Book Reviews | Digital Currency - Adoption By Governments: Interview With Erik Townsend

3rd Mar '19 by TamzinPiworld

7 comments 2010 reads

Digital currency adoption by Government, Central Banks and much more

https://www.piworld.co.uk/2019/03/03/interview-with-erik-townsend-digital-currency-the-future-of-money/

Tamzin Freeman is joined by Erik Townsend, the founder of macrovoices.com, and the author of Beyond Blockchain – the death of the dollar and the rise of digital currencies. Erik discusses how initially he ignored digital currency, and latterly realised its scope could change the world. He’s not a bitcoin or ICO fan but sees the scope of what they offer with distributed ledger technology, which could be revolutionary for the financial system.

A fascinating 45 minutes.

Erik’s background and how it led to the book – 01:29

Cryptocurrency falsely judged, instead what benefits it could offer to Government? – 02:34

What needs to happen technically to make digital currency a reality? – 05:23

How quickly will it happen? – 09:00

Doesn't the technology have to be in place before the Government can adopt it? – 10:52

Adoption of digital currency by central banks: the pros and cons – 13:41

What catalyst will lead to adoption of a digital currency by Governments? – 16:06

Who are the pioneers in the digital currency space? – 17:20

What’s Russia & China’s position? – 20:09

How could a digital currency get the trust that the Dollar has? – 23:23

Is a digital sovereign bond market possible? – 29:25

Where do international boundaries and foreign exchange fit in? – 33:56

How would Erik go about implementing a digital currency? – 37:48

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mojomogoz

3rd Mar '19

Thanks. Will check out.

Macrovoices is a great free resource. There's a strong editorial bias to adjust for but some of the stuff is great

Nick Ray

Just finished listening to it.

Much more sensible than the usual nonsense written about cryptocurrencies - in fact he explicitly dismisses bitcoin and the rest of the "alt" currencies.

The focus is much more on the use of distributed ledger technology to develop a global reserve currency. But when it comes to the detail of how and what, I think the use of a distributed ledger (or any other technology) can wait until a clearer spec of exactly what he wants to achieve with this "currency" comes along.

aston_22

4th Mar '19

I'm an avid listener to the weekly Macro Voices podcast, they have great guests with divergent views. Really pleased that Tamzin picked up on Erik as a market commentator. I currently live in Shanghai and digital payments, such as WeChat Pay and AliPay dominate, so much so that some restaurants are quite surprised if you wish to pay by cash. Some shops do not accept cash at all. The main difference between the mobile phone payment and credit cards is the money can be transferred between users, just like handing someone five quid. Great precursor of a practical digital currency. Thanks Tamzin..

You do need to be careful to distinguish between three different things: (1) cashless payment methods like AliPay/PayPal etc; (2) digital currencies and (3) distributed ledgers.

The cashless payment methods are here now and they are definitely the future for consumers. But they still have a payment processor who controls the database and has the power to reverse transactions and close or deny accounts as they see fit.

As the podcast mentioned, digital currencies had their genesis in a desire to create payment methods which could never reverse transactions and which no-one controlled (exactly like cash-in-hand). Solving that was the really ingenious contribution of bitcoin - but the code was (and largely still is) just proof of concept. It cannot handle high transaction rates. It just shows the ideas work.

Meanwhile, if I understand Erik Townsend correctly, his real thrust is the use of a distributed ledger which no-one has control of, as a way to settle accounts internationally, where you do not want the biggest country (USA) to control who you do business with politically just because it controls the global reserve currency.

He had a shopping list of desired abilities of this system:

develop a digital global central reserve currency
based on a trust architecture where no gov has authority over entire system
more effective monetary policy tools
re-engineer fractional reserve banking system at centre of global monetary system with something better
more effective credit mechanisms and economy management systems

but the problem here is that to much of it is rather vague. "Better" but in what way? What specific mechanisms? etc.

TamzinPiworld

5th Mar '19

Thanks for all your comments. I highly recommend Erik's book Beyond Blockchain for an exceptional overview of the landscape, the issues and the opportunities.

He covers many dry, heavy subjects and he manages to make them easily understandable AND entertaining! (Or am I just sad?!)

He has a wealthy of experience and knowledge. It helped me understand more than just digital currency.

Please share the podcast/video with friends/colleagues, any random strangers that might be interested! We'd like to publish more material like this, and more on the macro picture. However, to attract interesting speakers we need to have the audience to make it worthwhile. So please spread the word!

Maddox

Well done Tamzin for your initiative in recording this video - I find this an absolutely fascinating topic being a payment anorac.

One point that is often made about crypto-currencies (as does Erik) is that the transaction speed is exceedingly slow. This is due to Bitcoin - where the transaction speed is deliberately contrived to be slow. This is because the transaction recording process and Bitcoin 'mining' (i.e. new Bitcoin creation) are synonymous and deliberately designed to limit the currency supply: in order to maintain its value. This is a key attraction of Bitcoin and the algorithm is amended periodically to increase its difficulty to ensure that this is maintained in the face of vast amounts of computing power being used in the race to find a valid result.

There is in fact nothing (e.g. no new technical innovation) to prevent a crypto-currency transacting at a speed similar to the oft-quoted VISA network. However, this would then require another means to maintain the value of the currency.

Regards Maddox

Digital currency - adoption by Governments: interview with Erik Townsend

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TamzinPiworld

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