Digital Currency and Trade Systems Are Tearing up the Rules

We need a "digital Bretton Woods" to set standards

3 min read
globe of the world with different world currency symbols

The next big thing in global commerce is "trust chain" digital platforms. Nations are now creating such platforms to allow businesses to execute transactions from anywhere on the planet securely and irrefutably. These platforms—which combine open alliance legal agreements (like Visa or Mastercard's legal agreements), distributed ledger technology (for example, blockchains like hyperledger), and end-to-end encryption—can handle not only payments but also finance, trade, tax, and audits in a uniform manner.

A well-documented example is Singapore's Project Ubin, sponsored by the country's monetary authority and its Temasek sovereign wealth fund, which is now being deployed after five years of testing and development. China has created similar systems that have already seen large-scale deployment, but which are less well documented. Another example is the Swiss Trust Chain (which MIT helped engineer); that platform is live but its commercial applications are still being developed.

Trust chains add a layer on top of existing internet protocols that transforms the internet from a loosely connected communication medium into a trusted transaction medium. They make it cheaper, easier, and safer to do business with anyone anywhere and anytime. Technologies such as AI, blockchain, and digital identity are aiding this transformation, helping to make software platforms better suited for a distributed world economy.

Digital currencies could allow the government to see everything you purchase and constrain what you can and cannot do with your money.

These platforms bring with them the enormous challenge of transforming diverse legacy systems—for payments, taxes, shipping, customs, and more—to make them suited for a new uniform digital platform. One serious concern in this new regime is the deterioration of personal data privacy and the rising power of data holders, both companies and government agencies. To make these trust chains work, data needs to be more accessible and standardized—but it must also be adequately protected. Technologies such as federated AI, distributed ledgers, open legal alliances, and business models such as data exchanges can make this possible. But we need standards for governance and architecture that ensure such technologies are used.

A big motivation for the deployment of trust chain platforms is many nations' rush to issue central bank digital currencies, which use these same trust chain technologies to facilitate payments and tax collection. These "digital dollars" can make trade and payment cheaper, and make it more difficult to launder money and easier to trace fraud. But unless very carefully constructed, they also allow the government to see everything you purchase and to constrain what you can and cannot do with your money.

These digital currencies are on the rise. A 2021 report from the Bank for International Settlements found that 86 percent of central banks surveyed were exploring the possibility of issuing a central bank digital currency, and the first ones are now live in the Bahamas and Bermuda. Meanwhile, China is conducting large-scale tests with its digital yuan.

The power of the United States and European Union to set international standards will diminish dramatically if digital versions of other countries' currencies become major mediators of the new trust chain trade platforms. Today the United States and EU control virtually all of the worlds' financial systems, and their dominance is a potent weapon in their geopolitical arsenal that is frequently used to combat crime, unethical behavior, and tax avoidance.

Consequently, the geopolitical implications of switching to digital currencies could be significant. For instance, it's likely that new trading blocs, such as countries that are part of China's Belt and Road Initiative, might decide against using digital U.S. dollars or Euros as a means of payment. They might instead rely upon other digital currencies to avoid complying with U.S. or EU standards.

There is an urgent need to formulate a new international modus operandi with a new digital governance system. Lack of cooperation among nations risks a "race to the bottom," where countries compete by loosening worker protections and devaluing their currencies, with citizens of smaller nations suffering the most.

At the end of World War II the world's financial and trade systems were in disarray, and the major nations of the world held a meeting at Bretton Woods that forged new international financial institutions and monetary standards. The current state of affairs calls for a "digital Bretton Woods" aimed at creating governance and standards for privacy, dispute resolution, taxes, and criminal investigation. It must also ensure interoperability between systems being deployed by China, Singapore, Switzerland, and other nations.

These new standards must aim to make digital platforms efficient, secure, interoperable, and inclusive. However, unlike the post-World War II effort, such coordination must include technical and governance standards for all aspects of digital trade, tax, finance, privacy, and security in order to build a stable and inclusive world economy.

The Conversation (1)
FB TS 31 Aug, 2021

Bitcoin/cryptocurrency is either absolutely useless or absolutely unnecessary for any legitimate purpose but extremely useful for many illegitimate purposes, like money laundering, illegal (drug) trade, collecting untraceable ransomware payments! (Not to mention they are keep wasting massive amounts of electricity!) After proven useless as "virtual currency", they are now promoted as "virtual asset" (investment)! But, why do we need fake investments when we have plenty of real investments? What would happen to whole world economy, if everybody invested in fake investments, instead of real investments? Why do you think "Satoshi" took first 1 million bitcoins & disappeared to hiding (instead of proudly showing himself to whole world)? Realize it means government law enforcement cannot go after him! Also realize, as soon as "Satoshi" sells his share, everybody would rush to sell all their bitcoin/cryptocurrency! & so suddenly millions of people would lose all their invested money! Bitcoin/cryptocurrency is just a new kind of scam (just like Ponzi Scheme or Pyramid Scheme invented in the past)! It is not the first time that so many smart & educated people fell for a really clever scam!

& so, it is absolutely bad idea for any central banks to issue their own cryptocurrency! If governments start issuing cryptocurrencies then cryptocurrency scammers could easily tell general public: "If cryptocurrencies are scam then how come your own government issuing its own cryptocurrency?" Do we really want people of the whole world start trusting/investing bitcoin/cryptocurrency scams??

Also consider how/why government central banks control supply of national currencies (to protect/stabilize national economies)! A private company would really care national/global financial/economic stability or just how much richer they will get? & that is why any private companies issuing their own currency should/must never be allowed! ONLY government central banks should/must have the authority to issue currency & NOBODY ELSE!!!

Atari Breakout: The Best Videogame of All Time?

Breakout—as designed by Steve Wozniak—was a manufacturing nightmare

2 min read
atari breakout game screen showing a paddle at bottom and rows of colored bricks and two score fields at top

Breakout was the best video game ever invented, many designers say, because it was the first true video game. Before Breakout, all were games like Pong—imitations of real life. With Breakout, a single paddle was used to direct a ball at a wall of colored bricks. Contact made a brick vanish and the ball change speed. The game could never exist in any medium other than video.

Like Pong, the specifications for Breakout—its look and game rules—were defined by Nolan Bushnell at Atari Inc., Sunnyvale, Calif. But along with the specs came an engineering challenge in 1975: design the game with less than 50 chips, and the designer would receive $700; design the game with less than 40 chips, and the designer would receive $1000. Most games at that time contained over 100 chips. Steven Jobs, now president of Apple Computer, Santa Clara, Calif., was hanging around Atari at that time. “He was dirt poor,” recalled Allan Alcorn, who joined Atari at its formation. Atari’s design offer was “good cash”—to Mr. Jobs. Mr. Alcorn remembered that Mr. Jobs quickly designed the game with fewer than 50 chips. He had help. He called on his friend, Steven Wozniak, who later designed the Apple computer.

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