Naked Centralized Currency

Traditional centralized mints have too much power, no doubt about that. Governments abuse that power -- the lesson of history, and no reason for it to change going forward. The traders, the money exchangers, are left unprotected, at the mercy of decisions made is smoke-filled rooms by secret power brokers motivated by survival of the richest. It is therefore that no sooner has Bitcoin shown up, and a hit it became. It was amazing: millions who were clueless how Bitcoin works put their family treasure on this form of money that is as solid as Monopoly money, except that enough people believe that the magic will last, and the value will endure, despite the absence of any reason thereto. It was a voice of rage against the abuse we all suffer in the hands of governments that play with the value of their fiat currency for their own good, and for immediate political aims.

The irony of the situation is that governments quickly recovered from the initial panic for losing their grip on society through the power to mint the money people are compelled to use, and in a very wily way came around to the use the same technology with a few twists to mint fiat currency that is digital alright but that gives government unprecedented control over the people who use it. Central Banks Digital Currency, CBDC, lives in the cloud, the cloud is under the control of the government, so one can be made poor in a flash -- without any recourse. Soon enough physical cash will be illegal, and people will have to choose between being exposed to government abuse of visibility and going for decentralized money vulnerable to (i) competitive decentralized coins, (ii) dearth of mining or expensive mining, and (iii) to social media where influencers may readily kick off a run on the backed-by-nothing decentralized coin and turn millions of native rich people into millions of despairing poor people.

Not the CBDC as they are being formed right now with their abusive control, and not the collapse-prone decentralized crypto currencies are the way of the future. What did the German philosopher Hegel say?  A thesis and an antitheses unite into a synthesis, which is the naked centralized currency.

What makes centralized currency so objectionable? It is not the government per se, it is its ability of the mint to work in the dark, to print money at will. What makes decentralized money so attractive -- everything except the identity of the traders is exposed in the cloud. Blockchain technology uses the idea of having a multitude of copies of the full banking database so nobody can change a given entry in a single ledger. This premise will soon become a target for attack of quantum computers, and has always been  vulnerable for attack by a sufficient number of colluding traders. Not a durable solution.

What then?

Leave the government out of the digital currency business and. pass this responsibility to the private sector. Banks and other financial entrepreneurs will offer fiat currency claim checks -- tokenized entities that trade over the cloud with the same visibility as bitcoin as to validation and verification of transactions, but with a better guarantee than Bitcoin for privacy and discreetness of payment, and also unlike bitcoin -- resilient against quantum attack coming soon. Alas, this public serving cloud is not generated by social media influencers but by public responsible financial entities that manage their database -- keeping it in good order while being blind itself as to who trades on it, and who pays what to whom.

What will keep the financial cloud manager on the up and up? Old fashioned capitalism -- competition. Banks minting digital claim checks for dollars (that trade as dollars in every respect) will be responsible for their customers, the traders. They might charge a small fee from users (but there will be no mining cost) and be very diligent in keeping their customers happy. Much as regular stores are very loyal to their customers and keep them happy and returning, so will money stores -- keep the fully visible trading cloud on the up and up. If not, then customers will migrate to the next mint offering their own digital claim check for the same fiat currency.

Citizens of one country could use the cloud services of another country if they find them more reliable. This should be a big boon to the United States as citizens from around the world find it convenient to trade with digital claim checks managed by trusted American institutions.

And what about the dark room in the basements of the central banks around the world? The flexibility of traders from around the world to trade with claim checks of different fiat currencies will make these governments eager to stay competitive, motivated to show responsibility because traders can switch mint over night!

The next stage after that as described in chapter 19 in the just published "Handbook of Digital currency" is for international banks to issue digital claim checks representing not a single fiat currency but a basket of them, and these multi-fiat coins will compete on the favors of the public. As this chapter describes,  natural selection will build up a stable durable global coin for the benefit of all money trading people on this planet.

BitMint LeVeL currency was designed to comply with the vision laid here before the reader. But it is only one protocol and may not be the best. The field is emerging, one should fully expect new talent, new imagination to bring forth the full potential hidden in digital money technology -- coming right in time when finally the citizens of the planet get the sense of sharing a single spot in the vast dark universe around.