Thanks to smaller processing fees and quickened fiscal response in crisis situations, the digital dollar could save the American taxpayers billions of dollars for sending and processing stimulus checks, argues Forbes contributor Roger Huang. Furthermore, it would legitimize and increase the adoption of open cryptocurrencies, as protestors all over the globe are already starting to recognize the power of non-sovereign money, he writes.
The proposals to use the digital dollar to deliver further stimulus payments came up during the recent Congressional hearing. Proposed by Senator Sherrod Brown and the US House Committee on Financial Services Chairwoman Maxine Waters, the system would use digital wallets and accounts tied with physical postal service infrastructure for the delivery.
Essentially, it could potentially replace inefficient paper checks that cost taxpayers billions of dollars in aggregate, writes Huang.
The Covid-19 pandemic came with an unprecedented fiscal and monetary response worldwide. In the United States, it resulted in USD 267 billion worth of stimulus checks directly dispensed to Americans: USD 1,200 payment for each adult, USD 2,400 for married couples, and USD 500 for each child of 17 and under.
USD 120 million of these stimulus checks were sent by direct deposit, USD 35 million were sent by check, and USD 4 million were delivered via prepaid debit cards.
“Reducing inefficiencies and increasing the amount of data you can collect would be key policy goals for any government,” Huang writes.
However, the American government can’t use cryptocurrencies, as further cryptocurrency adoption, be it a digital dollar or open blockchains, might further legitimize money and store of value outside of state control. As such, cryptocurrencies must win by using a technological bottoms-up approach, argues the author.
“If cryptocurrency is going to win the day, it will likely come through overwhelming mass public adoption of already existing digital payments infrastructure that speeds past what the government can build — a bottoms-up technological approach rather than a top-down political one.”
The digital dollar is a central bank digital currency (CBDC) issued by central banks. The issue is particularly relevant for the U.S. government, whose dollar (USD) dominance might be challenged by digital yuan and other digital currencies.
Cryptocurrencies are gaining popularity amongst protesters
On the other side of the spectrum, protesters and protest movements all over the globe are starting to put increasingly more faith into open cryptocurrencies.
Uncersorable and relatively private cryptocurrencies are proving to be increasingly beneficial by protest movements like “Black Lives Matter,” as well as groups like Chinese netizens, Hong Kong protestors, Lebanon protestors, and Catalonia government, which are threatened by the state force, states Huang in another recent article.