The current “mining” of Bitcoin, and of most other cryptocurrencies, consumes enormous — and ever increasing — amounts of electrical power. Thus, as these cryptocurrencies become more popular, their carbon footprint will increase exponentially. We need to decide, as societies, whether the utility of these cryptocurrencies (whatever that may be) outweighs their externalities. Alternatively, we need to find a way to internalize in the price of Bitcoin and the other cryptocurrencies the cost of their carbon emissions, which currently society as a whole is paying.

What I don't understand is how "bitcoin" becomes "money". As I understand money needs someone to accept it - in whatever form it is - for something else. It replaces barter, my chair for your sack of flour. At one time, if I remember correctly, it represented so many ounces of precious metals, (the Native Americans used beads woven into belts?). So again, what is this stuff of digital creation -- and you buy it from whom with what? a dollar bill -- which seems to be universally accepted for something.

We already have FedCoin. It's called the dollar.

We already have a virtual currency. It is called the United States dollar.

The problem with all of these cryptocurrencies is that they don't really function like currency. They're constantly fluctuating in value and in order to spend them on most things you need to cash out. Bitcoin appears to be more of an investment than a currency.

I think that while it could be useful for the feds in multiple places, it also kind of defeats the purpose of crypto currency. When I look at bitcoin, I see two potential highlights, it can be used in a way that cannot be traced to you, and it is a good investment. It (to me) is not a practical way to use money and credit card companies and apple have made it easier to pay without cash or a credit/debit card. I think that by making it regulated by the feds would cause the “crypto currency” loose one of its key values, in being anonymous.

Bitcoin is the future of money in the same way that beanie babies was the future of collectables, Pets.com the future of online retail, the South Sea Company the future of joint-stock company, tulip bulbs the future of horticulture. There's no "there" there. Bitcoin is a pile of flim-flam dressed up in technobabble that has no place in any well-functioning economy. It purposefully introduces all the things that we consider harmful (irreversibility, wasteful duplication of work, pseudo-anonymity that by design can let transactions be traced in perpetuity, etc.) and worked to get rid of.