Reserve Bank considers the digital dollar: 'NZ's money must innovate to stay relevant '
Reserve Bank considers the digital dollar: 'NZ's money must innovate to stay relevant '
New Zealand could be using a government-backed digital currency by the end of the decade.
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I'm not sure what to think of this. Does a central bank backed digital currency still require proof of work? I didn't dig too deep but didn't see anything explaining what the structure would look like (I guess that's part of the process of determining what's appropriate).
If you access via an app, would it be open like bitcoin where anyone can maje an app, or would you have to install an RBNZ app only available on Google Play and the Apple App Store?
My initial thought was I wouldn't put much money in it, but then realised it's intended to be a form of cash and I don't keep much money in cash either.
So I guess if they do a good job I might use it for small transactions?
The reason for proof of work is because true currencies are tied to labor, or more accurately, the potential amount of labor that can be converted from stored energy.
Now, a computer solving a math problem at a predetermined interval is not actual labor, but it does consume energy, and thus, currently the system is you have to spend real labor to purchase pretend labor, and you aren't even getting the labor out of it, you are getting a token assuring you the labor actually happened.
Unless the computers are actually producing anything, I'm not sure how to get around this issue.
Sounds like it's not independant crypto, but instead more like a bank account run by the government.
You're not wrong..
forr example PRC's digital Yuan / Renminbi
Wtf are you on about? Proof of work is to keep the distributed ledgers honest. You need it if you are running a trustless system. If it is a central ledger, which it will be if a government is running it, then there is no need for proof of work.
As far as I can tell this is a Central Bank Digital Currency, and as such has nothing to do with cryptocurrency at all. CBDC’s are basically just the central back extending the service they offer to major banks to now be accessible to everyday citizens.
The main advantage for the government is that it makes tax accounting easier for people and improves the economy by eliminating things like say the two percent additional private sales tax on credit cards or bank transfer fees.
Interesting. I'm assuming this means you need an internet connection to make a transaction. Like Paypal or Venmo but run by the government. Or like a bank account run by the government (without loans or interest, etc.
Yep, that’s the basic idea. With Paypal and Venmo taking 3.4% of every transaction you end up with that being effectively being a sales tax that goes to private companies, and across an entire nation’s economy that tends to add up.
The actual form CBDC’s end up taking may very a bit though, as different countries implementations have tended to vary a bit while we figure out what works best, but I am curious to see what form you end up with.
I'm curious to see if we make any real progress by the end of the decade 😆
NZ already has electronic payment cards that are independent of credit card companies, called EFTPOS, that has been in use since the 80s. The cost off this for shops is a fraction of the cost of credit card transactions, starting somewhere like USD$10 per terminal per month for unlimited transactions of any size. Credit cards often take as much as 1-2% for Mastercard/Visa (the higher fee/higher reward cards US are often not accepted). In fact, credit card fees have become such an issue a large number of places will on-charge the fee to the customer.
If you're a small shop with one terminal paying $10 per month, it's not a cost that really matters. Unlike credit cards that often charge an annual fee to the user in addition to the transaction fee, EFTPOS cards are typically provided by banks free of charge. There is even competition in the space, with two different companies running EFTPOS systems.
Credit cards can generally also be used for EFTPOS so we don't even have to carry two cards around. Given this system, it would be interesting to see how much room there is for a central bank digital currency to improve on it.
I would assume this has little to do with traditional cryptocurrencies, but uses Blockchain as it's leger.
If I were in charge of this project, I would have a centralized validation system, maybe a series of servers across the country for redundancy. It doesn't need PoW or PoS as all validation is run by the RBNZ.
As for what this solves, I can think of a few things:
- Opening up fiat interaction with other cryptocurrencies
- Much lower fees for digital transactions
- Near-instant transactions
- Physical storage of digital funds. Paper wallets and other secure methods
- From the govt point of view, perfectly tracible cash transactions
Yes, this.
You can use premined currencies like XRP. You can just fork the protocol.