Bitcoin Demand Is About To Skyrocket On Massive $2 Trillion Coronavirus Stimulus
Such a prominent mention of digital dollars in a House bill, in relation to the Federal Reserve, means that the largest economy in the world has officially entered what is an increasingly heated race between a number of advanced projects at central banks around the world to be the first to issue this new kind of currency. “The concept of the CBDC seems to have gotten an imprimatur from the house finance committee,” said Vipin Bharathan, 59, chair of the Hyperledger identity working group, and a former senior developer at JP Morgan Chase, speaking at the meeting. “That’s a significant step, and I argue that such crisis situations always produce new ideas, and acceptance of new ideas, that will live on long after the coronavirus has burned through the world.”
At the time of publication, an estimated 21,000 people had died from the COVID-19 globally, resulting in countless business closures , and wiping out billions of dollars in wealth. While it seems unlikely that any of the digital dollar projects currently in the works would be ready in time to transmit the trillions dollars being sought by the Congress, eThaler is a great example of the race to accommodate law-makers’ increasingly opened minds.
Another bill, offered by California Democrat and Speaker of the House, Nancy Pelosi and other democrats, originally also included the “digital dollar” language, which was stripped shortly after it started circulating in media reports. E arlier today, t he Senate approved a $2.2 trillion stimulus package, without mention of a digital dollar, now awaiting a vote by the House.
First conceived earlier this year, eThaler gets its name from the thaler, a silver coin used throughout Europe for hundreds of years, from which the word “dollar” is derived. A group of professionals from consulting firms Accenture and InfoSys and the Itau Bank in Brazil, have been working on the open-source project in their free time for the past six months to explore the future of central bank currency issued on a blockchain.
The token-issuance system will comply with the Token Taxonomy Framework, a collection of standards for enterprises using ethereum, developed by JPMorgan Chase, ConsenSys, and other members of the Enterprise Ethereum Alliance, in April 2019. The group, informally called eThaler Labs, is building on Hyperledger Besu, an enterprise version of ethereum submitted by ConsenSys subsidiary PegaSys to Hyperledger and approved last August. A slide presented at today’s meeting by Bharathan, who worked for 16 years at BNP Paribas before founding blockchain startup DLT.NYC, laid out how eThaler would work.
First and foremost, eThaler is being designed to be fungible, meaning regardless of what central bank might end up minting its currency using the technology, every token will have the same value as the underlying asset, regardless of whether the token had been previously used for some nefarious purpose. Like traditional fiat currency, any initial supply of eThaler-based tokens would need to be increased through further minting by the central bank, or destroyed through a process called burning. But like bitcoin, it would also be able to be divided into as many decimals as the bank desired, a crucial component for so-called micropayments, tiny online transactions not currently feasible with fiat currencies. Lastly, and perhaps most controversially, the asset must be “pausable” in case a bug in the software is discovered, or an update is being implemented.
The important part about this, and other more advanced work, is that the role banks play, or don’t play, is little more than a design decision. Another slide reviewed by Bharathan showed that eThaler could be implemented as a wholesale solution, meaning it would only be issued to institutions with Fed accounts, and could be used to instantly move large values directly to one another without needing to go through the Fed itself. Another implementation, for retail however, would operate just like cash, except it could be disseminated from a central bank directly to the people.
In addition to complying with the Token Taxonomy Framework, eThaler-based tokens will comply with the ERC-1155 token standard. Unlike other ethereum token standards like ERC-20, 1155 is a single standard designed to support multiple kinds of tokens. So, for example, a central bank could use it to mint fungible digital dollars or bonds, according to the project’s lead developer, Mani Pillai, president of Swapshub capital markets infrastructure firm, who was also at the meeting. In the coming weeks, the entire structure is expected to be offered to open source developers, meaning anyone will be able to build on it. While developement of the codebase and launch of a test network will be governed by a capital markets special interest group, formal admittance to Hyperledger could take months.
However, none of this is guaranteed. A diverse...