Digital Dollar and the Inevitability of Crypto

Mar 27, 2020

At the beginning of this week, a news broke out that a bill is going to be proposed in the US Congress called “Take Responsibility for Workers and Families Act”. As part of the measures targeted at handling the inevitable economic crisis following the COVID-19 pandemic, the Democrats were going to propose giving $2,000 to a large part of the adult population of the US.

A Glimmer of Hope

In order to facilitate this “helicopter money” idea, the draft of the bill recommended using a “digital dollar”. The definition given for digital dollar was: “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),”. The recipients of the financial aid were supposed to get a digital wallet maintained by the Federal Reserve.

This news was exciting for most crypto-enthusiasts for a variety of reasons. One was the opportunity to introduce the idea of digital wallets and digital currency to a large portion of US citizens who’ve never entertained such a thought.

And of course, combined with what is now an official non-stop Quantitative easing (infinite money printing), such a distribution of cash would be just another step towards the demise of the dollar. Plunging dollar values would mean better chances for crypto to win the hearts and minds of more people and make cryptocurrencies the obvious solution for the financial troubles the world is going through.

A Cold Shower

But it was before the end of Monday when we learned that the term “digital dollar” was not present in the latest draft of the bill. It still proposes U.S. residents to receive $1,500 per person but in the huge text of 1404 pages there is no clarity how is the money going to be distributed.

So, they are not ready yet. Understandably so, as anything that furthers the cause for a different financial system, especially one that is based on a decentralized blockchain, threatens the positions of the political establishment.

Inevitability

But as it was mentioned, the crisis is inevitable and changes are bound to happen. And not only because keeping everything the old way is financially crippling for the majority of the human kind. In the light of a global pandemic happening around us digital money is now simply the safer option. People tend to prefer cash in times of crisis – the bank cannot restrict your ability to spend your cash, the government cannot seize your cash as it sees fit, the control you have over your money when you hold it is undoubtedly preferable when economic uncertainty strikes. But if bills have the potential to become worthless AND can give you a deadly disease, what is this store of value which can go around the quarantine. The answer is becoming quite obvious – crypto.