The main difference between digital money and hard currency is command and control. With digital money, a central authority can monitor every transaction and turn money on and off.
Theoretically, digital money can serve as a medium of exchange just as easily as hard currency. But that function is not inherent to the digital coin itself; it arises from the digital ledgers in which the transactions involving the “coin” are recorded.
It is therefore important to recognize that those digital transaction ledgers don’t need to exist under a central authority. The same technology that enables the implementation of digital money also allows the transaction ledgers to be decentralized — to exist in the wild, so to speak.
It is feasible to have digital money without government command and control over it.
Tidewater News and Opinion Forum 
The times they are a-changing’.
Personally, I am tired of paying taxes while tens of millions of business operators who are able to keep their transactions “private” in the current system do not. If this helps address that very substantial problem, put a check in the Pluses column.
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A cavalier fallacy.
Even with decentralized command and control of money the government would have its own balance sheet.
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“A cavalier fallacy.”
Huh?
What does that mean?
My point is that with ALL money digital it will become harder to evade income taxes. Why is that a fallacy?
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You mean you support taking money from citizens without due process.
Assuming tax collections adhere to due process requirements, there is no great advantage in being able to monitor digital transactions. Hence, the fallacy is the assumption that tax reciepts will increase. In reality, tax collection enforcement will only improve by abandoning due process.
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“You mean you support taking money from citizens without due process.”
What nonsense! I am merely stating the obvious. If there are digital records for every transaction it will be much more difficult for the current tens of millions of tax evaders to hide their transactions. Due process has nothing to do with it. Do you not understand how the IRS works? If the IRS finds evidence that you have falsified your tax returns then they will begin the “due process” of fining or jailing you.
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RE: “If there are digital records for every transaction it will be much more difficult for the current tens of millions of tax evaders to hide their transactions.”
I doubt it. According to my brother the CPA, the IRS is keenly aware of the losses it suffers from garden variety tax evasion. The collection cost (due process) doesn’t justify the collection benefit.
Besides, it shouldn’t be hard to create digital transactions that evade monitoring protocoals. One could sell artwork like Hunter Biden, for example.
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“The collection cost (due process) doesn’t justify the collection benefit.”
Uh, baloney.
Yes, the IRS is aware of HUGE amount of tax evasion. It’s problem is the lack of resources to pursue the miscreants. Which is why President Biden wants to add additional agents and staff to the IRS whose work will yield a very big multiple of the cost to employ them. It is also why the GOP – a party lead by a tax cheat – has vehemently opposed giving the IRS the resources it needs to enforce the law.
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RE: “Uh, baloney.”
I’ll take a CPA’s word over yours, thank you. But I notice you are in favor of tyranny by any means.
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“I’ll take a CPA’s word over yours, thank you”
You can take whomever’s word floats your boat, but the fact remains that the IRS is looking to hire tens of thousands of staff because they are needed to improve service and to increase tax revenue.
https://www.cnbc.com/2022/08/31/irs-is-not-hiring-an-army-of-auditors-whats-really-happening.html
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RE: “the fact remains that the IRS is looking to hire tens of thousands of staff because they are needed to improve service and to increase tax revenue.”
Sure. Stumble Joe wants to break a few legs.
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“Sure. Stumble Joe wants to break a few legs.”
Just too darn hard to admit you got it wrong? Okay. That’s you.
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Worse than a fantasy, a nightmare.
With a digital currency displacing cash, the government can simply turn off your money as a tool of oppression.
“You’re still driving a gasoline powered car? No food for you!”
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Oppression everywhere! Oh My!
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You can’t possibly look at what went on with Twitter and continue to think government is benign.
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Do I really have to post the blog again to show you how idiotic you are on this subject?
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“Do I really have to post the blog again to show you how idiotic you are on this subject?”
I kind of doubt that he bothered to read it the first time. Simple obvious truth and common sense do not go over well with that crowd. They much prefer complex and impossible conspiracies.
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“You can’t possibly look at what went on with Twitter and continue to think government is benign.”
Since virtually nothing untoward went on at Twitter I have no problem sticking to my core belief about the government – it is a tool for improvement and the only actor capable of standing up to the global mega-corps that dominate the economy. And, I would like to see it do a better job of enforcing existing tax law.
Your problem with Twitter seems to be your love of useful “alternative facts.” Under the prior management, Twitter tried its best to stop their spread and the harm they do. You seem to think that lying liars have some right to use the resources of a private company to spread bullshit. They don’t.
And none of what Twitter tried to do had much to do with the government.
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I’m guessing you aren’t aware that digital currency, bitcoin, etc, is the favored medium of exchange of drug lords and criminal enterprises due to lack of records? I’m guessing you also aren’t aware that the top 20% of income “taxpayers” pay over 90% of all income taxes collected? Oh, I’ve provided proof of that fact to you so many times it isn’t funny but like a good Democrat you still repeat this same lie over and over. It will never become true no matter how many times it is repeated. From a “business” aspect, the US had the second highest corporate tax rate in the world but as of 2017 it is in the middle. But you knew that, right??? Perhaps you might take a closer look at the bleeding of America through Biden and democrat policies before complaining about taxes.
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“. . . you still repeat this same lie over and over.”
Okay, I give up. What is the “same lie” I have just repeated?
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I have a problem with digital currency, whether government or private.
I met some Bitcoin miners at a recent Libertarian meeting. As I understand it, Bitcoin is mined by running complex calculations that serve no purpose. You can buy a mining machine, basically a math oriented computer, plug it in and it mines Bitcoin for you.
This produces “money” at the cost of huge amounts of electricity, but creates no wealth.
It’s like growing tulip bulbs.
But worse, it is wasteful of resources. That electricity could have made a refrigerator or a tractor or something else of value to be sold for money, but instead it only produces money.
I don’t know what is to be done about it, but I won’t be a part of it.
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RE: “As I understand it, Bitcoin is mined by running complex calculations that serve no purpose.”
That’s one way to look at it. As I understand it, the calculations you mention have the purpose of validating/verifying the digital ledgers (called “blocks”) which make up the block chain, which is the actual medium of exchange.
So, you are correct that no goods are produced. But we already use money that is created without producing any goods. That’s what makes digital currency seem attractive. And people don’t notice the command and control function that comes with it.
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“But we already use money that is created without producing any goods”
Yeah maybe. But the point is that producing these bitcoin monies USES UP goods – specifically electricity – that DOES have other uses.
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RE: “But the point is that producing these bitcoin monies USES UP goods – specifically electricity – that DOES have other uses.”
No, that’s not the point. The fiat money we already use is created by debt, which has to be repaid with interest. The interest is just as non-productive as the electricity consumed in bitcoin mining, possibly more non-productive when compounding is factored in.
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“No, that’s not the point.”
Well, actually it was. Whatever you think about “fiat money” creating it does NOT consume massive amounts of electricity in the producing of it.
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Actually, it does. Just add up all the electricity used by all the banks.
But you need to grasp that “using up” goods has the same economic effect as failing to produce them in the first place.
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“But you need to grasp that “using up” goods has the same economic effect as failing to produce them in the first place.”
No, it doesn’t. Think it through again.
For a simple example, let’s follow Dr. Tabor’s lead. Because of bitcoin mining more coal has to be burned to produce electricity. When it has been burned, that coal is physically GONE. Now consider failing to produce bitcoin. No extra electricity and no coal GONE. Simple to understand, really. Very simple.
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There is no command and control of virtual currency and there is no government backing either. Investing in virtual digital currency is like buying air, there is no tangible asset. From a digital “money” aspect, we are well on our way to a cashless society but huge problems come into play for those that are too irresponsible to have a checking account prompting claims of unfairness to the poor or racism. However, it would put s major cramp on under the table unreported income.
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The paper dollar in you wallet and the sum of dollars you have on deposit in your bank account have no tangible asset, either.
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Decommissioned coal power plants are being brought back online just to mine Bitcoin.
I am not concerned about the CO2 generated, but I am concerned about the coal wasted. You can’t make steel without coal on an industrial scale. They aren’t making any more coal. Significant coal accumulation stopped when bacteria evolved the ability to break down lignin 200 million years ago.
When it’s gone, it’s gone.
So, wasting my great grandchildren’s coal to make nothing just offends me,
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RE: “Decommissioned coal power plants are being brought back online just to mine Bitcoin.”
I get that, and I’m no fan of crypto currencies, but I would insist on separating appearances from reality, or the seen from the unseen.
Crypto mining concentrates electricity consumption in a readily visible way. But the non-crypto monetary system also consumes electricity, just not as visibly. The analysis required to determine which infrastructure consumes more electricity would be very complex, and I doubt it has been performed in a robust way.
I want to emphasize the command and control features of digital currencies because the Biden administration is planning to go live with a Central Bank Digital Currency (CBDC) next year.
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I don’t trust government, and I don’t trust them to not allow the non-governmental cryptos to circulate a while and demand tracing in return for allowing it to circulate. Those with large amounts of crypto in their assets will have no choice but to comply.
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“I don’t trust government . . . ”
I don’t trust gangsters, drug barons, and Russia oligarchs. I can think of no good reason why transfers of “wealth” using crypto should not be subject to monitoring similar to the movement of currencies.
This may all be moot as more people come to understand the Ponzi scheme nature of crypto and the whole house of cards comes tumbling down. It is happening pretty quickly with NFTs.
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When tulip bubbles collapse, it happens very quickly.
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I’m with. Personally, I’d like to see a return to precious metals currency. I’m no gold bug, but sometimes the analog solution is best.
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The mining operations are hugely inefficient. They suck up power that affects cities nearby. And the only “beneficiaries” are the owners of the “mine”.
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RE: “And the only ‘beneficiaries’ are the owners of the ‘mine’.”
Actually, the mining process benefits all the users of the “coin” that is “mined.” Here’s how it works.
The coin transactions are recorded in digital ledgers that are virtually impossible to hack. These ledgers have to be validated and verified (val/ver) before they can be added to collection of ledgers that make up the transaction system. This val/ver step ensures that the ledgers are trustworthy, which means that “coin” put into them or taken out of them is real. The system is able to work as a medium of exchange because it has this mechanism to keep the “coins” real.
The val/ver step is called “mining.” This refers to the fact that the currency administrators pay a fee in “coin” to the miners who val/ver the ledgers (called “blocks”).
Mining uses a lot of electricity because the math required to val/ver a block uses large quantities of really big numbers in complicated ways for which computers are not very well suited. Basically, the computers require a significant amount of time to perform the math, which makes their consumption of electricity significant.
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“This refers to the fact that the currency administrators pay a fee in “coin” to the miners who val/ver the ledgers (called “blocks”).”
Those “fees” are the only source of new “money” in the system. Those fees can only be earned by the expenditure of electrical energy. Only the miners benefit from their efforts. Nobody else. It is not clear why you are arguing?
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RE: “Those ‘fees’ are the only source of new ‘money’ in the system.”
So what?
RE: “It is not clear why you are arguing?”
No argument. I wanted Mr. Rothman to understand that crypto miners perform an essential function, for which they are paid.
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