Reserve Bank considers the digital dollar: 'NZ's money must innovate to stay relevant ' : newzealand

[–] Dave 7 points 7 months ago (4 children)

I'm not sure what to think of this. Does a central bank backed digital currency still require proof of work? I didn't dig too deep but didn't see anything explaining what the structure would look like (I guess that's part of the process of determining what's appropriate).

If you access via an app, would it be open like bitcoin where anyone can maje an app, or would you have to install an RBNZ app only available on Google Play and the Apple App Store?

My initial thought was I wouldn't put much money in it, but then realised it's intended to be a form of cash and I don't keep much money in cash either.

So I guess if they do a good job I might use it for small transactions?

[–] Rangelus 3 points 7 months ago (1 children)

I would assume this has little to do with traditional cryptocurrencies, but uses Blockchain as it's leger.

If I were in charge of this project, I would have a centralized validation system, maybe a series of servers across the country for redundancy. It doesn't need PoW or PoS as all validation is run by the RBNZ.

As for what this solves, I can think of a few things:

Opening up fiat interaction with other cryptocurrencies
Much lower fees for digital transactions
Near-instant transactions
Physical storage of digital funds. Paper wallets and other secure methods
From the govt point of view, perfectly tracible cash transactions

[–] JamesNZ@lemmy.world 1 points 7 months ago

Yes, this.

[–] sonori@beehaw.org 3 points 7 months ago (1 children)

As far as I can tell this is a Central Bank Digital Currency, and as such has nothing to do with cryptocurrency at all. CBDC’s are basically just the central back extending the service they offer to major banks to now be accessible to everyday citizens.

The main advantage for the government is that it makes tax accounting easier for people and improves the economy by eliminating things like say the two percent additional private sales tax on credit cards or bank transfer fees.

[–] Dave 2 points 7 months ago* (last edited 7 months ago) (1 children)

Interesting. I'm assuming this means you need an internet connection to make a transaction. Like Paypal or Venmo but run by the government. Or like a bank account run by the government (without loans or interest, etc.

[–] sonori@beehaw.org 2 points 7 months ago (1 children)

Yep, that’s the basic idea. With Paypal and Venmo taking 3.4% of every transaction you end up with that being effectively being a sales tax that goes to private companies, and across an entire nation’s economy that tends to add up.

The actual form CBDC’s end up taking may very a bit though, as different countries implementations have tended to vary a bit while we figure out what works best, but I am curious to see what form you end up with.

[–] Dave 2 points 7 months ago* (last edited 7 months ago)

I'm curious to see if we make any real progress by the end of the decade 😆

NZ already has electronic payment cards that are independent of credit card companies, called EFTPOS, that has been in use since the 80s. The cost off this for shops is a fraction of the cost of credit card transactions, starting somewhere like USD$10 per terminal per month for unlimited transactions of any size. Credit cards often take as much as 1-2% for Mastercard/Visa (the higher fee/higher reward cards US are often not accepted). In fact, credit card fees have become such an issue a large number of places will on-charge the fee to the customer.

If you're a small shop with one terminal paying $10 per month, it's not a cost that really matters. Unlike credit cards that often charge an annual fee to the user in addition to the transaction fee, EFTPOS cards are typically provided by banks free of charge. There is even competition in the space, with two different companies running EFTPOS systems.

Credit cards can generally also be used for EFTPOS so we don't even have to carry two cards around. Given this system, it would be interesting to see how much room there is for a central bank digital currency to improve on it.

[–] WamGams@lemmy.ca 3 points 7 months ago (2 children)

The reason for proof of work is because true currencies are tied to labor, or more accurately, the potential amount of labor that can be converted from stored energy.

Now, a computer solving a math problem at a predetermined interval is not actual labor, but it does consume energy, and thus, currently the system is you have to spend real labor to purchase pretend labor, and you aren't even getting the labor out of it, you are getting a token assuring you the labor actually happened.

Unless the computers are actually producing anything, I'm not sure how to get around this issue.

[–] Dave 5 points 7 months ago (1 children)

Sounds like it's not independant crypto, but instead more like a bank account run by the government.

[–] throws_lemy 2 points 7 months ago

You're not wrong..

forr example PRC's digital Yuan / Renminbi

https://www.adb.org/publications/the-peoples-republic-of-chinas-digital-yuan-its-environment-design-and-implications

[–] JamesNZ@lemmy.world 1 points 7 months ago

Wtf are you on about? Proof of work is to keep the distributed ledgers honest. You need it if you are running a trustless system. If it is a central ledger, which it will be if a government is running it, then there is no need for proof of work.

[–] BalpeenHammer 2 points 7 months ago

You can use premined currencies like XRP. You can just fork the protocol.

[–] luthis 6 points 7 months ago (2 children)

Whenever I hear things like this, I ask 'What's the problem they are actually trying to solve?'

Most of the time there is no problem, it's a solution looking for a problem. In this case, it seems like the only problem to solve is:

Today, New Zealanders still cannot make instant payments electronically to other people, unless they are both with the same bank."

I'm pretty sure that could be solved with a middle-man app instead of a 'digital currency.' Venmo exists in the US, something like that?

I'm sure we have had similar.. TradeMe has Ping which "Make payments safely with Ping. Pay or get paid instantly – using a credit or debit card, or Ping balance." .. so, yeah problem already solved, instant payments.

[–] Dave 8 points 7 months ago

I think the problem to solve is that you can't do it for free. Currently you get charged fees for every transfer, something that doesn't happen with cash.

Plus this is a single standard. If I go to pick up a trademr purchase I'm unlikely to be able to pay with Venmo, because there are a dozen other options and no one has heard of any. With a government backed option, people can start advertising that they accept it, and vendors/banks know where to focus their efforts.

[–] BalpeenHammer 0 points 7 months ago

Whenever I hear things like this, I ask ‘What’s the problem they are actually trying to solve?’

Let me list some possible benefits. Presume a premined centralized currency like XRP.

You can impose a mining fee and control the exchanges (miners). This would impose a tiny tax on every exchange of money and you can reduce or eliminate other taxes.
Easy exchange and transfer of money to and from overseas.
Easy peer to peer payments.
Easy tracking of transactions to eliminate money laundering.

[–] eagleeyedtiger 6 points 7 months ago* (last edited 7 months ago) (1 children)

All I want is an Instant Payment system for instant bank transfers. Multiple countries have managed to do it already.

Or just copy Australia's homework

[–] Dave 5 points 7 months ago (1 children)

Ours is down to a couple of hours for inter-bank transfers, 365 days a year. We've made a lot of progress in the last decade.

[–] eagleeyedtiger 3 points 7 months ago (1 children)

A decade is a long time.. we only got 365 days a year banking less than a year ago didn't we? I guess our market is so small nobody really cares to improve things and kiwis don't like to make a fuss to get things more modernised.

[–] Dave 4 points 7 months ago (1 children)

Correct, small steps but it's improving! Perhaps the digital dollar is the next step.

[–] eagleeyedtiger 2 points 7 months ago (1 children)

So a digital dollar in 2033, instant transfers by 2043 :P

If we get a digital dollar before instant transfers, I'm going to be annoyed!

[–] Dave 2 points 7 months ago

Haha we probably will! But the digital dollar will be instant, if that's any small consolation.

[–] absGeekNZ 4 points 7 months ago (2 children)

It could even be used for children's pocket money in the same way as cash was currently used.

I don't see that working well at all for younger kids, the physical nature of money has more "weight" to it than a number on a screen.

[–] Dave 1 points 7 months ago (1 children)

We use a spread sheet 😆

[–] absGeekNZ 2 points 7 months ago (1 children)

We use 1/2 cash, 1/2 a note book for their "savings account"

[–] Dave 2 points 7 months ago* (last edited 7 months ago) (1 children)

We struggle to keep track of what was actually their money and which was money that fell out of the grandparent's pockets etc. One kid always remembered putting their money in the spot where a coin happened to be.

We do 1/3 in each of a spending account (can spend on a whim), savings account (with some rules around it), and charity money (donate to charity of their choice). We don't need more crap so they get $1 per week per year of age (e.g. 6 year old gets $2 spending money, $2 to savings, $2 to charity account that we donate once it builds up a bit).

Some of their friends get $20 or more each week! One says they get $50, but kids say all sorts of things so who knows. One of my kids worked out you can get a pack of biscuits for $1, I can't imagine giving my kids $50 a week and ending up with hundreds of packs of biscuits.

[–] absGeekNZ 2 points 7 months ago* (last edited 7 months ago) (1 children)

We do the $/yr of age also.

We go to the op shop quite often, some cool things have turned up. We also donate stuff, especially good for puzzles, keep them for a while then donate them back.

Kids can talk a lot of shit.....😄

[–] Dave 1 points 7 months ago

We should go to the op shop a bit more. That's a better way of spending a few dollars than the cheap junk shops.

[–] BalpeenHammer 1 points 7 months ago (1 children)

You can load it on a card. Put twenty bucks in the card and that's all your kid has to spend.

[–] absGeekNZ 2 points 7 months ago (1 children)

From my experience, when a young kid is standing there counting out their money, there are a lot of smiles.

It is one of those little things, but it is really nice to see. You miss that with a card.

[–] Rangelus 1 points 7 months ago (1 children)

I don't think this is universally true. Both my kids weren't too fussed if their pocket money was cash, or deposited in their accounts.

[–] absGeekNZ 1 points 7 months ago (1 children)

It is not just the kids, the adults around also smile

[–] Rangelus 1 points 7 months ago (1 children)

I hate cash. I just have a card wallet, and a note clip if I absolutely need it. Otherwise I carry no cash.

[–] absGeekNZ 1 points 7 months ago (1 children)

I don't really use cash, I have a card wallet also.

But for pocket money and going to markets and the like, I use cash. Cash is just a tool, and sometimes it is the best tool for the job.

[–] Rangelus 1 points 7 months ago (1 children)

Absolutely. Which is why I think having a digital currency is great, because it adds another tool we can use.

Those that want to can use it, and those that don't can continue to use cash. I don't agree with some of the naysayers that digital cash will lead to the removal of physical cash.

[–] absGeekNZ 1 points 7 months ago

Agreed, at least in the short term. Physical cash will be around for a long time yet.

[–] absGeekNZ 3 points 7 months ago

It could lead to interesting situations where some people just use cash again.

As long a multiple wallets are simple to setup, you have your walking around money that is with you. In a secure location you have another general wallet that holds most of your liquid cash, and keep a third (4th, 5th....) wallet hidden containing some "emergency" money.

[–] BalpeenHammer 1 points 7 months ago (1 children)

It's easy enough. Just fork XRP, set up a couple of dozen servers in various places and you are done. The currency is pre mined so you get to control the supply just like fiat.

If you were really smart (and let's face it this government couldn't outthink a dead fly) you'd charge a mining fee and eliminate or reduce the GST.

[–] Rangelus 1 points 7 months ago (1 children)

I think validating blocks should be done centrally as well. I can't think of a good reason to allow it for the public for a government backed fiat token.

Unless you want to save money on electricity. But I would hope the goal of this is to make the digital tokens functionally the same as cash, the biggest part being 0 transaction fees.

[–] BalpeenHammer 1 points 7 months ago (1 children)

I think validating blocks should be done centrally as well. I can’t think of a good reason to allow it for the public for a government backed fiat token.

AFIK that's the way premined currencies work. The "miners" (which are not miners, as you say they just validate the blockchain) are controlled and are not that many.

Unless you want to save money on electricity. But I would hope the goal of this is to make the digital tokens functionally the same as cash, the biggest part being 0 transaction fees.

There are transaction fees on cash too, it's called GST, petrol tax, income tax, etc. This would just make it easier to levy taxes so we can eliminate more onerous taxes

[–] Rangelus 1 points 7 months ago (1 children)

AFIK that's the way premined currencies work. The "miners" (which are not miners, as you say they just validate the blockchain) are controlled and are not that many

To be fair I'm not that knowledgeable about XRP and other premined tokens.

There are transaction fees on cash too, it's called GST, petrol tax, income tax, etc. This would just make it easier to levy taxes so we can eliminate more onerous taxes

Oh I get that, I'm all for reducing or removing regressive taxes such as GST in favor of progressive taxes. Dreams are free, but that ain't going to happen.

Actually, a digital currency would make it much easier for businesses to collect and report GST. I've worked in retail before, it's a real headache.

[–] BalpeenHammer 1 points 7 months ago

It wouldn't be a GST technically. It would be a transaction tax. It would be collected automatically by the exchange servers.

Aotearoa / New Zealand