The Ecash Act
ecashact.us
ecashact.us
The point is privacy like _cash_ -- not like digital bank transfers.
> An E-Cash device is any piece of secured hardware issued and/or authorised by the government for the purpose of receiving, holding, and transferring e-cash balances.
> In contrast to ledger-based systems (including those that use a blockchain and/or distributed-ledger rather than a centralized ledge), which prevent double-spending by verifying unspent balances against a common record of all previous transactions, e-cash devices verify funds locally via a dedicated or trusted computing environment located on the device itself.
> This allows it to facilitate both offline and genuine peer-to-peer transactions without generating transactional data or requiring the approval of third party intermediaries or network validator nodes.
I don't see how this is different from physical cash wrt civil forfeiture or court-ordered seizure.
I'm concerned about whether or not this whole thing is a sham right off the bat because any security expert will tell you that there's no such thing as guaranteed security of a device in the physical possession of a motivated attacker. The best you can do is make it "pretty hard" below some threshold of spending.
The goal sounds admirable and better than some Orwellian central database, but on the other hand it seems that it would to some extent also combine the drawbacks of both cash and hardware devices, especially in the case of something as complex as a phone:
Things that would destroy the cash in my wallet would most likely also wreck my phone, but additionally my phone is more sensitive to being dropped (on the ground and/or in water), subject to random hardware failures, bad software updates, etc. etc. which currently wouldn't affect physical cash at all.
Its been tested and its proven. It works. Its stable.
Lets focus societal change on fixing climate damage instead of gambling with our economic structure adapting to new high risk changes.
If a currency can be used completely free of interference from the government, then it can and will be used for crime. In fact, if crime is easier and more profitable because the finances are safe and protected, there will be more of it. Eventually victims of all this crime will demand, rightly, that the government put a stop to it. So in come measures where government can interfere in the finances of the currency, for the purpose of preventing crime.
The power is zero-sum and it'll always be a trade-off between who has it. Total government control has problems because of potential abuses, by politicians. But a complete lack of government control also has problems of abuses, for crime. Both are bad, so it'll always be a trade-off.
Now that's an understatement. When in doubt, err on the side of limited government control.
Perhaps I'm in a stage of paranoia when I think that all democracies are on a slow inevitable slide toward a China-like fully monitored economic system. Either with or without cryptos.
I, personally, would prefer minor political abuse instead of citizen enforcement of "rights" in the absence of laws or enforcement of those laws. Because the latter quickly gives lie to the "governments have a monopoly on force" catechism.
If a currency can't be used completely free of interference from the government, then it can and will be used for crime.
Governments always want more control. More control requires trust. Governments have not shown themselves trustworthy.
If that is not possible, then you have bigger problems to worry about and no more printing presses either, so humanity will make some alternative fairly quickly.
This probably can't go wrong, and certainly wouldn't motivate groundbreaking research into breaking TPMs.
Is the e-cash proposal qualitatively different from Apple Pay (or other phone wallets designed to hold credit cards) in this regard?
If you break the TPM and get device or key control, then you can double spend. Double spending victims will find out they've been fooled when they go redeem their ecash for non-ecash and find out someone else already redeemed it.
This is why bitcoin was such an innovation, because it prevented double spending, and it also made it you didn't need to trust a central ledger database maintainer (aka bank) to not mess with the ledger either and it let you do it over a distributed network!
I think they're really talking about chaumian ecash with this act: https://en.wikipedia.org/wiki/Ecash
My understanding from the article is that the TPM would be used to prevent theft, and counterfeiting would be prevented by something like RSA blind signatures (e.g., http://www.hit.bme.hu/~buttyan/courses/BMEVIHIM219/2009/Chau...)
This is the same august body that has repeatedly pushed for breakable encryption, backdoors, and surveillance requirements on technology - give them a chance to start with a new technology completely from scratch, and they'll likely do the same
He seems to be cut from the mold of someone that believes the initial promise of bitcoin (freedom from monetary policy etc) but wants government regulation to prevent abuses of the system.
[1] https://willamette.edu/law/faculty/profiles/grey/index.html
But government is the original abuser of the system. That's _the_ reason cypherpunks built and adopted Bitcoin.
Bitcoin was just the first digital money the government couldn't shutdown. It had shutdown centralized versions prior.
Now, Monero is better for privacy, but Bitcoin remains the `Gold Standard` for government resistant digital currency, and none of the other currencies would be in existence had Bitcoin not paved the way to make governments accept cryptos.
As such, the government doesn't have a central place to monitor and or interrupt its subject's transactions. This and the removal of cash is the primary power play of a CBDC.
As for the creation of dollars today, it's kind of like flipping bits in a computer, but through a network of banks that get their fountain of debt backings from the Federal Reserve (or insert particular Fiat's bank here) as a central bank. So the bit flipping happens at the top and is distributed to member banks at very low interest rates.
I personally think the government should let people pick what they think is money for themselves. Of course they won't as the dollar and other fiat systems are their primary means of control.
Debt is issued to those that are believed can pay it back. Giant low interest loans are given to the member banks and they due diligence on smaller banks. The whole thing is a tree of larger institutions lending to smaller ones, and eventually the money makes it to markets that interact with actual customers -- mortgages and credit lines.
In this way debt is limited to those that are expected to largely pay it back.
Over time, more and more of the dollars in the system are owed to someone else. Our dollars literally come into existence as debt. This is the true source of inflation, but some make arguments about velocity of money and whatnot.
The defaulting of debts and subsequent vacuum where debt based dollars used to be is also the actual cause of the so call 'business cycle'.
10% ($6 trillion) of US dollars is physical cash or coins(1). Government authorities cannot exert control of this money supply unless they have physical control of the person / property (seized assets, found all the hidden caches). Cash is used when tracking & tracing is undesirable like contraband or political corruption(2).
So if those in power / government wishes to have total control of a population, then they need 100% of money to be in centralized databases. In that scenario, if someone does something illegal or not favorable to those in power (i.e. whistleblowing), then they can be completely shut out of the economy even if they evade arrest.
1) https://www.ngpf.org/blog/uncategorized/question-percentage-... 2) page 22 https://cybercemetery.unt.edu/archive/sigir/20131001080029/h...
No. There is about $6 trillion usd that is paper or coin. Perfectly anonymous, decentralized and no way for the government to track or otherwise do anything about.
About $15 trillion usd exists as an integer in a database. If you watched Canada recently. The government is absolutely capable of seizing those integers. Canadian gov even successfully went after bitcoin wallets at exchanges.
>When a government or whomever chooses to "print" more money, do they actually print it or just allow banks to insert a new row with N amount?
Yes to both in a way. during covid, the US government printed about $2 trillion in new cash, coins and paper. However that's not even a huge deal. It's the over $10 trillion of new money as integers. How this happens is a bit complicated.
>I'm trying to grasp the reasons on why governments would like to introduce a "more digital currency than today" but not necessarily a cryptocurrency as that would cede control and how all that relates to the digitalness of money.
Yes, this is the important factor. Why indeed.
When the government receives revenues, they can spend it. If they spend more or less how much they receive. great, everything is good. sometimes predictions are poor and they spent more than they received. You issue debt in form of bonds. This can only go so far, people will only buy so much of that debt until your credit rating drops or a situation where there just isnt anyone buying. Greece in a nutshell there.
The major limit is how much you can tax in this system. Greece had very high taxes and were pushing businesses out of their country. While also not providing reasonable goods and services relative to that tax level. Nobody likes increasing taxes especially when you're not getting your moneys worth. Politicians also dont like to balance the budget. This is an important balance. To maximise the amount of government revenues, often countries need to reduce taxes and bring business back. In order to tax them, otherwise you get none. China and their wonderful 10% flat tax in their capitalist zones have attracted countless businesses.
More importantly, you only pay taxes on profits you earn. A business that isn't profitable after deducting their costs, pays no taxes. Everything is in balance.
So what does Greece wish they could have done? They wish they didnt have the euro and could print money. This is an inflation tax. But an inflation tax doesn't just tax profits. It taxes everyone who is holding anything that is inflationary. Bonds with yields below inflation, retirees are largely speaking paying the inflation tax. People trying to save up for a downpayment on something. They pay the inflation tax. The people who hold the currency or will receive the currency later at a set amount like bonds are paying the inflation tax. Flipside, if you're amazon, you just locked in loads of debt at rates well below inflation. You are profitting from high inflation, but you dont pay taxes on that profit.
So why is a digital currency so important to countries like Venezuela? They created the Petromoneda. Because their primary currency is worthless, cant print enough of it to give it to anyone for anything. The government was forced to print so much money. But more importantly what did they do with the petro? They printed more money. https://cointelegraph.com/news/venezuela-to-fund-housing-for... BUT it's brilliant. Only foreigners cant buy them and only citizens can sell it. They are literally printing money at the expense of foreigners. They figured out how to make themselves a reserve currency to have foreigners pay their taxes for them. Amazing!
Flipside, why are so many highly indebt countries looking to ban crypto?
https://www.euronews.com/next/2021/11/23/india-is-planning-t...
So why are they so opposed? Countries end up losing this inflation tax and ability to print money. If everyone in canada switched to crypto and dropped the CAD. On payday you convert all your money into crypto and you pay at every store with crypto. The significantly reduced number of people holding the currency would be harmed even more by inflation. They would be pressured to jump ship or end up paying for all the government deficit spending in disproportionately more painful degrees.
And we know what happens next when the country loses their ability to print money like Greece. The government has to balance the budget, you have to give a reason for businesses to operate in your country. No wonder politicians are so hostile toward crypto. Imagine being forced to balance the budget because you cant print money anymore. Want to implement a new government service? You'll need to increase taxes. How's that going to work for your re-electability?
This is an interesting concept building on Web3. Is Web3 is already dead and the reason is on boarding? Transitive trust allows a participation threshold to be reached to build near ubiquitous implicit public trust. That might be scalable to onboard with some measurable identity proofing beyond KYC SSN garbage. :-)
In that sense a completely open and public payment infrastructure instead of SWIFT, e-payment circuits etc is more then needed, it must be MANDATORY by law and designed in an open manner not only in term of code but also in term of usage.
Cash stay aside, because there is no trusted hw, no guarantee of functioning in various situations than cash.
So imposing OpenBank-alike APIs for all, private Citizens included, possibly with each transaction digitally signed by three parties (paying, paid and State-controlled central bank) and easy to store locally by any of those three should be mandatory, demolishing private fintech of course, leaving cash should and must be equally mandatory.
I will be incredibly skeptical of any privacy respecting claims unless the design truly is cryptographically secure.
Also cash is robust. We are creating a situation where all economic activity becomes impossible if the network is down. With reliance on debit cards we're almost there already but this would remove cash as a fallback if it truly phased out physical cash. I'm not sure that is wise.
You should also be asking for a system that prevents further legislature from removing the privacy respecting aspect of it.
But at that point, Monero already exists.
I'm most curious how this is different from GNU Taler. I guess Taler is still ledger-based instead of hardware-based?
“I’m going to buy an Aeron from a Craigslist seller. I want to take only $300 with me, so that if I’m robbed, that’s all I’m out.” “I want to give my kid $20 to go to the store and buy whatever they want.” It wasn’t clear to me how to do that (would I have multiple e-cash devices? One that stays at home and several that I can take with me?)
So for instance, you might transfer $X/week to an app on your kid's phone for lunch money, or put $X on your "walking around" card, both of which could draw from a different instrument you leave at home that has a larger reserve on it.
You wouldn't need to be at an ATM to be robbed of all the money in your bank. A thief could just walk up in broad daylight, hold you up, make you put your card in and transfer everything out of your bank right now and then walk away.
If you made the mistake of having everything available right now you could lose it all in a matter of minutes.
I don't think that would be a common occurrence but it would probably happen at least once. How would you go about getting your money back or tracing the thieves down if they can take the money they stole and convert it to physical cash at an ATM 5 miles away from you?
There would be little recourse other than this ebanking system refunding you your money directly.
New systems create new opportunities for crime, how will we prepare ourselves for that before we are forced to live with it?
Depending on how the system is designed, such a refund may not be possible. I'm guessing that an offline-enabled ecash system would not support revoking and reissuing currency units, so you might be SOL.
> What would the recourse be if thieves just broke into your house and made you transfer everything over from your main account?
I want to say that this is no different than if you kept cash, gold, art, jewelry, etc., in your house, but ecash would be uniquely easy to conceal and smuggle across borders, so ecash would be a more attractive target for thieves than even an equivalent amount of gold. I'd love to see a deeper discussion by the lawmakers sponsoring the bill because I suspect there is no great answer to your question.
I don't know how they would provide any level of protection for your assets that you didn't provide yourself. If they figure that out then I'm all for it.
> 2. Issued and guaranteed by the U.S. government;
> 3. Available for retail use by the public;
> 4. Not reliant on a common ledger or any third-party payments processing intermediary; and
> 5. Capable of anonymous, offline, peer-to-peer payments.
We already have cash... cash does all these things.
This document is admirably clear about what they're attempting to provide!
But I can't help but think this requirement is very demanding - most stored value cards these days are for small amounts, and can mirror transactions to a central database, if they suspect cards are being tampered with.
There are a handful of devices that are hardened against tampering by the person who possesses them (game console antipiracy features, iphone activation lock) - but most of them took several attempts to get right.
What do you mean?
By virtue of this non-fungible quality, not all dollars are equal. Imagine you are a business owner, and someone pays with cash, and part of those bills are marked, or observed, as part of a criminal act like bank robbery or drug buy, you name it. As the business owner, that money can and will be seized and your operations will be complicated as a result of something outside of your control.
In a perfect world, you just show how you got the money and there is no problem, but what if you couldn't? What if you as the business owner have paid your rent with this cash, and your landlord is the one who is targeted for questioning, and deciding to avoid the hassle or speculation they just decide to terminate your lease agreement?
Fungibility means every dollar is indistinguishable (in value) from the rest, and for this reason, cash is not fungible.
You can't imitate one dollar bill for another, or take the value out of one dollar bill to make another dollar bill worth two dollars.
With eCash, you possibly could do that.