
Ecuador becomes the first country to roll out its own digital durrency - prostoalex
http://www.cnbc.com/id/102397137
======
mark_l_watson
Ecuador seems to be progressive in a lot of ways. Given a relatively weak
economy, and a desire to stand on their own, it seems reasonable to have a
state bank provide easy to use digital currency. Central and South America are
looking more interesting as alternative places to live (a friend of a friend
is permanently moving to Ecuador with his family in two weeks from the USA).
My wife and I were considering buying a home in Belize or Costa Rica last
year, but the US government, with FICA laws, etc., is making it more difficult
for Americans to live abroad. I totally understand why the American empire
does not want its citizens spending their retirement dollars abroad, but the
effect seems to take away a lot of freedom of choice.

I have visited Columbia, Belize, Guatemala, and Costa Rica multiple times and
I find a freshness to their society that I like. Sure these areas have their
problems but people seem to have good life values there.

+1 Ecuador

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nly
So basically a state run bank? Disturbing politically, and with respect to the
privacy implications to Ecuadorians, but otherwise technically boring.

There we greater and more interesting strides in to real digital currency in
the early 90s. See, for instance, eCash[0]. The problem is, aside for some
potential wrt saving the cost of counterfeiting, minting and replenishing
grubby notes, there's no tangible incentive for a State to get behind a
respectable replacement for cash. It's much easier just to pass the buck to
the card industry.

[0] [https://en.wikipedia.org/wiki/Ecash](https://en.wikipedia.org/wiki/Ecash)

~~~
zanny
And there is all the reason why a state would _not_ want to adopt a currency
they don't control. The ability to print money is one of the greatest powers
any group can have.

~~~
jMyles
It's possible that state A might want to adopt a currency that it doesn't
control in order to gain increased independence from state B whose economic
influence is too powerful to evade but which makes poor long-term decisions
about its own state-controlled or state-influenced currency.

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nawitus
It seems to be a stretch to call this a "digital currency", since it is
"directly tied" to the local currency. Besides, digital currencies are not
really interesting, as one can make digital transactions of traditional, "non-
digital" currencies.

~~~
rhino369
I would be very interested in a crypocurrency run by the Federal Reserve (
_bitcoiner brains pop_ ). The fed would be able to peg the bitBuck at 1:1
exchange rate with the USD$ but also have many of the benefits of
cryptoprotocols.

~~~
jordigh
Isn't USD already a mostly digital currency? Only around 10% of all dollars
exist as bank notes or coins.

What would a centralised cryptocurrency contribute? If you're centralised, you
don't need the crypto part of all, which handles distributed trust. "Crypto"
here doesn't refer to all applications of cryptography, but to the blockchain.
So what do you have in mind? Perhaps a blockchain where every block has to be
signed with a unique private key? This seems even more horribly inefficient
than the current digital USD.

~~~
Amezarak
Yeah, I have difficulty understanding this too. In what sense is USD not a
digital currency? The vast majority of USD exists only in digital form, albeit
it is exchangable for physical currency. The vast majority of USD transactions
take place purely digitally. To be sure, the _implementation_ is not as nice
as some people would expect, as not every bank has a convenient/free/cheap way
to send currency to other individuals (though plenty do).

Is "digital currency" just a buzzword? A misnomer referring to
cryptocurrencies?

~~~
jordigh
I think people just fundamentally misunderstand money. USD is "real" money and
Bitcoins are "fake" money. They use other words instead of "fake", such as
"virtual" or "digital", but the intent is the same: it's not as valid as USD.
The actual details of how the money works across the internet are not under
scrutiny. What people seem to convey with words like "virtual" and "digital"
is distrust: this is not as real as USD.

This sort of distrust with new methods of currency is not new. Bank notes were
viewed with suspicion and not as real as coins when they were first introduced
into Europe from China.

~~~
mjevans
It's 'fake' in the same sense that 'investing' in say, trading cards or some
other good mostly backed by the interest of the public to buy it is. In fact,
it's very much like stock for quantities of stock too small to have a
meaningful impact on corporate operations.

~~~
jordigh
What is backing USD or any currency other than the interest of the public?
It's not like any country gets to dictate to other countries how much their
money is worth.

~~~
nhaehnle
Taxes back fiat money.

More generally, currencies are backed by demand for that currency. A lot of
that demand is ouroboros-style circular demand of two kinds: (a) shops demand
the currency for their goods because their suppliers and employees demand it,
who in turn demand it because shops demand it; and (b) people have loans
because somebody else demanded currency, and now they will be subjected to
demand for a longer time period.

Taxes are special in that they create an _outside_ demand for the currency, so
they act as the bootstrap and anchor of this whole demand cycle.

Also note that the sibling comment by jzwinck is confused: the Swiss central
bank decided for some time to put an _upper bound_ on the value of the Swiss
franc. This is easy because they can always create more Swiss francs, and is
irrelevant to your question.

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nhaehnle
Quite frankly, this type of system is the future. Moreover, this type of
system already almost exists in many places (consider, for example, how
regular people can easily transmit money within SEPA, the Single European
Payments Area).

Bitcoin, by contrast, is interesting technology but with weaknesses that make
it unsuitable as something that regular people interface with every day
(security implications, mostly). It is also economically problematic
(widespread use of Bitcoins would mean regressing back to gold-standard
times).

Ideally, though, Bitcoin can play a useful role by putting enough pressure on
other payment systems to remove any remaining suckiness (mostly the fact that
existing payment systems are very bad at international and cross-currency
payments).

~~~
zanny
> security implications

Like what? I have a wallet with around $3000 in it and I feel my money is a
lot safer there than in some bank, because I control the security, and it is
all mathematically provable. You have to _trust_ your bank, and at that
_trust_ your state to insure your deposits. I don't have to trust anyone with
my wallet.

> widespread use of Bitcoins would mean regressing back to gold-standard times

The problem under the gold standard was that dollars were valued at fractions
of gold and the US could not control the monetary base at all. With bitcoin
they could hold a reserve to inject in or out of the economy to maintain
consistent growth, and the rate of coin generation is incredibly predictable.

I don't think that btc is the right currency to use in daily transactions.
Something like doge makes a lot more sense, because doge is perpetually
inflating with constant volume increase, which keeps monetary velocity high.
BTC is naturally regressive, so it is a fantastic gold replacement, but
disincentivizes spending as the rate of generation slows and coins are lost
over time since the monetary base is shrinking.

I would like to see someone try to implement a cryptocurrency where the
generation algorithm is not as simple, that could take into account velocity
in the economy to increase or decrease coin generation to attempt to maintain
a healthy velocity (ie, not too much hoarding but not over-capacity spending
like most fiat currencies are in right now, which I believe is one of the
reasons 2008 happened, and why it will likely happen again soon).

~~~
Dylan16807
I don't have to trust the bank very much to use an insured account.

I'm trusting the state whether or not I use bitcoin, so I might as well take
advantage of its insurance.

I'm not cocky enough to assume I won't get hacked.

>I control the security, and it is all mathematically provable

The parts that are provable won't keep you safe. And control is a feel-good
measure, not a safety measure. Consider the people scared of air travel
despite how safe it is compared to automobile.

~~~
zanny
> I'm not cocky enough to assume I won't get hacked.

And I'm not going to my faith in the state to guarantee my assets because
between my bank and bitcoin, I can (and have) read the source, the
implementation, and the algorithms behind the security, whereas with my bank,
I have no access to the software they use, to the procedures they use to
secure my funds, or have any reason to trust the people in positions of power
in the bank regarding my money. I'd much rather put faith in the mathematics I
can observe and reason about than the behavior of an entity who wont' tell me
squat about how they operate.

That, and the fact they are using terribly implemented mass produced web sites
and apps to access critical bank details do not give me any faith in their
actions. Individual bank entities are mingling in software intimately on the
consumer facing front in ways they have been for decades on the backend but
never have they been software companies and from my engagements with banks
(I've talked to several local credit unions and regional banks about security
and potentially working on contract to fix their broken web portals when I
find loopholes) the decision makers are not computer literate or competent in
the slightest. They deal in effectively informational data without any desire
to invest or put effort into actually knowing what they are doing, and it is
incredibly dangerous.

~~~
Dylan16807
Banks have terrible security, it's true.

But you don't lose your dollars when they get hacked.

You do lose bitcoins in a hack.

>faith in the mathematics

All the mathematics do is keep your money from disappearing in the situation
where there are no security breaches. I'm confident enough in the bank+FDIC to
do _that_.

~~~
zanny
So how exactly do you steal bitcoin out of a password protected wallet, when I
have never written the password anywhere, it is "reasonably secure" (no
dictionary, mixed notation, 16+ characters) and it is encrypted AES-256, which
has not been cracked yet? I'm not talking about online wallets which are just
as untrustworthy as banks unless they FOSS their implementation, and even then
you are trusting their system administration, especially if they keep backups
of your password and thus have access to the contents on their end.

~~~
Dylan16807
Virus on your computer as you type in that password.

~~~
zanny
I'm wondering how I'm going to get a virus on a curated Arch installation
without usb autoexecute, also considering its on my office and usually locked,
behind two firewalls without any inbound ports default open. They would need
to get an executable on my system - shell or not - somehow give it executable
permissions (which reminds me, there really should be some mechanism in almost
any file transfer protocol to deny-execute on downloaded files so users need
to manually allow it), run it somehow, and have it running when I'm accessing
my wallet, via somehow injecting itself into an autorun mechanism. And I have
PAX disabled access to xinitrc, bashrc, bash_profile, ~/.config/systemd,
~/.pam_environment, and ~/.config/autostart.

I'll take my chances. If I heard of wallets getting keylogged, I'd just access
my wallet via a TTY without my desktop running without any user autostart
configuration. It is also a partial advantage that X is horribly implemented
and since the window manager grabs the keyboard, you need to exploit the
window manager to listen to keystrokes like that, if you deny /dev access to
keystroke polling. I think it gets even better in Wayland where the system
compositor controls keyboard access, so you can stay diligent in only passing
keystrokes to the actually selected application, and take steps to avoid
situations like false frames over the GUI login prompt that passthrough
keystrokes from an invisible keylogger (I'm not aware of if thats even
possible on X or Wayland, though, should look into that).

~~~
Dylan16807
What program are you using to make the actual transaction? It needs knowledge
of the blockchain, is that coming from another computer or is it connecting to
the network? A firewall isn't going to protect you in the latter case.

I would want a nearly completely airgapped machine before I would be
comfortable using it to self-manage significant quantities of bitcoin. Maybe
feed blockchain info over a one-way serial cable. Definitely no disk sharing.

With a bank I know that a hack might happen but nothing is irrevocable. If
they want to use bad security it only hurts their insurance premiums.

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unwind
Epic typo in the submission ("durrency"), that is not on the original page.
Somebody please fix.

~~~
boriskourt
It is the title tag of the original document.

~~~
vonnik
it's a mistake, though. the word durrency appears no where in the article.

------
moron4hire
The consensus amongst the middle-class and affluent Ecuadorians I have met was
that tying their currency to the US dollar was an important first step to
regaining stability, and they weren't sure the government had yet changed its
corrupt ways enough to make a new Ecuadorian currency a good idea. Now,
Ecuador has a very large poor population as well, who need a lot of help (I
mean so poor they can't afford a door on their shacks), and the competing
ideology is that a new currency that is locally controlled is necessary for
new growth to bring those people out of poverty. Though there also send to be
an unspoken understanding and willful ignorance of the fact that the
government is too corrupt still to make that a good idea.

I don't know, that's just the impression I got from talking to people in one
city, and a particularly affluent one at that (Quito).

------
bubbleRefuge
Key question #1 : how is payment settlement going to take place? In the US and
the vast majority of floating fx currency regimes(fiat money regimes), payment
settlement occurs via credit/debits to/from reserve accounts at banks. Banks
have accounts at the Federal Reserve which are used to settle payment amongst
each other. By settling in reserves and allowing bank deposits to be merely
denominated in reserves -US case- money supply is much more flexible.

Key Question #2: How will loans be made ? Will banks be able to make loans out
of thin air as in the US and most of world or will loan creation be tied to
reserves?

As it stands today, Ecuador's monetary regime looks like a gold standard fixed
currency regime. This digitization change appears to be an attempt to
eliminate cash transactions but maintain the dependency on dollar reserves
which the Ecuadorian government cannot print and must be obtained via exports,
which is hard. Golds standards died because of this inflexibility. My guess is
this is a first step in returning to a sovereign currency but without saying
so explicitly. If loans and settlement are based 100% on dollar reserves today
maybe tomorrow they can remove the US Dollar reserve usage.

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pjc50
This is closer to M-PESA, I think: operating on mobile phones, a financial
service for the unbanked. Because Ecuador is dollarised but can't print their
own $, physical wear on notes is a significant cost. A digital service allows
for an expansion of the money supply (M1? not M0), cost savings in money
transfer, etc.

------
known
Countries that don’t have a currency of their own

[http://qz.com/260980/meet-the-countries-that-dont-use-
their-...](http://qz.com/260980/meet-the-countries-that-dont-use-their-own-
currency/)

------
taternuts
Is 'durrency' a new made-up word that's a play on 'digital currency' or a
typo?

------
logicalman
Iceland already did something similar:
[http://www.auroracoin.org/](http://www.auroracoin.org/)

~~~
brianbarker
Why is this getting downvoted? Iceland did roll out a crypto-currency, the
article did claim this other to be the first. Seems logicalman is being just
that ;).

------
Eleutheria
> "The project initially created buzz in in the bitcoin blogosphere, but that
> interest faltered once it was clear that Ecuador's project would not present
> a competing alternative."

and

> "In fact, Ecuador's project is more similar to M-Pesa, a mobile phone-based
> money transfer service"

Headline is deceiving.

Nothing to see here. Move along.

