The US government is creating their own cryptocurrency. The digital dollar also known as Fed Coin or CBDC (Central Bank Digital Currency). This is a project that is in joint collaboration MIT the Massachusetts Institute of Technology and our government and it’s something that was talked about for a long time. This is still top secret but details will be revealed in Q3 or July of this year. In this video I wanted to talk about what the government actually plans to do and what you need to know as far as what it means for the future of crypto, – does it mean crypto will go up in value, is it going to go down, does it mean the end, is it going to compete? Is Bitcoin going to be replaced? What is Fed Coin? Fed Coin is a federal coin, a government coin which is also called CBDC (Central Bank Digital Currency) Isn’t the dollar already digital? The dollar itself is not digital, even though it exists on a computer, whenever we send money to each other, we’re not technically exchanging that money, we’re transferring digital rights or a digital claims which is denominated in dollars that don’t technically exist yet. Banks that have more than 124.2 million dollars in assets are required to keep at least 10% of the reserves on hand and the rest they can “digitally print”. This is because the infrastructure of how money works is extremely complex.
The complexity of our system: Remember the Gamestop and Citadel situation when Robinhood froze trading? That was because of T+2. This is because when we place a trade to buy or sell stocks in an app like Robinhood – for us it’s instantaneous – we put in an order, order gets filled, we have the stock – but behind the scenes what actually happens are 3 phases. Phase1: the execution phase which is where we enter into an agreement between buyers and sellers, then our trade goes through clearing which is phase 2 where those transactions get recorded and made sure that the money is in place and accountable, and then phase 3 is the actual settlement where we exchange money for stocks. This can take 2 days which is why Robinhood needed the cash to front those trades (allegedly). What is the goal of Fed Coin? The hope is that Fed Coin would potentially be instantaneous without going through any middleman like banks and payment processors.
Pros & Cons of the Digital Dollar: Pros: It’s going to help the government become more efficient at collecting taxes. Cons: it’s going to make the government more efficient at collecting taxes. Just kidding, here is the real deal.
Pros: – Atomic Swaps (allows people to move money in and out of crypto extremely quickly without middlemen) – Velocity of capital (increases speed with which we exchange money which means more stability for the system which means more utility for crypto to function like an actual currency) – Less wait time to withdraw from exchanges
Cons: – Government will finally phase out cash – Less financial privacy – Another system of control?* (speculation) When is it going to be released? It’s not official yet and the government is divided. Jerome Powell says he will make it happen when Congress votes for it. Janet Yellen, the Treasury Secretary says that the digital dollar could help people who don’t have access to the banking system while other people like the chairman of the senate Banking Committee Sherrod Brown who represents the interest of big banks says the government is jeopardizing the stability of our economy with a solution to a problem that doesn’t exist.
Did you know what Satoshi Nakamoto means central intelligence? That’s why some people think that Fed Coin is Bitcoin and that it was actually created by the government in secret as a tool to keep track everyone, united under a single world reserve currency (fun tidbit that isn’t true).