Digital Currencies in Rosella Tolfree’s World- the future of cryptocurrencies

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Elon Musk Jokes About Dogecoin on SNL

Cryptocurrencies Fall Apart

The U.S. Develops a Digital USD

Central Bank Digital Currencies Help Power an A.I. Arms Race

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On SNL, Elon Musk joked that Dogecoin was a hustle. This was followed a couple days later, as reported on Bloomberg, that Mr. Musk tweeted Tesla would no longer accept the cryptocurrency Bitcoin as payment for his cars. He cited green energy issues. This sent the prices of Bitcoin tumbling.

Following all this, the Economist had a piece on the idea of central banks issuing digital money and if banks could survive. The piece noted that in October 2020 the central bank of the Bahamas became the first group to issue a digital currency. China has since followed with the e-yuan. Other central banks are now looking into the idea.

The U.S. Federal Reserve has had a dual mandate [price stability (i.e., the rate of inflation) and maximum sustainable employment] for a long time. They do this through the control of monetary flows through the various areas of the economy. This is not the same throughout the world with other central banks. But could this change with digital currencies? Digital currencies allow for greater control features not part of the current fiat money supply.

So, What Happened?

As the First Age of Humanity continued to unfold, cryptocurrencies kept having issues. There were problems with the mining aspects from how block chains worked. An ever-increasing number of anti-trust lawsuits were launched by miners against other miners, to increasing social concerns over power and resource consumption. There was also the ever-increasing pressure by the SEC against various U.S. entities launching cryptocurrencies in violation of trade and security acts. Then came a big Federal crackdown effort on cybercriminal activity involving not only general hacking, but also the use of cryptocurrencies for money laundering and other criminal activities. Arrests of crypto crimes were becoming news click bait as people became increasingly reluctant to use the digital currencies for trade. Then Wall Street became unwilling to deal with the space until the government developed greater oversight. This is when the ride stopped with the current known cryptocurrencies as the market collapsed.

It was at this point the U.S. federal government reasserted its authority under Section 31 U.S.C. 5103 and Title 18, Section 471 to issue any currency for trade, debt, and any obligation by creating its own digital version of the US dollar. It then relegated the remaining cryptocurrencies to a variant of tradable security like stocks, bonds, and futures. These moves reassured Wall Street allowing the reopening of trading in the cryptocurrency space, but in doing so subjected the transfers to greater scrutiny. Such as removing off book transactions, the public announcement of certain transactions by insiders, and subjecting domestic cryptocurrency exchanges to the same rules as all other security exchanges.

The Digital USD Technology

The adoption of a digital USD, or d-USD, caused a consolidation of the US banking industry. Left were shadow bankers, investment bankers, credit unions, and saving & loans associations. Gone were retail bankers, commercial bankers, and cooperative bankers. The accounts from lost banks were redistributed and merged into either the remaining bankers or under the new division of the Federal Reserve handling the d-USD working with the Treasury Department, the Commerce Department and Small Business Administration.

The US Treasury continued to print coin denominations but discontinued the printing of paper bills. Except now all coins had Nano-chips imbedded in them, making them digital and traceable.

By Rosella’s time, d-USD transactions were tracked through an A.I. reinforced Byzantine consensus mechanism instead of older block chain technology. People kept all their d-USD transactions online in a “g-wallet” maintained by the Federal Reserve. The “g” isn’t for government but is for gene. This is because it granted access through a gene scan from a person’s finger. Some people employed a second layer of security using a “key chip”. Key chips could be imbedded in the hand or kept in something physical, like a card. They used a special form of algorithmic encryption that required both parties to know the formula. Each key chip formula is unique and registered with the g-wallet that there is one.

A g-wallet ties in all aspects of the finances of a person into one digital location allowing individuals to get loans, buy stocks, or conduct any wide range of financial transactions. The downside was the government now monitors all transactions.

Cord Cutters & Criminals

There are hold outs who’ve cut the cord from digital money. This is common for poorer or remote areas of the United States. It’s also found in the communities of Seattle, Washington, Portland, Oregon, and parts of San Francisco, California. These areas have returned to basic bartering or use of any precious commodity, like jewels or gold for trade.

Many criminals have also moved to physical gold and silver for transactions finding it has a lower digital footprint. More clever criminals have multiple fake g-wallets using 3-D printed DNA fingers to do money laundering. These criminals act as the go between for transacting gold and silver for goods and weapons then passing the metals on to other people for d-USD. Allowing them to purchase more supplies for gangs.

Local, State and Federal law enforcement are constantly investigating links between the cord cutting communities and the criminal networks. In Seattle and Portland there are street protests, even in Rosella’s time, by those who support the people’s right to barter and not deal in the new digital currencies.

The Rest of the World

As for the rest of the world, by Rosella’s time you see other central banks with digital currencies and government monitored digital wallets. Some places removed all their banks while others kept private banking systems in place. With the digitization of currency came a precise control over the economy by nation states that rivaled all previous control measures. For the first time nation states could stop certain sales of products because of illegal activity or safety issues with the push of a button. But it also made central banks an increasing target for cyberwarfare and espionage creating a security tech race among the nations. This alone helped to power the increasing development of more powerful A.I. systems for both defense and attack.