[aNoob7000]

LOL! Very true..

Who the hell has time to figure out all this stuff?

I personally think the day the digital US dollar is developed and can be stored in your IPhone. If I can take my locally stored digital dollar and then send it via imessage or whatsapp, then the game is truly over for Bitcoin.

[singularity2001]

   I personally think the day the digital US dollar is developed  …

The digital US dollar is pretty much in use already, or do you think your bank has anything physical resembling the number on your account?

[freeone3000]

It's closer to each individual bank having their own digital currency, all of which are worth 1 USD each. The digital US dollars at my bank are not directly exchangable with the digital US dollars at your bank. You need to settle up with an ACH transaction, which takes at least a day to transact as it has to run in a central batch job. In addition, only US domestic institutions can use this mechanism to transfer US dollars between themselves -- international institutions need to use the SWIFT system, which is multiple days for a transaction. Contrast with credit card payment and settlement, which acts closer to a digital system but can't be used as a store of value (and has punitive fees for attempting to do so). The US dollar acts like a cash system with some digital features rather than a digital system.

[warkdarrior]

> The digital US dollars at my bank are not directly exchangable with the digital US dollars at your bank. You need to settle up with an ACH transaction, which takes at least a day to transact as it has to run in a central batch job.

FedNow will reduce that latency from days to minutes. US is slow in that game, but RTP is widely deployed in UK, France, etc.

For international transactions, one can use SWIFT (days) or TransferWise (minutes) or Western Union (under one hour).

[aNoob7000]

I want my digital cash to work like regular cash. I need to pay the lawn guy, send an iMessage. I wanna buy lunch, swipe my phone and pay with the money in my phone. I don't need the charge going through my bank or some intermediary.

I want freedom to use my digital money the way I want without someone holding my account hostage, if I do something wrong. Additionally, I have no problem losing my money, if I send the money to the wrong person or lose my phone.

[Geee]

That's good usability-wise, but it still has the problem of central banks being able to create money (diluting your wealth for their benefit) and also being able to cancel you, or someone you want to pay, out of the system. It's a horribly powerful way to control people.

[freeone3000]

FedNow is a digital cash system. It's not there yet, and it's still not international. As for Western Union et al, it's a bit like claiming the US has a digital cash system because Venmo exists -- it's someone else taking on the risk the funds won't settle in order to provide a better user experience. So the US is approaching a digital cash system, but it's not there.

[bun_at_work]

The bank does hold a fraction of your deposits, as our banking in the US is fractional reserve banking. This has been the case for quite some time, and isn't really the same thing as digital currency, even if we transact digitally.

[jwolfe]

From my understanding, they hold most of that in reserve accounts with the Federal Reserve. But yeah, someone at some point holds some cash. But of the total US money supply (in 2018), physical currency makes up about 11% of the total value[0].

[0] https://www.businessinsider.com/heres-how-much-us-currency-t...

[reedjosh]

And whenever this comes up, I just like to remind people that we went to a reserve requirement of 0% nearly a year ago with the start of COVID.

https://medium.com/navigating-life/we-just-went-from-fractio...

Edit: Downvoted, and I'm guessing it's the source? This is legitimate fact though. Here's the fed's own announcement.

> In light of the shift to an ample reserves regime, the Board has reduced reserve requirement ratios to zero percent effective on March 26, the beginning of the next reserve maintenance period. This action eliminates reserve requirements for thousands of depository institutions and will help to support lending to households and businesses.

https://www.federalreserve.gov/newsevents/pressreleases/mone...

[tylerhou]

Which is completely fine, because the Fed is willing to step in as the lender of last resort.

[lowkey]

Where does the Fed get the money to be a lender of last resort - by printing the money and generating inflation? If so, then how does this inflation impact the purchasing power of these last resort dollars?

I often like to take things to a logical extreme. Since the Fed can simply print all this money into existence, is there a limit to their ability to print? I mean couldn't they simply print their way out of any economic crisis or would this result in another Weimar republic situation? -- genuine question.

[reedjosh]

It may be fine for the faith in banking structures, but it's not that great it you like your dollars to hold value.

[bun_at_work]

Right, because fractional reserves are set around 10% or so.

edit: fraction reserve _requirements_ are set around 10% or so.

[kqr]

Well, you make it sound like there's a limited number of dollar notes and the bank will refuse your deposit/loan if they don't have enough notes lying around to make the fractional requirements.

In reality, they will accept your deposit/loan (as long as it makes business sense) with no regard for how many notes they have lying around. If that puts them over the edge of the fractional requirements, they'll just go to the Fed/Treasury, who will swing their wand and write in additional (digital) reserves for the bank.

It is mainly all digital at this point.

[reedjosh]

> they'll just go to the Fed/Treasury, who will swing their wand and write in additional (digital) reserves for the bank.

Pretty sure that's true for larger institutions and lending between themselves, but not for your everyday accounts. They must go to fed member banks themselves to ask for the loans.

[bun_at_work]

This simply isn't how the financial system works. The bank will only loan out amounts based on what they hold in reserve. Asking the Fed/Treasury to "swing their wand around" isn't really close to what happens. Also, the Federal Reserve and the Treasury are different entities.

They don't just "print money" for banks arbitrarily.

[kqr]

Printing money for banks arbitrarily is exactly what they do -- what they have to do, if they want to have any chance at meeting their target overnight rate. (Which they are.)

Demand for money comes from the market and is not very flexible, and certainly not under anyone's control. Lenders will meet the demand for money at ever increasing prices (i.e. higher overnight rates) unless money gets printed arbitrarily.

[spiralx]

Banks literally create money by lending, here's a good overview from the Bank of England:

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...

[scatters]

The US does not have reserve requirements; it has capital requirements. The fractional-reserve model is not a realistic description of banking in modern developed economies.

[X6S1x6Okd1st]

That definition seems to differ from the definition I've commonly seen.

How do you define a digital currency?

[bun_at_work]

I don't have a strict definition handy, however it seems as though digital currencies would be those that are digitally based, whereas the dollar is a tangible currency first, even if it is fiat.

A digital currency would be like crypto currency, or in-game currencies or something designed to be digital. The dollar is the federal reserve currency, and not intended to be digital. It doesn't make sense to call it digital currency, when in fact it's physical currency first, and we've developed digital tools to help us use it and move it around.

[X6S1x6Okd1st]

At this point the vast majority of USD is digitally represented only.

[bun_at_work]

I don't disagree, but it doesn't change that USD is not a digital currency.

[HWR_14]

> I personally think the day the digital US dollar is developed and can be stored in your IPhone. If I can take my locally stored digital dollar and then send it via imessage or whatsapp, then the game is truly over for Bitcoin

Hasn't this already happened. It's called Zelle or Venmo or CashApp or ApplePay or a million others. Heck, if you prefer Elon Musk pushed technology there's even this thing called PayPal.

And it comes with a whole series of laws that protect you in the case of hacking, fraud, etc.

I don't follow the advantage of using a government-issued (and custodially held) bitcoin wallet. Well, I understand that El Salvador wants to encourage people to use their BTC there. But other than that I don't see the value.

[whiskyant]

>Who the hell has time to figure out all this stuff?

In the early days of the internet, many things were a complete pain in the ass to do. But then services and apps were built and things became easier, same is happening in this space.

Before, even purchasing Bitcoin was extremely difficult to do, and involved a lot of research + steps - now it's trivial. Before, securing your wallet was extremely difficult, now it's easier but not ideal to those that are less tech saavy.

[aerosmile]

This is such a brilliant answer. Imposing the grandma test on early-stage ecosystems is a total naysayer move. We all know that humans are capable of doing advanced math, even though a newborn baby doesn't come even close to being able to do it.

[miked85]

The digital dollar has been here for years. I couldn't even tell you the last time I carried paper currency.

[rahimnathwani]

The dollar is a central bank currency.

Numbers in a retail bank's ledger are not digital dollars. They represent an obligation of the bank, and not direct ownership of dollars.

Digital dollars exist, but only banks can hold them, as they're the only ones with accounts at the central bank. The rest of us use retail bank accounts, which are the equivalent of custodial wallets in the crypto world.

[JumpCrisscross]

> dollar is a central bank currency

The term "dollar" encompasses central bank money (including but not limited to banknotes) as well as private money.

> Numbers in a retail bank's ledger are not digital dollars

Yes, they very much are. Modern money creation is public-private and only semi-centralized.

[rahimnathwani]

This is correct in practice. But consider what I said in the context of the discussion: contrasting 'digital dollars' with cryptocurrencies.

With dollars, individuals have to choose between bank accounts, which are subject to counterparty risk, and cash, which cannot be transacted digitally.

If your holding of 'digital dollars' in a bank account is subject to counterparty risk, then there's something different about the dollars you hold and 'real' dollars issued by the central bank.

With cryptocurrency, anyone can transact the real thing. There's no counterparty risk. (Of course, there are issues with blockchain scaling, use of custodial wallets etc., which negate this to some extent.)

[warkdarrior]

> With cryptocurrency, anyone can transact the real thing. There's no counterparty risk.

This only holds true if there was only one cryptocurrency in the world and everyone used self-custody. As soon as you have multiple cryptocurrencies and multiple networks and multiple wallet providers, you have counterparty risk.

Coinbase may not disappear, but others may. Similar for Bitcoin etc. etc.

[rahimnathwani]

> "if ... everyone used self-custody"

I said 'anyone can', not 'everyone does'.

> "disappear, but others may. Similar for Bitcoin"

The risk of the bitcoin blockchain disappearing, and your BTC holdings thereby becoming worthless, is not an instance of counterparty risk.

[JKCalhoun]

If I hand a cashier a physical dollar, no fee to me.

Not so with your so-called digital dollars.

An actual digital dollar would have no transaction fee whatsoever.

[skoopie]

So the person who transports those dollars to the bank doesn't get paid? The car that takes that person to the bank doesn't use gas? Just because you don't see the fee doesn't mean you don't pay it. It's included in the price of anything you buy.

[hayyyyydos]

> An actual digital dollar would have no transaction fee whatsoever.

So, something BTC is unable to provide?

[squeaky-clean]

That fee is only because we want that money settled instantly by a third party. There's no fee for a bank to bank transfer. Or heck, even writing a check. Once you get VISA involved they want a cut.

[miked85]

I don't pay any fee when I use a credit card.

[c-linkage]

It might appear that way, but that is only because the fee is hidden.

The credit card terminal agreements signed by retailers prevent the retailer from offering differential pricing when buying via credit card or cash. Essentially, the credit card fee is embedded into the price.

This might be "good" for people who have credit cards, but it is inflationary (by roughly 2%) to people whose credit is poor and only transact by cash.

But let's be honest -- who cares about the poor?

[reedjosh]

You pay a slightly elevated price to use your CC.

The CC network charge vendors a percentage of the transaction. So you aren't paying directly, but we're all paying.

[spullara]

You do, but it is hidden as the vendor is responsible for paying it. CC companies are basically a tax on transactions.

[amelius]

> Who the hell has time to figure out all this stuff?

This is a valid question for our current tax system, already.

[systemvoltage]

I like physical analog cash even though its a pain in the ass to carry. Cashless society is terrifying to me.

[dougSF70]

I think that using cash makes money expensive which adds some base load inflation - this will help reduces homelessness and other societal ills (such as wealth inequality).

Electronic money is never lost, not like those pounds, pennies, dollars, quarters. Losing money, takes out of circulation. While not much is taken out, it might be enough to create a base load of inflation - money becomes more scarce and therefore more expensive.

Low inflation leads to asset price bubbles - stock market and housing in particular. It also suppresses wage inflation. So housing becomes more expensive and wages do not keep up, making housing less affordable. A double punch.

Low inflation leads to more financial speculation as people with access to capital look to diversify away from a limited pool of assets (Bonds and cash become less desirable in low inflation regimes). Buying housing and leasing it out is a good use of capital. However, this leads real-estate investors to drive increases in rent as they chase yield and airbnb-empires also drive rental prices - as this is one way of driving yield.

High rents combined with low wage growth means that people's lives become priced for perfection and one small deviation can knock them out of equilibrium - losing their home / rental property when they lose their job.

All because governments and technology are conspiring to keep inflation low. Using cash is the person-on-the-street's only weapon to fight it.

[systemvoltage]

Homelessness is a California’s complex housing shortage and governance/policy problem. The world is much bigger than issues in SF/Portland/Seattle. I am not following the strawman from utilitarian aspects of cash -> inflation -> homelessness & inquality.

[dougSF70]

Cheap money forces it to find a home that generates a 7%+ return. Cheap money reduces the number of asset classes that can guarantee (within reason) those returns to Housing and Stocks (and Crypto of course). Buying a home becomes out of reach for more people. In addition, low inflation also suppresses wage growth. As house prices increase (just look at Blackrock's purchase of residential property at 30-50% premiums) rents will also increase because professional landlords are seeking a 7% return and if the property changes hands at a 10% lift then rent-asked for that property will also rise. This leads to a situation of unaffordable housing (exaggerated by lack of new supply coming in line in places like California) in the face of low wage growth - this leads to homeless-ness. IMO.

[JKCalhoun]

Counterpoint: those pounds, pennies, dollars, quarters never end up in a Nigerian Prince's bank account.

Oh, electronic money is "lost" all the time. Alarmingly so. :-)

[dougSF70]

Moved yes, lost no. That prince will spend it. Unlike Grandma's couch, known to have consumed $000's in its life time.

[tangent128]

(I think your definitions are reversed- a decrease in money supply is associated with deflation, not inflation.)

[dougSF70]

From the interwebs: In the U.S., the money supply is influenced by supply and demand—and the actions of the Federal Reserve and commercial banks. ... More money flowing through the economy corresponds with lower interest rates, while less money available generates higher rates."

Higher rates = higher cost of borrowing = higher prices = higher inflation.

[JKCalhoun]

I understand.

For perhaps the same reasons as you, I decline/turn-off auto-pay of any services I subscribe to. I actually cut checks every couple of weeks to pay bills.

I need a regular reminder of how I am being nickeled and dimed. My big fear is a constant drain on my account from a service that I had forgotten about or just the accumulative damage a lot of services add up to.

To be sure, our corporate overlords love the auto-pay, cashless society they have created for our convenience.

[jwolfe]

I have all of my credit cards and bank accounts set to notify (text) me whenever there is any transaction whatsoever. I find that helps with the subscription concerns, as well as confidence in catching fraud/incorrect charges quickly.

[criley2]

A cryptocurrency backed by the united states could certainly succeed as many people want to do business that way, but the point of bitcoin was decentralization and preventing government control of the currency.

The same people (lots and lots and lots of criminals, but you know, regular people too) who use bitcoin would probably not want a us dollar coin very much.

But the vast majority of people don't use bitcoin at all, for anything... I think a us dollar coin with FDIC protection or whatever protection it takes to make grandma feel safe that her $100k account is protected, would be wildly successful if they tried it.

[pinkybanana]

> Who the hell has time to figure out all this stuff?

Nobody will have to learn this stuff, if the BTC economy develops there will be professional custodials for all levels. Eg. banks.

But the importance is that there is always the option to self-custody if you want to. With fiat you don't have that option even in theory. I think the option for self-custody is what makes BTC powerful alternative, not necessarily how widespread self-custody is going to be.

[wins32767]

> But the importance is that there is always the option to self-custody if you want to. With fiat you don't have that option even in theory.

The stack of hundred dollar bills under my mattress disagrees with you.

[pinkybanana]

Good luck storing and handling that pile of cash, I'll stay with my crypto hardware wallet.

[wins32767]

If folks are unbanked, their pile of cash is unlikely to be so large that it's hard to store and handle.

[acdha]

> But the importance is that there is always the option to self-custody if you want to. With fiat you don't have that option even in theory.

You mean that if you store cash it will magically disappear once you hit a certain quantity or age?

[pinkybanana]

Physical cash is ridiculously cumbersome and difficult to handle in larger quantities. I wouldn't probably be able to get $10k worth of cash from my local bank, and getting something like $100k would probably require days and lots of work. However if I have millions worth of BTC at some big exchange, I can move that amount to a secure self custody in 10 minutes without a hassle.

[acdha]

So you agree that you were wrong to say that you don’t have the option even in theory? Convenience is a discussion point but it’s predicated on being possible – and since this happens not-infrequently (people buy cars, farm equipment, even houses with cash) it’s far from theoretical.

One other area to learn about: security – while it’s true that you can move millions on yourself own, the risks of theft or accidental loss are why most people do not avail themselves of these theoretical options since they consider the cost of banking fees to be an acceptable trade off for the security and convenience of letting a professional handle those problems.