Newsline

National Security , Newsline

“Crypto Currency” For Dummies and Why a “Digital Dollar” Is Near

Posted on Friday, November 5, 2021
|
by AMAC Newsline
|
31 Comments
cryptocurrency

AMAC Exclusive

Earlier this year, the Chairman of the Federal Reserve, Jerome Powell, acknowledged that the central bank of the United States was actively investigating the possibility of creating a central bank digital currency, or “digital dollar.” Without explicitly mentioning cryptocurrency, the Fed was essentially suggesting that it may look to develop its own cryptocurrency. Such a dramatic shift in monetary policy in the United States would undoubtedly have an effect on the financial lives of every American, and is also likely to become a hot-button political issue in the years to come.

Many Americans may be confused about what all the fuss about “crypto-currency” actually means. Here is your primer.

What is cryptocurrency, and why do some people think it could one day replace traditional money?

Currently, government-issued money exists in two forms: cash, and reserves held in financial institutions. The “digital dollar” would be a third possibility, which the Fed describes as utilizing “an electronic record or digital token to represent the digital form of a nation’s currency.” Instead of paper money or a credit card backed by money in a bank, cryptocurrency is a digital form of payment based on a new technology called “blockchain.”

Essentially, blockchain technology creates a digital ledger which verifies transactions across a network and, once they are verified, adds a new data “block” to the chain of verifications (hence the term “blockchain”) thereby creating a permanent and fully verified record of the transaction. Without getting too far into the technical details, blockchains allow transactions using digital currencies to be reliable and guaranteed without any of the parties knowing each other or being required to trust each other—much like cash does today. When you get a $20 bill, you know that it is good as a medium of exchange. In a similar fashion, when you get a Bitcoin, for instance, you can be 100 percent certain it is not fake.

The specifics of how each step of the process works get increasingly complex, and there are plenty of resources online for learning more about it. However, what is important, particularly when it comes to politics and the government’s involvement in the crypto market, is why the technology has grown more popular in recent years.

There are two main appeals of cryptocurrency. First, paying in cryptocurrency eliminates the middleman – namely, banks. You don’t need a bank’s permission to access or move cryptocurrency, and you generally don’t have to worry about a third party accessing your money. You are the only one who has access to your crypto wallet, and you control every transaction. Second, cryptocurrencies are not susceptible to centralized manipulation by institutions like the Federal Reserve, who’s continual “quantitative easing” (money printing) has played an enormous role in the ongoing inflation crisis many are beginning to feel hit their pocketbooks.

Cryptocurrencies, proponents argue, offer everyday people the opportunity to circumvent the traditional financial system, essentially creating a parallel financial system outside government control but just as secure.

Why Central Banks and government leaders are taking notice

Of course, the prospect of a decentralized financial system has many government leaders around the world concerned. Because governments have historically had control over the money supply, they have maintained some degree of control over the economic lives of their citizens—and many (including the United States) have come to rely on a degree of inflation to make their societies function. For authoritarian countries like China, the prospect of such financial independence from the government is unacceptable, which is why the Chinese government banned all crypto transactions in September, citing “illegal activity.”

But the push to assert state control over cryptocurrency hasn’t stopped in Communist China. In recent months, the Biden administration have been signaling its desire to regulate cryptocurrencies through legislation and produce its own fully digital currency. And they aren’t alone. Earlier this year, European Central Bank President Christine Lagarde predicted that the E.U. would have a digital currency within four years and called for the regulation of Bitcoin.

As the crypto market reached a record value of $2 trillion last month, it was reported that the Biden administration was also considering a draft Executive Order that would call for the regulation of cryptocurrencies. The Order would attempt to coordinate the study of cryptocurrencies and a digital dollar across the federal government, and possibly even include the appointment of a White House cryptocurrency czar. Multiple departments would be involved, including Treasury, Commerce, and even various national security agencies.

In the meantime, the price volatility of cryptocurrencies like Bitcoin has led to the development of a form of cryptocurrency called a Stablecoin, which is pegged to a fiat currency like the dollar. These digital coins can theoretically be exchanged one-for-one with actual U.S. dollars. It comes as no surprise, therefore, that the Biden administration has signaled approval for Stablecoins, so long as they can be subject to further regulation. The President’s Working Group on Financial Markets, which has been tasked with studying the issue of cryptocurrency and digital currencies, recommended that Congress pass legislation supporting Stablecoins and limiting their issuance to insured banks—thus incorporating them into the current financial system—whereas many in the crypto space see decoupling from the current system to be the biggest selling point for cryptocurrencies.

Cryptocurrency is not a futuristic pipe dream; it’s a real phenomenon that is quickly taking the financial sector by storm. Although the country is still a long way from paying for gas and groceries with bitcoin, digital markets are reframing how people and governments conceptualize money and payments. A potential switch to digital dollars would undoubtedly bring about unforeseen consequences – some positive, some negative – but being prepared for such changes and understanding the public debate over them will be key in situating Americans for financial security in the long term.

We hope you've enjoyed this article. While you're here, we have a small favor to ask...

The AMAC Action Logo

Support AMAC Action. Our 501 (C)(4) advances initiatives on Capitol Hill, in the state legislatures, and at the local level to protect American values, free speech, the exercise of religion, equality of opportunity, sanctity of life, and the rule of law.

Donate Now
Share this article:
Subscribe
Notify of
guest
31 Comments
Most Voted
Newest Oldest
Inline Feedbacks
View all comments
Joan
Joan
2 years ago

I’m sorry, if it’s racist to think certain people can’t get an ID to vote then it must be age discrimination to force this on people of a certain age. There are still people who do not know how to use the internet, get all their spending money in cash, do not have cell phones and pay their bills with checks, nothing online.

bill
bill
2 years ago

The article doesn’t say how these companies will make money. Do they take a percentage of each transaction like a credit card company does?

Nancy
Nancy
2 years ago

This is prophesied in the Bible; a sign of the end times.

Tom
Tom
2 years ago

When you become a slave to technology you are doomed !

No Name
No Name
2 years ago

Bitcoin controlled by the gov’t is a lead-in as to HOW people spend their money. It will totally do away with any privacy and opens the door for a social credit system like the one currently in place in China.

If they don’t like who you donate money to, or where you spend it, or how you spend it, or what/who you associate with in both real-time as well as the internet, guess what happens?!?…

You get CANCELLED in a very big way from society.

Digital money is an absolutely horrible idea. It is a totalitarian concept first formulated by the founders of Agenda 2030.

Invest in gold & silver now. Use cash as much as possible. Let your legislators know that you will NOT tolerate this extreme invasion of privacy. Doing nothing is equivalent to agreeing with the total loss of freedom.

Eddie Van Halen
Eddie Van Halen
2 years ago

MasterCard is leading the CHARGE on this. Dump “MasterCard.”

Hal
Hal
2 years ago

Anything Biden approves of , I’m strongly opposed to. I don’t trust Biden or the DemocRat Party in regard to just about anything financial. Of course without a Constitutional requirement for our Fed Govt to be restricted to a balanced budget, the present system has been a bit shaky , especially when the DemocRats have control of the legislative and executive branches of our Federal Govt.

Nick
Nick
2 years ago

Crypto is propelled by idiot libertarians who foresee a future in which anything can be bought and sold without the government (or anyone else) knowing about it. So I think it’s pretty dumb, too.

Kevin
Kevin
2 years ago

Wow,

And people scoff(ed) at the Bible that predicts that you will need a mark on hand or forehead to buy or sell. Maybe that old book is right after all? (said with tongue in cheek)

Carol
Carol
2 years ago

Anything that goes thru the internet is subject to hackers and government intervention! This sounds like the credit system I read about in Sci-Fi comics. How does any digital system keep tyrants hands off of it? If anyone thinks government won’t use a system like this to subjugate all it’s people, I’ve got beach front property in Nebraska for sale!

Flattop56
Flattop56
2 years ago

Follow this digital currency to the end point the Feds plan to implement. They intend to do away with all physical money & replace it with a digital wallet holding your money (?) at an approved federal bank. Buy something & your wallet is debited; sell something & you get credit. If any tax is involved the government takes it’s cut off the
top of the transaction. There will be use to hid cash under the mattress; no one will be able to take it. There will be no more paying the kid down the street $40 to mow & clean your yard with a couple of $20 dollar bills; no more cash tips at the cafe.
All of the millions of small daily transactions will be then be done with digital money.
Even the federal reserve is starting to talk about a digital wallet for your money. The
computer power is available now to handle this. You will not be able to spend a nickel
that the government will not know about & get it’s “fair share”. The EU is already starting a version of digital money. If the Fed & our government can force it through
we are not far behind.

PaulE
PaulE
2 years ago

The original idea behind crypto currencies was to create a medium of exchange that was independent of any central government to manipulate it to its own ends. In simple terms, no single government or set of governments pegging its value to what they want it to be on any given day based on political objectives like dollars, euroes, yen, etc.. Bitcoin was designed to be a finite medium of exchange, that could not have its value inflated away by government printing presses. Only so many so-called “coins” (there are no actual, physical coins) can be mined based on an algorithm, which I can’t say that about most of the other cryptos out there. What is the value of any Bitcoin or any other digital currency? Whatever the market is willing to pay for it, much like our own fiat currency called dollars. Would I personally own Bitcoin? H*ll no! Would I play the price action in the marketplace based in the price movement of this so-called asset, with a very small percentage of my total portfolio (1 to 2 percent tops)? Absolutely! It’s like playing in the futures market to a great extent. You’re placing a bet on the direction of price action, not taking ownership of the actual asset at a small fraction of the market price. So viewed in that context, Bitcoin does have “value”. Would I go anywhere near Stablecoins or most of the other crypto currencies, even for a trade? Absolutely not, because most won’t be existence 5 years from now.

As for the Fed and other central banks around the world wanting to push digital currencies to replace physical money, that is all about control and power. Right now you can spend physical dollars and it is anonymous transaction. You can buy what you want from whom you want and there is no ability for the government to interfere or stop you. With all U.S. money reduced to a digital form, essentially a debit card, the government would be able to track virtually every cent to spent everywhere. They would also have the ability to cut you off from all your money with a keystroke, if they desired. In the current environment of political correctness and cancel culture, this is the ultimate means with which to enforce government edicts on the entire population.

China is interested in creating a digital yuan for this very reason and other central banks seem to be jumping on the train to varying degrees. Of course they haven’t had the boldness to lay out the rationale in such clear terms as the CCP has in China. If your “social value credit score” (how well you adhere to government mandated policies and buy from only government approved goods from government approved sources) falls below a specified number, the CCP would be able to freeze or even potentially delete all your money. The ultimate government enforcement tool to ensure compliance from their population. As I said, it’s about control and power.

Myrna
Myrna
2 years ago

I think all of us should be worried about banks, especially when our federal government has so much power over them. I expect the regime plans to have full control of crypto currencies too.
We are on our way to being so organized that freedom loving people will not recognize this country.

dave rynex
dave rynex
2 years ago

more loss of freedom

Jean
Jean
2 years ago

Crypto is interesting but I don’t understand how it is backed by anything or much less how to ‘buy’ it when one coin costs half as much as my home. It also makes no sense if an item costs 1 bitcoin and theoretically would put even a loaf of bread out of people’s reach. Even “gaming money/items” is a low price for a high amount of items; this appears to work backwards. There isn’t any pricing on items of how many parts (or whole) an item costs on websites. I also wouldn’t trust anything issued by a central bank or the Fed, we’d run into the same issues we have now with physical currency. . .

Becky
Becky
2 years ago

BS!! What cryptocurrency is really about is just another ‘fix’ to a problem created by law breakers.
Stop trying to screw Americans by controlling their finances! Start punishing the identity thieves, thieving brokers over our IRAs, and all the other illegal games going on.
We do not need fake money. Ours already became fake in 1971 when it was removed from the gold standard. POLITICIANS did that. More fake money will help nothing, and will hurt most Americans.
Fix the problems! Instead of creating more BS ‘fixes’.

Chris
Chris
2 years ago

You glossed over the main reason governments want their own cryptocurrency — so they can “print” it whenever they want. With the existing slate of cryptocurrencies the creation of new currency is under the control of the network using strict rules that governments can’t break. They want currency creation rules that they can control and exercise on their prerogative.

Bob L.
Bob L.
2 years ago

What actual “value” do cyber currencies have? As much as a container full of a vacuum. Holding other investments like shares in mutual funds or stocks have something of value backing your money whereas “owning” cyber coins have no such “value”. Your “investment” could disappear in an instant with a single keystroke from a malicious criminal or government. Bitcoin is worrisome since it is solely a Red Chinese company and if there’s a move to “cash in” on our other weaknesses they hold title to, to bring down this nation, you can bet Bitcoin would be a big part of the attack.

I wouldn’t “own” a single fraction of a cyber coin. Our own current digital economy/fiscal “cashless” structure is bad enough.

Bob Wagner
Bob Wagner
2 years ago

Cryptocurrency is a scam. It is a high stakes type of gambling controlled by major players like Elon Musk. So surprised that AMAC would print this garbage. Also very disappointed in AMAC.

Tom
Tom
2 years ago

More shenadigans by bank to pull the strings behind the curtain.

An older blonde women laughing in the kitchen with a grey haired man.
AMAC’s Medicare Advisory Service
The knowledge, guidance, and choices of coverage you’re looking for. The exceptional service you deserve.
The AMAC App on 3 different iPhone
Download the AMAC App
The AMAC App is the place to go for insightful news wherever you are and whenever you want.
jen Psaki speaking, news
disney sign; woke corporations
Dr. Gorka and Biden
electric vehicles; EV emissions

Stay informed! Subscribe to our Daily Newsletter.

"*" indicates required fields

31
0
Would love your thoughts, please comment.x
()
x

Subscribe to AMAC Daily News and Games