This has been said before but not enough.
Do you think we will have digital money someday? True internet currency?
If you do (are we going to print bills and make coins forever? Maybe actually), there are two ways to do it.
1) the fed makes a money database (CBDC)
2) decentralized open protocol (Bitcoin)
1 is the naive way to go. The fed makes money now, and has some sort of ledger for the banks it deals with. Just extend that to everyone.
The reason why it is naive is the unprecedented power that puts in the hands of the gov’t.
Every txn and account balance visible, full discretion over access.
The founding fathers couldn’t ever conceive of a way to have that much control. An unelected official could take away the ability for someone to buy food in an instant with no due process.
Less obvious, imagine a market regulator having insight into the exact balances, P/Ls of all of the industry players they regulate. You think insider trading / lobbying in congress is bad now?
1 is true and total control. I don’t think most (including in the US gov) really want this? I also don’t think most people understand the implications of 1, especially if it’s packaged as “safe, trusted, just like dollars, fair”
2 is the opposite. Maximum access, no central control, but bad guys will use it. I really liked Natalie Smolenski’s talk at the bitcoin policy summit recently
Is there an in between? This is much like the encryption debate— you can’t have backdoored encryption to make sure bad guys don’t use it. The backdoors will be used against the good guys / everyone. Half encryption is no encryption.
In a digital currency system, the same principle applies. Bitcoin and lightning built on top of it use cryptography at their core. To try to police or patrol either at the protocol level is to break the things that make them neutral and valuable in the first place. Might as well use the database.
This is the fundamental issue we face today. I worry most people won’t realize the importance until it’s too late.
