Currency Always Has Costs, Ctd

I see digital currency is celebrating a bit of new legitimacy – the US Government is going to investigate the possibility of regulation and even issuing its own digital currency:

Industry leaders are greeting the White House order as a win for the sector. “Today, as democracies confront the greatest threat to global order in this century, we had a breakthrough,” Tomicah Tillemann, a former State Department official who recently joined an as-yet-unnamed venture capital firm investing in blockchain-based companies, wrote in a Medium post. “The Executive Order will inaugurate a serious, sustained discussion about how to build the policy architecture of a better internet. This is a debate Americans deserve.”

Circle chief executive Jeremy Allaire, whose company issues the world’s second-most-popular stablecoin, wrote on Twitter that the order signals that the United States “seems to be taking on the reality that digital assets represent one of the most significant technologies and infrastructures for the 21st century; it’s rewarding to see this from the WH after so many of us have been making the case for 9+ years.” [WaPo]

Which, to me, suggests a recognition by the government that value can be transmitted via digital currencies, and that possibly criminal elements are using it for that purpose.

And not necessarily that digital currencies are superior or have an unique utility.

So I think we can suppose digital currencies are in our future. Important questions:

  • Will they remain fragmented, or coalesce into a few examples? If we dare to take examples from the real world, the post-World War II example of the dollar becoming dominant suggests coalescence. How much patience would we have with each of us managing a variety of digital currencies?
  • Will the energy consumption problem become paramount? That is, will the US Government require that new coins be issued without the huge outlay of energy that accompanies some digital currencies, such as bitcoin, still require?
  • Will necessary inflation of the coin supply be recognized as a key problem of digital currencies, and a manual way around it be mandated?
  • Will stablecoins go away?
  • How will the value of bitcoins be managed, particularly exchange rates?

Speaking of value, how’s bitcoin doing these days?

It appears safe to say not as well as a few months ago. However, the chart makes clear that it falls and recovers, so it may recover again.

If that’s a good thing for its future as a digital currency.

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About Hue White

Former BBS operator; software engineer; cat lackey.

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