The United States’ battle against cryptocurrency has only just started. After Russia used crypto to circumvent financial sanctions, the Democrats have started work on their alternative to kill crypto: digital dollars.
Just like Japan, the United States is working on a digital representation to its main currency. But how does the digital dollar work? And how is it any different from money housed in, say, a bank account? Well, read on.
What is the Democrats’ digital dollar?
Following the Russians’ use of cryptocurrency to avoid sanctions, the United States Democrats are working on a privacy-focused digital dollar. Announced on Monday, the political party’s “Electronic Currency and Secure Hardware (ECASH) Act will see the creation of the US’ official digital currency.
The ECASH Act aims to give its digital dollar the same uses and privacy as tangible dollars. As other countries work to create their own fully digital currencies, the United States is hoping to act fast as to not be left behind.
America’s virtual cash is said to be designed to be “owned, held, and used directly by the general public via widely available hardware devices, without the necessary involvement of third-party custodial or payment processing intermediaries." This means that no one will be restricted from using e-cash due to not having a modern computer.
Via The Register, Rep. Stephen Lynch said:
"By establishing a pilot program within Treasury for the development of an electronic US Dollar, the ECASH Act will greatly inform, complement, and advance ongoing efforts undertaken by the Federal Reserve and President Biden to examine potential design and deployment options for a digital dollar.”
Why would I use digital dollars?
The Digital Dollars ECASH Bill is said to be designed with privacy and usability in mind. For example, the mass surveillance of credit card transactions will allegedly be more secure than ever before. However, there's no knowing how long that privacy will last.
At least for launch, “any hardware device authorized to hold or otherwise facilitate transactions involving e-cash shall be secured locally via cryptographic encryption and other appropriate technologies, and shall not contain or be subject to any surveillance, personal identification or transactional data-gathering, or censorship-enabling backdoor features."
Additionally, just like physical cash, users will be able to send money to friends offline and without transaction fees. Furthermore, anonymity is of paramount importance to make sure citizens are comfortable with the technology.
Currently, banking companies and other monetary services suck up information from users. ECASH is said to be designed without any data harvesting features included. If true, this could be a fantastic tool to make the general public more comfortable with entirely digital currencies.