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
iStockphoto

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 TS31 Aug, 2021
INDV

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!!!

The Inner Beauty of Basic Electronics

Open Circuits showcases the surprising complexity of passive components

5 min read
Vertical
A photo of a high-stability film resistor with the letters "MIS" in yellow.
All photos by Eric Schlaepfer & Windell H. Oskay
Blue

Eric Schlaepfer was trying to fix a broken piece of test equipment when he came across the cause of the problem—a troubled tantalum capacitor. The component had somehow shorted out, and he wanted to know why. So he polished it down for a look inside. He never found the source of the short, but he and his collaborator, Windell H. Oskay, discovered something even better: a breathtaking hidden world inside electronics. What followed were hours and hours of polishing, cleaning, and photography that resulted in Open Circuits: The Inner Beauty of Electronic Components (No Starch Press, 2022), an excerpt of which follows. As the authors write, everything about these components is deliberately designed to meet specific technical needs, but that design leads to “accidental beauty: the emergent aesthetics of things you were never expected to see.”

From a book that spans the wide world of electronics, what we at IEEE Spectrum found surprisingly compelling were the insides of things we don’t spend much time thinking about, passive components. Transistors, LEDs, and other semiconductors may be where the action is, but the simple physics of resistors, capacitors, and inductors have their own sort of splendor.

High-Stability Film Resistor

A photo of a high-stability film resistor with the letters "MIS" in yellow.

All photos by Eric Schlaepfer & Windell H. Oskay

This high-stability film resistor, about 4 millimeters in diameter, is made in much the same way as its inexpensive carbon-film cousin, but with exacting precision. A ceramic rod is coated with a fine layer of resistive film (thin metal, metal oxide, or carbon) and then a perfectly uniform helical groove is machined into the film.

Instead of coating the resistor with an epoxy, it’s hermetically sealed in a lustrous little glass envelope. This makes the resistor more robust, ideal for specialized cases such as precision reference instrumentation, where long-term stability of the resistor is critical. The glass envelope provides better isolation against moisture and other environmental changes than standard coatings like epoxy.

15-Turn Trimmer Potentiometer

A photo of a blue chip
A photo of a blue chip on a circuit board.

It takes 15 rotations of an adjustment screw to move a 15-turn trimmer potentiometer from one end of its resistive range to the other. Circuits that need to be adjusted with fine resolution control use this type of trimmer pot instead of the single-turn variety.

The resistive element in this trimmer is a strip of cermet—a composite of ceramic and metal—silk-screened on a white ceramic substrate. Screen-printed metal links each end of the strip to the connecting wires. It’s a flattened, linear version of the horseshoe-shaped resistive element in single-turn trimmers.

Turning the adjustment screw moves a plastic slider along a track. The wiper is a spring finger, a spring-loaded metal contact, attached to the slider. It makes contact between a metal strip and the selected point on the strip of resistive film.

Ceramic Disc Capacitor

A cutaway of a Ceramic Disc Capacitor
A photo of a Ceramic Disc Capacitor

Capacitors are fundamental electronic components that store energy in the form of static electricity. They’re used in countless ways, including for bulk energy storage, to smooth out electronic signals, and as computer memory cells. The simplest capacitor consists of two parallel metal plates with a gap between them, but capacitors can take many forms so long as there are two conductive surfaces, called electrodes, separated by an insulator.

A ceramic disc capacitor is a low-cost capacitor that is frequently found in appliances and toys. Its insulator is a ceramic disc, and its two parallel plates are extremely thin metal coatings that are evaporated or sputtered onto the disc’s outer surfaces. Connecting wires are attached using solder, and the whole assembly is dipped into a porous coating material that dries hard and protects the capacitor from damage.

Film Capacitor

An image of a cut away of a capacitor
A photo of a green capacitor.

Film capacitors are frequently found in high-quality audio equipment, such as headphone amplifiers, record players, graphic equalizers, and radio tuners. Their key feature is that the dielectric material is a plastic film, such as polyester or polypropylene.

The metal electrodes of this film capacitor are vacuum-deposited on the surfaces of long strips of plastic film. After the leads are attached, the films are rolled up and dipped into an epoxy that binds the assembly together. Then the completed assembly is dipped in a tough outer coating and marked with its value.

Other types of film capacitors are made by stacking flat layers of metallized plastic film, rather than rolling up layers of film.

Dipped Tantalum Capacitor

A photo of a cutaway of a Dipped Tantalum Capacitor

At the core of this capacitor is a porous pellet of tantalum metal. The pellet is made from tantalum powder and sintered, or compressed at a high temperature, into a dense, spongelike solid.

Just like a kitchen sponge, the resulting pellet has a high surface area per unit volume. The pellet is then anodized, creating an insulating oxide layer with an equally high surface area. This process packs a lot of capacitance into a compact device, using spongelike geometry rather than the stacked or rolled layers that most other capacitors use.

The device’s positive terminal, or anode, is connected directly to the tantalum metal. The negative terminal, or cathode, is formed by a thin layer of conductive manganese dioxide coating the pellet.

Axial Inductor

An image of a cutaway of a Axial Inductor
A photo of a collection of cut wires

Inductors are fundamental electronic components that store energy in the form of a magnetic field. They’re used, for example, in some types of power supplies to convert between voltages by alternately storing and releasing energy. This energy-efficient design helps maximize the battery life of cellphones and other portable electronics.

Inductors typically consist of a coil of insulated wire wrapped around a core of magnetic material like iron or ferrite, a ceramic filled with iron oxide. Current flowing around the core produces a magnetic field that acts as a sort of flywheel for current, smoothing out changes in the current as it flows through the inductor.

This axial inductor has a number of turns of varnished copper wire wrapped around a ferrite form and soldered to copper leads on its two ends. It has several layers of protection: a clear varnish over the windings, a light-green coating around the solder joints, and a striking green outer coating to protect the whole component and provide a surface for the colorful stripes that indicate its inductance value.

Power Supply Transformer

A photo of a collection of cut wires
A photo of a yellow element on a circuit board.

This transformer has multiple sets of windings and is used in a power supply to create multiple output AC voltages from a single AC input such as a wall outlet.

The small wires nearer the center are “high impedance” turns of magnet wire. These windings carry a higher voltage but a lower current. They’re protected by several layers of tape, a copper-foil electrostatic shield, and more tape.

The outer “low impedance” windings are made with thicker insulated wire and fewer turns. They handle a lower voltage but a higher current.

All of the windings are wrapped around a black plastic bobbin. Two pieces of ferrite ceramic are bonded together to form the magnetic core at the heart of the transformer.

This article appears in the February 2023 print issue.

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