On March 5th, 2014, WSJ editor columnist, Michael Casey, wrote a thought provoking article which made me think of the next “runner” after the collapse of Bitcoin. Before, I have never thought of a private company can handle such an overwhelming duty, yet I have changed my mind. It is possible. Either by the government or by private company; the next runner will mostly like be the electronic dollar. Use of electronic dollars, in terms of our professor’s blog posts, How governments can and should beat Bitcoin at its own game, can convince people to believe that complete use of electronic dollars can get rid of zero lower bound problems as well as stimulating economy more effectively than under the use of paper currency. In theory, I think that the use of electronic dollars is very profound and plausible which likely to happen in real life as well. This WSJ article, What if the Bitcoin End Game is a Digital Dollar?, gave me a spark on which I have not thought about it before. That is, the possibility of U.S. government losing its own game.
Not a long ago, we saw Mt.Cox crashed because Bitcoin algorithms were hacked. This left a big punch hole inside of the most important function of Bitcoin use which is trust. Bitcoin fans, entrepreneur, and enthusiasts of Bitcoin supporters are disappointed and left the market. However, those people are not given up their dream of what seems to me is like dethroning U.S. government dollars. It seems to me first that this must be the “Mission Impossible”, yet I start to doubt and ask questions: “What if?”
“History repeats itself” is very powerful phase. This gave me chill when I began to write this post. Think about the time when gold standard was getting replaced by paper money. I can imagine economists back then might also have been having very similar discussions as now we are talking about possible scenarios of electronic dollars replacing paper currency. If a power private company could invent impenetrable and secure algorithms for electronic currency, it is possible that electronic dollars get popularized faster than previous Bitcoin spread. When it does, it will gain huge political powers. Before this time comes, U.S. government better have been prepared to win its own game against a giant private tech company which has gained supreme power of producing crypto-currency.
Creativity of individuals and their own powers are influencing billions of people around the world today. With the help of more advance technology, it is quite possible that private company issues electronic money that can behave like U.S. dollars. May be, someday, it even can dethrone the U.S. dollars if it get enough political and worldwide supports. This can be a disaster for many of us. This may be the end of the liberal democracy. I cannot imagine how rules and regulation will be change in the future, yet in human history, so much power in the hands of few always brought the end of empire. Thus, I hope that U.S. government getting prepared to bit its own game by considering more seriously about potential gains and losses of using electronic money.