E Pros And Cons Of Blockchain Digitalization Of Dollars

There are pros and cons of blockchain digitalization of dollars. We already learned from Bloomberg and from Michael Snyder about a secret meeting of bankers with the startup Chain.com. The digitalization of money for purposes of transfers is the goal of the technology and of the meeting which was not so secret that no one could find out about it.

So, let me get right to the point. Currency is fungible. That means a dollar is a dollar, whether it is in one place or another, whether it is digitalized or a physical dollar. Blockchain is a method of transferring dollars.

Dollars can be identified by an asset ID as the Chain's website shows us. In fact, this is what can happen to currency with asset ID affixed to it:

Once issued, units of an Asset ID can be programmatically transacted with smart contracts or retired from circulation. 

So, the question is, is this blockchain technology good or bad? How far can this technology go?  Banks retire dollars everyday, as they wear out. Can they be retired without recourse or physical replacement, forcing the elimination of cash? So far there are bank regulations requiring access to cash. It would be a good thing to trace digital dollars so they won't be stolen from you. But privacy issues remain.

There are many questions about this blockchain technology. It has some important benefits. For example, it could be used to disperse helicopter money. As we approach the zero lower bound, that could be a good thing.

But before looking at the potential dangers and cons resulting from the misuse of blockchain  technology, here are some reasons it could be a good thing:

Responsibly Expand the Monetary Base Before It Is Too Late 

Eric Lonergan Precisely Defines Helicopter Money

Preserve Capital-The Relentless Slide Toward Deflation and Negative Nominal Rates

But questions remain about the technology, simply because Larry [retire-the-100-dollar-bill] Summers has been talking about blockchain being more important than the bitcoin created from it. Summers recently said in an article at CNBC that blockchain is more important than the Bitcoin it produces. He has attacked the existence of even medium sized bills, 100's and 50's, in not such an honest way in the past. That alone raises a red flag. It may turn out that the technology will be a good thing, but with thinkers like Summers touting it, could it be used to help eliminate cash? Once you eliminate big bills, you shrink the physical money supply by leaps and bounds.

1 2 3
View single page >> |

Disclosure: I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice.

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.