I don’t think bitcoin is some sort of intelligence thing, Occam’s razor, it is probably just a dude. I mean, what was his big feat of secrecy? Writing a paper needn’t necessarily leave a big footprint.
But! Bitcoins are too clunky to threaten the federal reserve really. And, a system that is widely understood by laymen to be anonymous, but is actually pseudonymous and inherently traceable, seems like Christmas for intelligence and police organizations.
The funny thing is, crypto is actually good for the dollar.
USDT/USDC are far easier to acquire than actual USD in third world countries. There’s a separate economy built up in Africa, Phillippines, etc. that operates entirely on USDT.
You can see this in the price of USDT vs USD in these countries - USDT commands a premium.
Crypto via coins like USDT means that Nigerians increasingly want to work for USDT, not Naira. Bad for Naira, good for the USD
Tether has to be backed by USD-denominated reserves for that to work. If it's actually backed by something else (or nothing) then all that value is going somewhere other than the dollar
Silver (#8 asset in the world) is also "clunky" but it is close to being surpassed in market cap by Bitcoin (#10 asset in the world).
A large part of that value is derived from a market cap based upon the stability created by the dormant coins, like gold sitting dormant in fort knox used to stabilize the USD value.
It really does seem like an intelligent design passes Occam's razor more than "oops i conveniently formatted that harddrive then disappeared"
Hypothetically, getting those who hate "the feds" to record their transactions on a public ledger would be criminal intelligence coup even bigger than when FBI's "Encrypted Phone" platform became popular with criminals[1]. In this hypothetical, the FBI would hack/subvert/operate their own mixer service and eliminate uncooperative services, so that all money-flows are transparent to investigators.
Not all cryptocurrencies use public ledgers. Bitcoin was the first, but it was always intended to add privacy tech - see MimbleWimble.
Zero knowledge proofs and other strong privacy protections are available on more modern projects. Some ledgers are entirely dark, granting a decent anonymity set.
How many of those cryptocurrency were created by Satoshi Nakamoto, the subject of the thread's speculation? I was speculating on the why a 3LA would have created Bitcoin, specifically.
Others like Monero also have mysterious origins. I don’t think Satoshi was behind the design even in part, but it’s one theory.
I’m pointing out that even if Bitcoin was the creation, the introduction of this concept and class of data structure is much more important and will have more lasting impact.
Surely any government agency would have considered the feasibility of new alternatives with similar designs.
It’s no threat at all for the foreseeable future.
Make no mistake though, over the next decades, the core idea is an existential threat.
If a currency like Monero with further developed scaling and privacy features is able to gain a foothold in developing nations, and enough off-ramps are set up via decentralized exchanges like Bisq and through direct acceptance for goods and services, then it is difficult to see the spread stopping between nations with reasonably free Internet, especially as factions within each government will likely have some direct interest.
The US dollar will be least threatened, the longest.
Privacy features in a currency are a double-edged sword. It means that the money is very difficult or impossible to recover in the event of theft, fraud, or even user errors. It isn't a risk most people want to be exposed to.
Physical cash is typically used in face-to-face transactions, which somewhat reduces the risks. The scenarios in which a digital version of physical cash might make sense are few and far between. To suggest that such a currency could one day threaten the US dollar dominance is absurd, in my opinion.
I completely agree with you. And you're assuming that a crypto network even exists that could support that kind of transaction volume, so the reality is even more absurd.
Monero for instance is optionally transparent using view keys, which allow read access to incoming but not outgoing transactions.
As cryptocurrency already requires the safeguarding of a private key or a custodial partner doing so, and generally do not accept rollbacks on the base level, there isn’t that much added drawback to making strong privacy default.
Spitballing here… it could have been a test to see how easy they could get a digital currency into common use. The idea of a digital currency offers the Fed a lot of advantages… no money laundering, traceability, etc. it could actually advance them if well executed, not threaten them.
Does the fed employ a lot of cryptographers? I feel like people expect the U.S. gov to be omnipotent when the last 20 years have been just fumble after another
While not omnipotent, the NSA does hire a huge amount of mathematicians and has a budget in the tens of billions. Most of what they do is also behind (extremely) closed doors.
The Bretton-Woods paradigm was already in collapse at the advent of bitcoin due to the corresponding growth of the US trade deficit as the US stopped producing/exporting and began massive consumption from the east.
The USA is in a debt spiral spending $659B on interest on debt annually (13% of tax revenue) while running larger and larger deficits. This cannot really be escaped, and it's impact on inflation is becoming unavoidable.
Bitcoin? No. But if you're asking whether digital currencies (which share a lot of the same underlying characteristics) might transform the global monetary landscape, well, they already have: 11 countries have issued CBDCs, and another 130 are actively exploring them as a more convenient alternative to USD for international transaction settlements. Several of those are in advanced pilot stages. No one with serious ties to the US financial system finds this to be a laughing matter, I assure you. The dollar is by far the currency of choice in trade invoicing (more than 50% of total trade) and foreign exchange transaction volume (almost 90% of the total) globally (Moronoti, 2022). This also means that US settlement authorities and financial institutions are involved in finalising most global transactions. If two countries have CBDCs, then they in principle would have the ability to settle transactions between themselves with near-instant finality, potentially bypassing the current dollar-based system.
I think we can safely expect at least one major CBDC-based cross-border payment system to launch by the end of the year. Soramitsu is the most promising candidate IMHO. A prevailing theory is that foreign corporations that operate domestically within a country will need to create accounts with a domestic central bank for CBDC payments to work efficiently. If this becomes a reality, the status of the dollar's "exorbitant privilege" will be up for immediate dispute. Its geopolitical hegemony over global finance won't be swept away overnight, but it will suffer a major blow. Only time will tell how serious.
You don't say why a CBDC would be a more convenient alternative to USD for international transaction settlements. A CBDC is simply a digital version of an existing currency. It isn't nothing new, since bank deposits already allow digital transactions with any currency.
You're missing the point. The reason the dollar is the global currency of choice is because it offers the infrastructure for any two parties to settle a transaction. The existence of CDBCs for wholesale purposes has the potential to fundamentally change that. Central banks could directly settle transactions between themselves in local currencies via dedicated corridors that bypass the dollar settlement system. That would mean more diversification of currency pairs, with increased liquidity for currency pairs that do not include USD.
> It isn't nothing new,
It is though. The infrastructure to support cross-border payments with CBDCs is bleeding edge stuff. The term floated around in obscurity for a while, but it's only been in use since 2019 or so. See: https://en.wikipedia.org/wiki/History_of_CBDCs_by_country
The USD doesn't have a technological monopoly on cross-border payments. Before the introduction of the euro, European nations were trading with each other using their local currencies just fine.
Moreover, CBDCs are ill-suited for internation trade, or for any kind of trade, because they're cash-like. They're intended as a substitute for physical cash.
The speculative currency crises in Europe during the 90s helped drive the adoption of the Euro in the first place. It's a bit outside my ken, but I do wonder if Italians of a certain age would agree that the older system worked "just fine."
I think reasonable minds can disagree about whether CBDCs are any more or less suitable than the alternatives (which seem worse to me in some respects, and certainly are worse in others) but either way, the world's central banks are singing a similar tune in unison right now. Like it or not, the macroeconomic tailwinds favor a more decentralized approach to cross-border settlements and we'll soon have infrastructure to enable this at massive scale.
Again, that's simply not true. You can't point to a single instance where CBDC infrastructure has enabled or improved wholesale international payments that were impossible or otherwise costly to do before.
Give it until the end of the year. These systems are new. Legal and logistical frameworks are being created around them. Southeast Asia will have a streamlined import/export relationship with Japan by the end of the year. Where it goes is from there is anyone's guess, but there's a lot of momentum for this to be the first of several major events over the next 2-3 years.
