Anyone interested in joining Digital Dollar working group

Earlier this week a number of U.S legislative proposals were made calling for the creation of “Digital Dollar Wallets”. A part of the larger policy discussion around the COVID-19 response, these wallets are intended to be a means to get government stimulus money to citizens quickly and efficiently.

The proposals (which did not make it into the final COVID-19 package passed this week) reflect an inflection point, pointing to greater policymaker understanding of the power of personal digital wallets.

Given this heightened interest, we are issuing a Call to Action to GDF members interesting in forming a Digital Dollar Working group. The purpose would be to review these proposals, provide commentary and exchange reactions, and form a white paper examining how a proposal, if passed, might work practically. If you are interested in joining the working group please email hello@gdf.io

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I dont know how much I would be able to add to the process but its a great idea.

The original concept was how US govt to airdrop billions in bailout direct to taxpayers. Personal digital wallets was originally considered but taken off the table as being too complicated and basically somewhat radical for the decision makers (example of weak technology adoption). Perhaps someone from Coil or anyone thinking of developing new payment channels might want to put hand up to make sure continuous payments are supported (set aside regular tips or StreetPerformers Protocol). The more widespread wallets are (and interledger is supposed to help cross-wallet payment) and show to be according to standards, then web monetarisation will be faster to take off.

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Hi,

I am interested in a Digital Dollar Working and would contrinute. The US lags behind in mobile wallet usage.

But what are the advantages of digital dollar wallets over using direct deposit into a bank account?

The IRS already has bank account info for the >80% of tax payers (https://www.irs.gov/newsroom/taxpayers-can-get-faster-tax-refunds-with-direct-deposit). All these bank accounts are already “digital” and FDIC insured. Banks already act as intermediaries between the Federal Reserve and customers.

What value does the digital dollar and digital dollar wallets add?

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Let me give you an example, payment through Stripe costs 30c + 2.9% … so for $10, the cut is 5.9% and for $1 becomes 33% … If you are talking micropayments, this is absurb. I calculated that if you design the wallet right, the overhead is 0.5-1% … basically a wallet load feed and direct P2P exchange (assuming same token and only exit fees back to your bank account). This would true regardless of the amount. So 1% vs 33% overhead is a big big gap when it comes to tips.

I’m not recommending it but here is a list of cryptocurrencies back in 2018 that are either pegged, backed or algorithmically stablised relative to major currencies USD/EUR. If you trust that there is sufficient liquidity back to the existing financial system, then in theory interledger could treat each as fungible (software functionally equivalent). In practice I suspect it depends on the connector, the conversion fees and the amount of free float. So daredevils can pick their favorite wallet and do direct setoffs (basically an accounting netback procedure) between pairs of participants, then at end of month, doing a settlement to clear all outstanding balances/debts if >$100. You can then see how the coil protocol helps the daily rebalancing non-custodian wallets whilst only tapping into the normal payment process for largish amounts. Again, this is no endorsement of any particular token or even stablecoins in general as I think there are inherent flaws in the underlying concept.

That’s fine for P2P transactions. In fact, it’s 0% if you use Venmo and 0% from Venmo to your bank account.

But we’re not talking about P2P. The digital dollar wallet is being proposed as an alternative for facilitating distributions from the federal gov. Whether direct deposit to a bank account, or writing and mailing a check, or transfer of digital dollars to a wallet, there is no fee charged to the recipient. Even with P2P there already exists at least one zero fee solution with Venmo.

So, what I’m wondering is, what value are digital dollars supposed to add? They’re not any faster than direct deposit. They don’t cost any less for the recipient. They still require at least one intermediary between the Federal Reserve and wallet owner. They may not even be insured if the intermediary goes under.

The only thing I can think of is maybe they make it cheaper for the federal government? And easier for them to track our purchases? They will perhaps cut more banks out of the loop, and thereby could have an effect on the money multiplier.

But what value do they add to the end user?

The digital dollar wallet is being proposed as an alternative for facilitating distributions from the federal gov.
But what value do they add to the end user?

Not being in the US I don’t know what the FedReserve is thinking. However, given that PRC is steam-rolling ahead with their CDEP some more far-sighted officials might be trying to future proof any changes or prepare their citizens. Remember, the ability to dole out state owned digital tokens, whether pegged to USD or otherwise, suggests parallel ability to tax them right back again. I can only speculate that by pushing for a radical overhaul (xref India) they can then maybe have the ability to monitor the offshore Eurodollars and any overseas black accounts (basic input/output maths). With purported 20 or even 30 trillion dollar debt ceilings being able to enforce global tax collection for US citizens might not be impossible with enough surveillance.

The way superpower govts thinks is too hard for my little brain … as a citizen you should be asking the questions not eating the chickenfeed they hand out.

Ah, yes, I can see the advantage of tracking all transactions for purposes of limiting fraud and tax collection.

If I understand correctly, digital dollars are to be sourced directly from the Federal Reserve. However, banks and other service providers will have to provide wallets and thus act as custodians. Thus, the opportunity still exists to obfuscate transactions at the custodial level (see HSBC). Unless a blockchain/distributed ledger is involved, which I do not see mentioned anywhere in the reporting on this.

Further, digital dollars are to be convertible into regular dollars and even cash via ATMs. Thus providing another way to “hide” transactions off the digital dollar ledgers. Perhaps the next step is to phase out currency conversion and physical cash altogether? As you say, who knows what they’re thinking and what plans are in store?

Not impossible … the PRC already has internal CNY and external traded CNH for settlement which isolates the internal real economy from external speculation (you might recall Asian crisis with a massive hedge fund attack on the national reserve banks). With 1.2 Billion people. a few smart cookies should rise to decision making level. The US could well be contemplating something similar to rein in non-custodian dollars outside its purview. Not really something that concerns day-day micropayments.

Unless a blockchain/distributed ledger is involved,

implicit since if a token is involved, somewhere somehow it will get recorded into a form of DLT if want to transact with other custodian wallets or payment points