The E-Dollar is a new form of currency, albeit a questionable one, that could solve the unsustainable debts of the current monetary system. It fits the mold of past currency overhauls, namely it increases the power of both the banks and the government. This post is the result of new information that has been brought to my attention about bitcoin and not a re-explanation of the E dollar. If you would like more information on the E dollar please read my first post History and Introduction.
In that first post I explained why bitcoin has been permitted by the government when they have been so hostile toward any other domestic competitors to the dollar. I outlined that bitcoin may be allowed to ease Americans into the idea of a crypto currency. It certainly has gotten enough media attention. My train of thought while writing that first post was that bitcoin was a private endeavor, as it is advertized, and that it is just being used by the government for their own purposes.
I had heard the rumors that bitcoin was a government program from the beginning, but didn't have the information to give these allegations much weight. That was until I was given the following paper written in 1996, http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsamint.htm . I thank commenter Guy_Incognito for pointing me towards this very interesting paper.
While reading 'How to Make a Mint: The Cryptography of Anonymous Electronic Cash', if you didn’t know any better, you could be forgiven for thinking the author of this paper was someone involved with the invention of bitcoin in 2008 such as Gavin Andresen or the mythical Satoshi Nakamoto. In reality this paper was written in 1996 by the National Security Agency Office of Information Security Research and Technology. That’s right it was written by the NSA in 1996. The source is about as reliable as you could ask for, as the website address implies it comes directly from the MIT website. It has been released by the NSA for the public, hiding in plain sight.
Depending on your level of interest I would suggest reading the paper but suffice it to say it essentially explains bitcoin to the T. There were certainly advances in the block chain technology in the 12 years between this paper and the introduction of bitcoin in 2008 but most of the aspects are the same including the cryptography, anonymity, divisibility, digital signatures and keys, and even digital wallets! The terms used are also similar. The word ‘coin’ had the most occurrences throughout the paper, and though bit was not used nearly as much it was mentioned several times. To analyze the term usage I used word clouds, and though partly a coincidence it was still surprising to see the term bit-coin pop up right in front of me. When the word cloud popped up this is what I saw.
Notice bit appeared right above coin, again this was a coincidence considering I put the wordcloud in alphabetical order but it was still powerful due to the implications of the paper to my thoughts on our monetary system, bitcoin and the E dollar.
Now on to the point of this post. It appears that bitcoin is not just a private experiment that the government is allowing because they would like to implement a crypto currency of their own but an actual beta test executed by the government.
This is not only supported by the similarities between the crypto currency outlined in the paper and bitcoin, and the NSA writing it but also by the timeline. This may not make sense at first glance considering the paper was written 12 years prior to the implementation of bitcoin, but once the goal of the government is considered everything makes much more sense.
If it was decided that this crypto currency wouldn't just be used alongside and as a supplement to the dollar, but as a possible replacement there would be no reason to attempt to implement it in 1996 when the US economy and the dollar were literally on top of the world. Even with LTCM, the collapse of the tech bubble and 9/11 there was no real threat to our financial system or the US dollar. That all changed in 2008 when as we have heard over and over again the financial crisis nearly broke our economic system. If there was ever a time to rapidly test a plan B and a new currency it would have been then and, right on time, the bitcoin plan was published on October 31 2008, and the open source code was implemented in early 2009.
I still don’t believe bitcoin would ever be the replacement for the dollar. I don’t think the government would really want to make the Winklevoss twins some of the richest people in the world. That said it only makes sense that if they were thinking of a major overhaul to our monetary system such as the E dollar a beta test to work out the bugs would be warranted, and bitcoin may be this test. They waited over a decade for a crisis to test their system and they will wait for the next crisis before taking the next step.
With the government involvement and clear interest in crypto currency over a decade prior to the advent bitcoin, as well as their cordial treatment of the new currency for anyone who still believes that bitcoin is the savior of freedom, free markets and the destroyer of the dollar are simply being naive.
I will be the first to admit that this is pure speculation but we will not be warned of any major changes to our monetary system, we will just wake up one morning and the shift will have been made. If we want to have any chance of preparing for such a monetary change, we must dig through all available information and make every attempt to make educated guesses on how the government might react. The E-Dollar is a reasonable conclusion drawn from the clues left for us.
Again, if this doesn’t make any sense please read my first post: History and Introduction.