Brace for the Digital-Money Wars
The digital yuan China is planning is in fact a complete inversion of the bitcoin model. All of the data created would be centrally housed and become part of China’s surveillance state.
...it’s an example of the leverage China would have over every transaction on its system. The only question is how heavy-handed the Chinese would be in using it.
While the Chinese model might be the far end of the spectrum, cryptocurrency has been moving in that direction. While bitcoin was designed to mimic the anonymity of cash in a digital setting, all its transactions are public, and therefore trackable. And Facebook’s libra would log transaction data, while recording user identities in a separate database. A central concern in Congress is what Facebook would do with that information.
Say the Federal Reserve digitized the U.S. currency. It could track how every dollar in circulation is spent. That might give it a great advantage in trying to figure out how the economy is growing, and where stimulus efforts would best be directed. But say people in government wanted to lock down some group or activity.
People need to start thinking about this now, Harvard’s Ms. Kumar said. China’s digital yuan will be a real-world proof of concept. The West will need to respond in some way. “Are we prepared for that?” she said. “Not just technically, but legally? Can we protect privacy in this new world?”
See the full story here: https://www.wsj.com/articles/brace-for-the-digital-money-wars-11575694806