Say No More About FedCoin, US Federal Reserve Has No Interest in National Crypto Anymore

The Federal Reserve of the United States, known commonly as Fed, has lost its interest in the idea of national cryptocurrencies. With the value of Bitcoin skyrocketing last year, blockchain seemed like the future, but it was actually a lot more hype than anything else, so now the Fed is abandoning the idea of the so-called Fedcoin.

While Christine Lagarde, the director of the International Monetary Fund (IMF) believes that digital currencies emitted by central banks can be a good idea, the Fed disagrees. According to Lagarde, everybody wants a spot in a brand new cashless world so the central banks who would come before could have an edge.

However, the prolonged bear market after the hype bubble exploded has made people cautious. At first, it seemed like Bitcoin was a panacea for all kinds of economic issues. During 2018, however, it became clear that it had to scale to work better and that the future, well, was the future.

Bitcoin struggled a lot and the Fed dropping the idea of the Fedcoin is just another example of how the Bitcoin hype died out and now only the true believers and the investors who still are capable of making some money are in the market to stay.

Last year, Kevin Wash, the former governor of the US Federal Reserve, which was a candidate for Fed Chairman at the time, told the media that a Fedcoin would be a great idea. It would be a national blockchain-based currency, just like the Venezuelan Petro was, the only difference is that it would actually work.

This new token should be digital, transparent and considerably more efficient than paper-based money. It was also said that it could give the Fed access to some interesting, yet unconventional tools like the negative interest rates.

Cryptos Are Not Suited For Central Banks, The Fed Believes

While researchers of the Fed have determined that the bank could easily create cryptos, the idea was not deemed very good by them. This is mostly because the structure of how cryptocurrencies work is full of what were considered important red flags.

For instance, the law enforcement would need to monitor well who is using the money for what, so creating a national crypto without creating measures to identify anyone using the money would basically be an invitation for all kind of criminals. Also, it would be hypocritical to tell banks to do it if the own government did not enforce this kind of rule.

It was also noted that, when you remove the permissionless ledger from the network, you just have a centralized digital currency and nothing more. Without this, you just have the blockchain on the way because it is not a cryptocurrency anymore.

Centralized money does not need a blockchain at all. In fact, even before the blockchain was created by Satoshi Nakamoto the technology for creating centralized digital money already existed, so the blockchain does not make anything new here. All of this combined with the “high operational risks” makes the whole idea especially not good.

Lael Brainard, the governor of the Federal Reserve Board, has recently affirmed that central bank issued cryptos or centralized coins were not so good because the blockchain, which sits at the heart of the cryptos, is not really useful as a store of value, as cryptos are simply way too volatile.

Brainard was also concerned with international cyber attacks and how the currency could affect banks. Digital money in the United States, she affirmed, is already good and useful, so there is really no need for using cryptos.

Get Free Email Updates!

*Action* Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

I will never give away, trade or sell your email address. You can unsubscribe at any time.

Avatar
Gabriel Machadohttps://bitcoinexchangeguide.com/
Brazilian journalist who is interested in the future of the financial world. Has a special interest in the blockchain technology and the global financial markets. Covers economic and technology news with a focus on the fintech industry and has been writing about the cryptocurrency market since the start of 2017.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

LEAVE A REPLY

Please enter your comment!
Please enter your name here

3,472FansLike
2,795FollowersFollow
4,195FollowersFollow

Live Bitcoin Price & Latest BTC Charts

Today's Latest Crypto News

Crypto Market Bounces Back by 44.5% in Q2 As BTC Gains 78% Since Black Thursday: CoinGecko

The market cap of cryptocurrencies has grown by 44.5% within Q2, according to the first quarterly report by CoinGecko. In addition to this, Bitcoin's price...

DApp Q2 Market Report Shows Massive DeFi Impact in The Decentralized App Ecosystem

The DeFi realm has registered tremendous growth in the past quarter (Q2) with some products posting some impressive figures. $4.9 Billion was channeled through...

VaultAge Solutions CEO Declared Bankrupt After Scamming Crypto Investors Out of Over $13M

Willie Breedt, chief executive officer of the crypto investment firm, VaultAge Solutions, has been declared bankrupt, who is currently on the run after defrauding...

Arca Labs Rolls Out Ethereum Based Fund After SEC Approves Digitally Transferrable Securities

According to a press release on Monday, July 6, 2020, Arca Labs, a digital asset investment firm, becomes the first-ever company to trade an...

China’s OTC Crackdown Puts Bitcoin at a Discount

Last month, there were reports of thousands of cryptocurrency over-the-counter (OTC) merchants and their clients getting affected as China froze their bank accounts to...

BitcoinExchangeGuide is a hyper-active daily crypto news portal with care in cultivating the cryptocurrency culture with community contributors who help rewrite the bold future of blockchain finance. Subscribe on Google News, see the mission, authors, editorial links policy, investment disclaimer, privacy policy. Got News? Contact us, we are human too. Note: nothing here is financial advice, do your own research thoroughly.

Start Using Crypto Today