With all the positive sentiments surrounding cryptocurrencies in the media today, this looming presence has yet to be fully addressed, The Digital Dollar. The elephant of a question raises many concerns about the future of decentralized finance. More specifically, will the United States squander the entire unregulated crypto frenzy before anyone has a chance to react?
Why would the United States Create The Digital Dollar?
As seen in my article on the Blockchain Arms Race, the battle for the final digital exchange platform has been underway for over a decade, with significant pickup over the past five years. In this recent popularity, many United States government departments have been cornered into commenting on potential plans for the U.S. to create a cryptocurrency of some kind. It is within the United States’ best interest to create a digital currency for their long-term prosperity.
Currently, the United States is at the heart of the traditional banking system. With such a robust system, the government can rely on issuing debt and bonds to its citizens and foreign governments. A decentralized ledger system threatens the long-term sustainability of the current model. The decentralized method allows greater freedom in terms of the character of the transaction, including illegal, unethical, and nefarious purposes. With that reason in mind, along with the tax revenue possibility, the U.S. is interested in creating The Digital Dollar.
What would The Digital Dollar Look Like?
While The Digital Dollar would not be completely decentralized in terms of no government oversight, the use of blockchain technology would be the crux in the fundamental framework behind the creation of the asset. More specifically, features such as government-based peer-to-peer currency transfers between American Citizens, international transactions between ally countries, automatic tax liability calculation, and federalized personal “bank” accounts are some of the possibilities behind this technology. Additionally, using the blockchain with NFTs on the American Government Blockchain would allow even more excellent protection for intellectual property rights worldwide.
When will The Digital Dollar be released?
Fed Chairman Jerome Powell has mentioned on previous occasions that the United States is investigating the possibility of creating a digital currency, currently at the Massachusetts Institute for Technology. On July 17th, Treasury Secretary Janet Yellen, regarding meeting with President Biden about Cryptocurrencies, said, “Bringing together regulators will enable us to assess the potential benefits of stablecoins while mitigating risks they could pose to users, markets, or the financial system…”. Specifically, the meeting within the Biden Administration is to examine the effect of stablecoins like Binance USD and USD Coin, despite their names aren’t government-affiliated but hold significant amounts of U.S. Dollars, over 100 billion.
The Digital Dollar would likely incorporate the best aspects of the traditional banking system, likely including private integrations within the system to support the potentially obsolete banking industry. It will be imperative for foreign nationals to get in on the American digital currency, potentially re-cementing the United States as the world’s financial capital. This title has been slipping since the rise of decentralized currency.
The America Government has an opportunity to seize the crypto market. The questions remain, do they have enough humility to respect the technology and approach the challenge correctly?
