Jekyll Island 2.0
Is the Fed blockchain a Trojan horse for internet of value & the internet of money?
Jekyll Island 1.0
in the space of less than two weeks, a group of government and business leaders fashioned a..new financial system that has survived a century, two world wars, a Great Depression….
the Jekyll Island conference…was dodgy even by the standards of the Gilded Age: a self-selected handful of plutocrats secretly meeting at a private resort island to draw up a new framework for the nation’s banking system….
one very much like…became the basis of the Federal Reserve system that remains in place today.
Gregory D L Morris, in Bloomberg, ‘The Secret Meeting That Launched the Federal Reserve: Echoes’
Blockchain technology: a Fed Trojan for the penetration of the internet of value?
If policy makers and businesses get it right, linking the physical and digital worlds could generate up to $11.1 trillion a year in economic value by 2025…
the hype may actually understate the full potential…
capturing it will require an understanding of where real value can be created…
address…systems issues, including interoperability.
James Manyika, Michael Chui, Peter Bisson, Jonathan Woetzel, Richard Dobbs, Jacques Bughin, and Dan Aharon, McKinsey Global Institute, ‘Unlocking the potential of the Internet of Things’
In the simplest terms, the blockchain transfers value from one party to another over the Internet….money, a share of stock, a property deed, a digital royalty — even a vote cast in an election.
Amy Cortese, ‘Blockchain technology ushers in the “Internet of Value”’ for Cisco.
Monetizing the internet of things (IOT), using the traditional monetary system, usually involves a one time payment or time based service for the use of a dedicated app. Cost per use pricing, similar to a cost per click, is difficult to implement using fiat currencies. In general, fiat money is available in fractions of up to two decimal places.
On the other hand, bitcoin (BTC) can have fractions of up to eight decimal places: one satoshi is 0.00000001 BTC. Companies like 21.co are helping build a machine payable web built on bitcoin.
Since blockchain technology enables the machine payable web, does a Fed blockchain give the Fed a backdoor into the internet of things? And is this the Fed’s front door into the internet of value?
Digital Dollars: The Fed’s fiat’s Trojan for the internet of money?
A better model, ultimately, is central bank digital currency. This would mean that a central bank, like the Federal Reserve, would participate on the network and would digitally mint U.S. dollars onto it. Since the Fed is the legal issuer of dollars, this would make digital dollars a native digital asset.
Adam Ludwin, Co-Founder & CEO, Chain, ‘Why Central Banks Will Issue Digital Currency, A Summary of Chain’s Presentation at the Federal Reserve’
The Fed would control the internet of money by issuing its own digital currency. The Fed would not mine its digital dollar but would mint its own digital dollar. No need for miners to verify & confirm transactions; the Fed would retain its role as the ultimate trusted counter party. By creating its Fed own digital asset, the Fed would also build a fiat Trojan for the internet of money.
Are Blockchain tech vendors searching for a problem to solve?
For any trusted third party carrying out payments, trading, or record keeping, the blockchain is an extremely costly and inefficient technology…
A non-bitcoin blockchain combines the worst of both worlds: the cumbersome structure of the blockchain with the cost and security risk of trusted third parties….
seven years after its invention, blockchain technology has not yet managed to break through in a successful, ready-for-market commercial application other than the one for which it was specifically designed: bitcoin.
Saifedean Ammous, ‘Blockchain Won’t Make Banks Any Nimbler’, in American Banker
Does a Fed blockchain attempt to finesse bitcoin & other emerging crypto currencies?
There is no place in the Bitcoin world for the Federal Reserve; Bitcoin was designed to destroy it.
This is the real reason these institutions are testing new networks…..
Bitcoin is money without the State. It is banking without banks. Its wire transfer without wire transfer services. It destroys everything that the 100 people at this meeting rely upon and take for granted. It ends their world forever….
the function of money is what Bitcoin is replacing, and because the Federal Reserve and the other central banks have the entire force of government behind them, this will not be like Intranet vs Internet and private protocols vs open protocols debate. If the central banks try and release their own cryptocurrency alt coin, they will anoint it and supercharge it with Legal Tender status. That means that it will be illegal for anyone to refuse to accept their alt coin for settlement of debts.
Essentially, they will move their Ponzi Scheme from one set of databases that they have exclusive access to, to another database they own where all market participants have direct access to the generated tokens….the fundamental and unethical nature of the money will remain unchanged. It will be imposed by force, and its supply will be managed by a secret process. It will be as unreliable as all fiat currency ever was. This is the very definition of lipstick on a pig.
What is money? Who is money for?
The IMF’s perspective
An alternate perspective
Money
You do not create money out of thin air. Money…comes into being because of labour…Gold does not have entropy.
James Turk, Founder & Director, Goldmoney
Good money
Gold is good money because it has the energy proof of value…The gold price does not drive the price of oil, of energy….its the other way round. Stefan Wieler, Vice President, Goldmoney Insights
Sound money
Gold is sound money. Its as simple as that.
Alasdair Macleod, Head of Research, Goldmoney
A measure of merit
Gold is immortal to time. Nothing else is…How are you measuring your own meritocratic journey? Gold encapsulates energy labour & time.
Gold is better for the poor than the rich
Gold is for better for the poor than the rich…
If you just are starting you journey in upward mobility, you want the best money possible. So that, when you save something, it lasts till that aspirational period in your life. Your costs are commodity costs.
Josh Crumb, Chief Strategy Officer, Goldmoney
A means to avoid the debts that make you poor
Gold should not be viewed as the means to make you rich but rather, as a means to avoid the debts that can make you poor.
The internet of value, money & gold
Well, the medium of money has only changed a few times in history, from precious metals to bearer currencies to now our ledger-based electronic systems.
Adam Ludwin, Co-Founder & CEO, Chain, from his Fed presentation.
Harking back to Satoshi Nakamoto’s 2008 white paper, in another little corner of internet, the internet of value is being constructed; for an internet of money anchored by the internet of gold.
Goldmoney
Goldmoney’s BitGold operating system for gold, brings gold back to its core historic functions:
- as money
- as savings,
- for wealth protection
Aurum
Goldmoney’s patented Aurum technology enables:
- vaulted, personal, physical metal
- transactional gold for payments & collections.
- money transfers
The medium of money is changing. In ways that Satoshi Nakamoto does not imagine.
