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digital currency.

This one will be boring for most.

I was on a flight somewhere between San Francisco and New York back in 2017 when I was listening to podcasts about crypto. This sexy digital ledger technology had already been around for years, but it was only then I started to realize where it was all going. I started to listen closely when I heard Janet Yellen dropping knowledge about blockchain and ‘fedcoin’ in her press conferences. Ironically, cryptocurrency was being triumphed as the answer to money laundering. No more criminals smuggling suitcases of cash in private jets around the world. Instead we will have a highly vulnerable encrypted ledger based system subject to hacking and manipulation. Arguably, the blockchain has become more secure with each transaction contributing to the verification process. Nevertheless, a year later I found myself living in London where nearly all transactions are electronic.

Now here we are hovering above zero in policy rates across both the United States and the United Kingdom. The European Union, which is already at a negative policy rate, is seriously considering the digital euro and this time people are listening… instead of laughing.

Let me tie the significance together at this point. Digital currency instead of fiat currency means there is no physical cash to withdraw at the ATM. Therefore, no old fashion run on the banks. This then allows central banks to reduce interest rates further and effectively pass on the negative interest rates to retail bank accounts (you and I). It becomes another hidden tax and forces individuals to invest in risk assets (stocks, crypto, real estate, etc.). Will it be successful? Well, define “success”.