A New Step Has Been Taken For Digital Dollars! Here are the Details
Digital Dollar Project has announced its plan for how the US government should offer the digital dollar. In the plan, digital dollars will not replace cash; instead, it was stated that it would act as a “third form of money” under the control of the Federal Reserve.
How will the digital dollar be issued?
The Digital Dollar Project, a partnership of the Digital Dollar Foundation and Accenture, has released a whitepaper detailing how the US government can launch a central bank digital currency ( CBDC ).The project, led by a group of ex-US government officials, including ex-chairman of the Commodity Futures Trading Commission (CFTC) J. Christopher Giancarlo, aims to train policy makers and propose a national CBDC strategy for the country.
According to Whitepaper, the tokenization of the dollar will allow the dollar to maintain its position as a reserve currency by increasing its capacity. Ultimately, the widespread adoption of a new dollar will serve the interests of the US government.
The article in question also provides a use case for making use of digital dollars in case of crisis. Millions of Americans had to wait for the economic aid, distributed as paper money, to arrive. If there was a system based on digital dollar, money would be distributed almost instantly.The proposed digital dollar will be built on a “two-tier distribution architecture” where commercial banks and other regulated financial institutions will act as intermediaries between the Fed and people who use tokenized dollars.According to Whitepaper, these regulated institutions, “Just as they give cash money to customers with ATMs, they will replace their reserves with digital dollars and distribute them in the same way.”
Tokenation will start in commercial banks
Commercial banks will be asked to replace some of their reserves with dollars in token to encourage the system. The tokenized dollars kept in the reserves will be distributed to the consumers via mobile phone applications or various cards.
While the adoption of new dollars will begin with commercial banks, other institutions will also be able to participate in this process. While there is still no concrete requirement for technology to facilitate the distribution and use of the tokenized dollar; He said that the Digital Dollar Project will at least be inspired by “distributed ledger technology (DLT)”.David Treat, senior manager of Accenture, told LedgerInsights that they are open to any kind of public-private cooperation. “Although CBDC definitely has the support of the central bank; use cases, services, and infrastructure work are open to many, ”he said.
When it comes to the privacy issue of the proposed digital dollar, the organization said the government should continue its “current cash practice”. Thus, privacy can be secured below the $ 10,000 threshold, similar to dollar coins and coins.
However, confidentiality remains an increasing concern for citizens afraid of the government spying money. For now, Bitcoin and privacy-focused coins are still considered the best way to pay digitally.