Jeff Fawkes is a seasoned investment professional and a crypto analyst covering the blockchain space. He has a dual degree in Business Administration and Creative Writing and is passionate when it comes to how technology impacts our society.
The U.S. House Speaker Nancy Pelosi rolls out the plan by Democrats that will probably revolutionize how we accept digital dollars. It looks like the U.S. can set itself for a Government-backed stablecoin invasion.
The new coin appears first in a form of a draft law by the Democrats. Per the bill, the majority of American banks will have the opportunity to join some kind of a financial alliance working under Fed supervision. Formed by the government, such an alliance will issue ‘digital dollar wallets’, as well as the dollars themselves.
It remains unclear, however, why just not use digital cash? Many people have bank cards and they are transacting via online banking. People will start asking questions about the paper dollar’s true value and liquidity.
Digital Dollar Would Have Hardware and Software Wallets
The digital dollar wallets had received their definition, per the paper:
“[Digital Dollar Wallet is] a digital wallet or account, maintained by a Federal reserve bank on behalf of any person, that represents holdings in an electronic device or service that is used to store digital dollars that may be tied to digital or physical identity.”
This means that the Democrats have studied how cryptocurrencies work and decided to repeat the sequence. Possibly, they think that ‘blockchain’ is some magic word making computer gigs lose heads and money. In reality, blockchain does nothing big, it’s just a type of database. People who were in Bitcoin since the beginning know the price of such things as ‘the longest chain’ and ‘decentralized hash power’. The definition of cryptocurrency in the text is pretty interesting:
“[Cryptocurrency is] a balance expressed as a dollar value consisting of digital ledger entries that are recorded as liabilities in the accounts of any Federal Reserve Bank or … an electronic unit of value, redeemable by an eligible financial institution (as determined by the Board of Governors of the Federal Reserve System).”
Sure, the government-backed coin does not necessarily need a decentralized network of nodes. But such an element would be more than awesome, adding credibility and human labor to the system. Just imagine the open, permissionless digital dollar Net where ordinary Americans join up the network with their nodes. Who knows, maybe this is what will happen in a few years. But coronavirus adds fuel to everything we do these days, right?
Digital Dollar to be Available via Postal Services
Also, the draft bill suggests that the U.S. Postal service workers should help the unbanked and the old people to connect themselves to the state-backed blockchain (or whatever their system will be). The postal attendees will have the possibility to set up a personal account and use the ATMs to access the funds.
The member banks will connect to the network via the personal pass. Interestingly, the banks in America without FDIC license and Fed membership will still have the possibility to offer their versions of the Digital Dollar Wallet. Mac, Windows and maybe even Linux users will have the possibility to store their dollar cash on PC. Also, we can presume that the government will issue mobile wallets soon after, or even before, the Desktop versions.