Fed's Digital Dollar Would Look Nothing Like Bitcoin
Fedcoin wouldn't need the massive computations of cryptocurrencies, but it would effectively nationalize the payment industry, competing with banks, credit cards and Venmo.
Bitcoin wouldn't be the model for a U.S. digital dollar
Photographer: NurPhoto via Getty Images
Treasury Secretary Janet Yellen recently mentioned the idea of creating a so-called digital dollar — a new form of electronic currency that would make the payment system easier for Americans and presumably compete with Bitcoin and other cryptocurrencies. But there’s little rationale for a government-managed online dollar that looks anything like Bitcoin. There are probably better ways for the Federal Reserve to make it easier and cheaper for Americans to pay for things.
Yellen is not the first to suggest the idea of a digital dollar — or “Fedcoin,” as some call it. Fed Governor Lael Brainard contemplated the concept last year. And David Andolfatto, a senior vice president at the Federal Reserve Bank of St. Louis, has been investigating the possibility for a number of years now. In 2015 he wrote about it on his personal blog, noting several potential benefits.