The future of digital cash is not on blockchain

This means that true digital cash does not exist, despite the many options for online payments. This is not simply a theoretical distinction. more and more companies do not accept bills. This in particular poses so-called dangers. no bank— People who cannot afford to have a bank account and do not have access to non-cash payment methods.

Frightened by the rise of privately issued cryptocurrencies, governments around the world are exploring the so-called central bank digital currency, or CBDC. Imagine a government version of PayPal or Venmo. This could solve the bankless problem by creating a public banking option for low-income people, but it doesn’t replace cash. As the economy moves relentlessly towards all digital transactions, a future of only payment apps, banks, cryptocurrencies or CBDCs of choice means a future where all financial transactions are potentially subject to government or private scrutiny.

The ECASH bill, introduced by Massachusetts Democrat Stephen Lynch, chairman of the House Financial Technology Task Force, and House Financial Technology Task Force, seeks to avoid that fate. (This is the Electronic Currency and Secure Hardware Act – the perfect legislative abbreviation.) The bill, advised by Gray, would direct the U.S. Treasury Department to conduct a pilot program on a version of the digital dollar that works like cash. will be

“For there to be an open option for digital finance, everyone has to be included,” says Raúl Carrillo, a research fellow at Yale Law School who, like Gray, advised on the bill. “The important part is that you can go offline.”

What would it look like? The Treasury will issue digital dollars just as it has been issuing paper money since the 1860s. To function as cash, money cannot be bought on a government ledger or distributed blockchain ledger. This means that the balance must be stored in the hardware. It can look like a standalone device or it can be a secure hardware environment in your phone, similar to a SIM card. to the security of the entire operating system.

This idea has been around for a while. In the 1990s, companies like Mondex developed store-of-value cards that could support offline payments. However, the government did not embrace the idea of ​​issuing a digital currency, and the company was acquired by the credit card industry. (like Steven Levy of WIRED) wrote, 1994, “When I called a Fed spokesperson and asked about e-money, he laughed at me. It was like asking about the exchange rate with UFOs.”)

Today, the technology is smoother and the applications are clearer. Last week I spoke with Razvan Dragomirescu, Chief Technology Officer of WhisperCash. Through Zoom, he showed me his company’s products. One looks like a credit card with both a touchscreen keypad and a small Kindle-style e-ink display. You can send payments between cards using Bluetooth or by entering the payee’s ID number and amount. In the latter case, the transaction generates a 10-digit cryptographic hash that encodes the parties to the transaction and the amount. To receive it, the recipient must enter that code on their card. WhisperCash’s other flagship product, a security chip that sticks to your SIM card, turns your phone (even the cheap “feature phone” common in developing countries) into a digital cash wallet.

The future of digital cash is not on blockchain

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