1y ago

Reserve Bank considers the digital dollar: 'NZ's money must innovate to stay relevant '

www.rnz.co.nz 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?
- 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.
- 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.
- 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.
  
  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.
- You can use premined currencies like XRP. You can just fork the protocol.

Whenever I hear things like this, I ask 'What's the problem they are actually trying to solve?'
Most of the time there is no problem, it's a solution looking for a problem. In this case, it seems like the only problem to solve is:
Today, New Zealanders still cannot make instant payments electronically to other people, unless they are both with the same bank."
I'm pretty sure that could be solved with a middle-man app instead of a 'digital currency.' Venmo exists in the US, something like that?
I'm sure we have had similar.. TradeMe has Ping which "Make payments safely with Ping. Pay or get paid instantly – using a credit or debit card, or Ping balance." .. so, yeah problem already solved, instant payments.
- I think the problem to solve is that you can't do it for free. Currently you get charged fees for every transfer, something that doesn't happen with cash.
  Plus this is a single standard. If I go to pick up a trademr purchase I'm unlikely to be able to pay with Venmo, because there are a dozen other options and no one has heard of any. With a government backed option, people can start advertising that they accept it, and vendors/banks know where to focus their efforts.
- Whenever I hear things like this, I ask ‘What’s the problem they are actually trying to solve?’
  Let me list some possible benefits. Presume a premined centralized currency like XRP.
  You can impose a mining fee and control the exchanges (miners). This would impose a tiny tax on every exchange of money and you can reduce or eliminate other taxes.
  Easy exchange and transfer of money to and from overseas.
  Easy peer to peer payments.
  Easy tracking of transactions to eliminate money laundering.

All I want is an Instant Payment system for instant bank transfers. Multiple countries have managed to do it already.
Or just copy Australia's homework
- Ours is down to a couple of hours for inter-bank transfers, 365 days a year. We've made a lot of progress in the last decade.
  
  A decade is a long time.. we only got 365 days a year banking less than a year ago didn't we? I guess our market is so small nobody really cares to improve things and kiwis don't like to make a fuss to get things more modernised.

It could even be used for children's pocket money in the same way as cash was currently used.
I don't see that working well at all for younger kids, the physical nature of money has more "weight" to it than a number on a screen.
- You can load it on a card. Put twenty bucks in the card and that's all your kid has to spend.
  
  From my experience, when a young kid is standing there counting out their money, there are a lot of smiles.
  It is one of those little things, but it is really nice to see. You miss that with a card.
- We use a spread sheet 😆
  
  We use 1/2 cash, 1/2 a note book for their "savings account"

It could lead to interesting situations where some people just use cash again.
As long a multiple wallets are simple to setup, you have your walking around money that is with you. In a secure location you have another general wallet that holds most of your liquid cash, and keep a third (4th, 5th....) wallet hidden containing some "emergency" money.

It's easy enough. Just fork XRP, set up a couple of dozen servers in various places and you are done. The currency is pre mined so you get to control the supply just like fiat.
If you were really smart (and let's face it this government couldn't outthink a dead fly) you'd charge a mining fee and eliminate or reduce the GST.
- I think validating blocks should be done centrally as well. I can't think of a good reason to allow it for the public for a government backed fiat token.
  Unless you want to save money on electricity. But I would hope the goal of this is to make the digital tokens functionally the same as cash, the biggest part being 0 transaction fees.
  
  I think validating blocks should be done centrally as well. I can’t think of a good reason to allow it for the public for a government backed fiat token.
  AFIK that's the way premined currencies work. The "miners" (which are not miners, as you say they just validate the blockchain) are controlled and are not that many.
  Unless you want to save money on electricity. But I would hope the goal of this is to make the digital tokens functionally the same as cash, the biggest part being 0 transaction fees.
  There are transaction fees on cash too, it's called GST, petrol tax, income tax, etc. This would just make it easier to levy taxes so we can eliminate more onerous taxes

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