
Senegal to Introduce a New Blockchain Based National Digital Currency - tefo-mohapi
http://www.iafrikan.com/2016/11/24/senegal-to-introduce-a-new-blockchain-based-national-digital-currency-making-it-only-the-second-country-to-have-a-national-digital-currency/
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nickik
Im a fan of crypto currencys, but they are simply not ready for primetime. In
order to have a monatary system thay correcly works for a complex economy with
many stages of production you need a way to grow and shrink the money supply.

Some people like to compair Bitcoin to gold and then the make the argument
that gold worked well for a long time. That argument however is flawed because
gold usually was used ontop of a banking and coinage/note system.

Take for example the old Scottish banking system during (17/18th century),
they on avg had reserve ratio of 2%. That essentially means that the
circolating money (feduciary media) is much higher then the gold stock. It
also means the the broad response to changes in money demand (velocity).

As long as crypto currencies can not figure this out, the will not be able to
run a full modern economy.

One way to do it, would be to use Bitcoin as a gold replacement, and then have
'banks' create Shaum-style E-Cash to people. Then these 'banks' could increase
or decrease the supply based on the money demand. That is however far from
optimal.

The tricky thing boils down the system being able to buy and sell assts in
order to create or destroy money.

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popol12
Can you explain why it is needed to grow and shrink the money supply ? I don't
get that. In my view, the only problem with gold was that it was not practical
to use. That's where bitcoin is better, you can divide a single unit into much
much smaller unit (up to 10^-8 Bitcoin for instance) so everybody can use it.

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erebus_rex
Most central banks in the world do a lot of open market operations to keep the
economy in check. It is how they affect inflation, interest and exchange
rates.

Most cryptos are still commodity currency; the commodity is computation.
Because we don't decide how many coins get "minted" our ability to affect the
money supply is reduced. So we're castrating one of our major interventional
instruments.

Practicality isn't the issue. During the Gold standard, the bars were kept in
vaults and we traded in convertible paper notes. The mint could always print
notes of smaller or larger denominations if needed, but couldn't print more
than it had bars to convert to. And that is the problem.

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EdHominem
> couldn't print more than it had bars to convert to. And that is the problem.

To be fair, one man's problem is another man's solution. "It can all be taken
away" isn't a selling point to the currency's users, only to the issuer.

Monetary policy has always been a tool of governments, but that's been because
the people haven't had any practical options other than another government's
currency.

Having a flexible layer of fiat lets us have a shock absorber between the
markets and the commodities we need to live. But too much of a decoupling and
you run into more problems the other way.

It's hurt a lot of people when their government hyper-inflates the currency,
or steals much of it back via bank controls, etc.

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wyager
As a huge proponent of Bitcoin and other decentralized currencies, I really
don't understand this. The entire point of going through the rigamarole of
using a blockchain is to attain a large degree of byzantine fault tolerance in
an adversarial, trustless, and most importantly unprivileged environment. That
is, there are no "master nodes" or any sort of centralized hacks like that.

If you're Senegal, presumably you want control over your national currency, so
you're going to need some sort of centralized authority anyway. Since you've
already done away with decentralization, why waste the time and effort on
using a blockchain? There are any number of simpler architectures you can use
when you have a central authority.

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CyberDildonics
I don't think that is the WHOLE point. An anonymous currency based on private
keys, even if centralized, allows you to use electronic money without banks,
which means without permission.

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notahacker
But if they're having the centralised authority anyway, can't they just allow
anonymous accounts to transact through a more traditional secure electronic
payments system provided by that central clearing house, without the resource
consumption overheads and limits on concurrent transactions associated with
blockchains?

I can't see true anonymity being a goal of a system introduced by governments
either, though I can see why they wouldn't want an electronic payments system
to rely on financial intermediaries in an economy where many people don't use
banks.

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CyberDildonics
A public blockchain, even if it is just readable by citizens if far more
difficult to manipulate.

> without the resource consumption overheads and limits on concurrent
> transactions associated with blockchains?

I'm not sure what this is about, do you have a source? Volume of transactions
should be easily large enough to satisfy their currency - all that's needed is
some hashing.

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runeks
I can't help facepalm when I read news like this. The value proposition of
blockchain technology, combined with proof-of-work, is distributed
trustlessnes. Why would a national, centralized issuer need anything of this
sort? All they need is a PostgreSQL database or, preferably, letting their
citizens use whichever medium of exchange they prefer, rather than try to
pretend that there isn't plenty of foreign currency that their people would
probably prefer using.

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Kinnard
I spent a semester abroad in Senegal during the financial crisis of 2008.

I wonder what the details are. The CFA is pegged to the Euro, so this could
mark Senegalese monetary independence. A different sort of liberation than
most in the blockchain space are going for, but a liberation nonetheless.

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laurent123456
I wonder who is mining the blocks? Since this is launched by the government,
are they the one doing all the mining? In that case, isn't the currency
vulnerable to the 51% attack (i.e. the government could essentially "print"
digital money as they wish)?

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Kinnard
Well, it wouldn't be "vulnerable" to a 51% attack, this would just be
controlled by a mint which was the model for cryptocurrencies until Satoshi
figured out mining:
[http://digitalcommons.wcl.american.edu/cgi/viewcontent.cgi?a...](http://digitalcommons.wcl.american.edu/cgi/viewcontent.cgi?article=1389&context=aulr)
[https://static.aminer.org/pdf/PDF/000/120/358/universal_elec...](https://static.aminer.org/pdf/PDF/000/120/358/universal_electronic_cash.pdf)

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pierre_d528
Senegal eCurrency = digital currency + centralisation?

Can someone explain the advantages of that currency for the people and not the
banks nor the state?

I thought all the magic relied on decentralisation and removal of
intermediaries.

Isn't it a progress, but backward?

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gesman
This has nothing to do with decentralization or giving people any advantages.

This is to reduce expenses and dependency on cash or other currencies such as
US dollars.

And of course to have central "push button" control over monetary instruments.

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chubs
Does anyone know if "it still relies on the central banking system" means it
can be inflated away to worthlessness by a poorly run government?

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upofadown
>The other interesting point to observe is how both Tunisia and Senegal's
digital currencies use the blockchain as part of their technology but don't
use BitCoin as a currency.

That's a silly thing to say. Tunisia and Senegal already have Bitcoin. If they
didn't declare some sort of national currency they would in effect be
withdrawing from any sort of control over money in the countries entirely.

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Null-Set
A better article with more detail.
[http://www.businesswire.com/news/home/20161103006949/en/eCur...](http://www.businesswire.com/news/home/20161103006949/en/eCurrency-
Mint-Limited-Banque-Régionale-De-Marchés)

~~~
davidgerard
That's literally the press release.

Has there been any coverage in proper news outlets? Surely this would be
_huge_ financial news.

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mathiasrw
It will be interesting to see who may + how they will procuce new "coins".
Blockchain is only better if it can deprive privat parties to deflate the
value by "printing" more...

Also interesting how much anonymity users will have.

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Avshalom
Alternate head line: "Senegal to introduce national database of all financial
transactions"

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davidgerard
I'm seeing no news coverage of this that doesn't reprint this article or the
original press release. Surely this would be big news in proper media,
particularly given the buzzword status of "blockchain". What are they
_actually_ doing?

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known
Decentralized + Private + Cloud + Immutable on top of AUDIT TRAIL

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draw_down
Good luck!

