Following Biden’s executive order the Digital Dollar is likely to become a reality. In a recent podcast, Nathaniel Whittemore tried to explain the effects of asset development.
Greater Fed control
Last Wednesday, the Biden administration released its long-awaited executive order on cryptocurrencies. In addition to providing a general picture of the administration’s attitude to the cryptocurrency sector, the Biden order also revealed that the administration would step up its research and development efforts to create a CBDC.
What would be the consequences? Nathaniel Whittemore in his podcast “The Breakdown With, NLW” noted that the launch of the digital dollar will have an impact on taxation, distribution of stimulus checks, financial supervision, fiscal policy, monetary policy and geopolitical power struggles.
The digital dollar will be completely under the control of the Fed, as will the Fiat. He likened it to a Fed account and said that as such it would be easier to pay or collect taxes and also distribute checks.
However, much of the debate about the digital dollar, Whittemore notes, is likely to revolve around the Fed’s even more precise oversight of cash flow. While the government is likely to argue that this would help reduce financial crime, it will also face the temptation to monitor ordinary citizens’ transactions. As a result, the CBDC’s idea is a concern for privacy advocates.
The digital dollar has many potential benefits, from easier and cheaper transactions to better fiscal and monetary policy applications that address inequality while posing a potential privacy risk. However, speaking about privacy concerns, the Fed said the digital dollar would “strike the right balance between protecting consumers’ privacy rights and providing the transparency necessary to deter crime.”
Is the digital dollar a threat to BTC?
In July last year, Fed Chairman Jerome Powell said the launch of the digital dollar would reduce the need for cryptocurrencies.
“If you had the American digital currency, you wouldn’t need cryptocurrencies.”
However, Whittemore did not believe this would be the case, saying that if the Fed really saw BTC or other cryptocurrencies as competitors, it would ban them with the launch of its CBDC.
He noted that the purpose of cryptocurrencies is not only transactional, and the Fed’s increased control, unlike the nature of BTC and other assets, further supports BTC for those who use it to avoid the arbitrary nature of the fiat currency offering. However, he believes that the digital dollar would provide a more efficient entry and exit point into cryptospace than is currently available.