United States is considering the introduction of the digital dollar
The United States is considering the introduction of a digital dollar. According to U.S. Treasury Secretary Jane Yellen, a digital dollar can enable faster, safer and cheaper payments. The new US administration under Joe Biden has a chance to force the country’s technology strategy focused on blockchain, cryptocurrencies and digital assets.
Janet Yellen: Federal Reserve should consider creating a digital dollar
The U.S. Secretary of the Treasury gave an interview to The New York Times in which she stressed that the United States should consider the sense of introducing e-dollar. She admitted that the digital dollar can enable safer, cheaper and faster payments. At the same time, it indicates that the Federal Reserve needs to prepare for a couple of issues before making a decision. Above all, she has in mind the possible impact of digital currency on banks and the Federal Reserve itself.
– Janet Yellen is gradually changing her approach to digital assets. Just a few years ago she was a fierce opponent of cryptocurrencies. It deemed it a “growing problem” used for illicit financing. Currently, although still skeptical about Bitcoin, believing that it is not suitable for making transactions, sees potential in digital currencies. She is also an advocate of decentralization of finances. It should be noted, however, that the U.S. Secretary of the Treasury, while criticizing Bitcoin, disregards its value as a form of hedging one’s savings against inflation. Being something like “digital gold” – says Marcin Wituś, CEO of modern digital asset trading platform Geco.one, which is a member of the Polish-Estonian Chamber of Commerce.
The administration of Joe Biden and Kamala Harris began to implement new strategies to rebuild the U.S. economy affected by the coronavirus pandemic. It focuses mainly on the introduction of new technologies, while ensuring data privacy. The use of blockchain comes to mind here as a natural solution. The Chamber of Digital Commerce together with the BRI prepared a 120-page report detailing m.in., How blockchain and digital assets could improve the American economy. Cryptocurrencies and the introduction of the digital dollar may soon become a reality – given also that there are several supporters of this idea in the new US administration. Apart from Janet Yellen, Prof. Yellen is also interested in blockchain technology and digital currencies. Gary Gensler. He was appointed to head the Securities and Exchange Commission. Back when Gensler was a professor at the Institute of Technology Sloan School of Management, he pointed out the advantages of blockchain and cryptocurrencies.
The race for leadership status in the digital asset market
The world’s leading economies have long been interested in cryptocurrencies. One of them is China, which has been working on introducing a digital yuan for some time. In January 2021. 100,000 residents in the Shenzen region received a total of 31 million digital yuan through a lottery. ATMs have also been set up in the province to convert digital currency into cash. The coronavirus pandemic has only accelerated Chinese plans to bring a state-owned cryptocurrency into circulation. However, the PRC’s aspirations are greater.
– The People’s Bank of China has joined the work to create and use the central bank’s digital money capabilities. Currently, China, Hong Kong, Thailand and the United Arab Emirates are working together in this direction, with their own digital currency, emCash. The main goal of this research is to create a transparent system for digital cross-border payments based on a distributed registry. It is very likely that China will want to pave the way for global use of the digital yuan. All this to strengthen their position on the international stage – says Geco CEO.one.
Venezuela (Petro) and Marshall Islands (SOV) also have their own digital currencies. The former launched its cryptocurrency back in February 2018. It was initially to be backed by Venezuela’s gold reserves and oil resources. The petro is used by Venezuelans for international transactions and as a substitute for dollars on the real estate market or when paying for airline tickets or hotels. The Venezuelan government hoped the Petro would effectively curb rising inflation and combat black market and mafia money. Petro, however, does not have the characteristics of cryptocurrencies – the official token wallet does not exist, and the Android app has been removed by Google.
– Many countries are considering introducing their own digital currencies. These include Sweden, Russia, Japan, Israel and Senegal. At one time Estonia also thought about introducing a national cryptocurrency, but eventually abandoned the idea. Eventually blockchain-based “Estcoin” is expected to evolve into a form of digital document signature – adds Marcin Wituś.
National digital currencies will force cryptocurrency centralization?
Cryptocurrencies and blockchain are primarily associated with a decentralized system. A perfect example is their prototype – Bitcoin, which has an open yet anonymous transaction system. Bitcoin is only secured by its users, however, and it is they who give it value. Its creators are constantly engaged in improving the cryptocurrency, but none of them can manage it. There is no local server, and Bitcoin’s computing power is spread around the world.
– There are cryptocurrencies in the digital asset market that have a centralized system, not just a distributed one like Bitcoin. One of them is Ada belonging to the blockchain platform Cardano, which is authored by the co-founder of Ethereum – says Wituś from Geco.them.
The introduction of state-owned digital currencies will mean their centralization, i.e. major assets will be protected by the state and financial institutions. Will the emergence of the digital yuan or dollar make all cryptocurrencies centralized? Absolutely not. Digital assets such as Bitcoin will remain independent and in the hands of their users.