Topic: Ecuador: There's no *new* digital currency (Read 3940 times)

Indeed ! 

More privacy: absolutely!

However it's easier to transfer money with this new system than doing a wire transfer when using the mobile phone.
You just need to enter the destination phone number and the amount.

To do a wire transfer (at least here) you need to previously register the destination so it normally takes several minutes.

But yes it will be more useful for people that don't have a bank account, a smartphone or a mobile Internet connection.

It definitely will take time to catch on.
For a person with a bank account, it would be easier to do a wire transaction with fiat, wouldn't it?
More privacy in it as well.

Well it's not mandatory to use the digital currency so not every single thing. Actually very few people are using it at the moment.

And I guess nobody willing to hide the transaction would use it.

Seems like a great way for them track every single thing you buy.

Small central banks are irrelevant. It is countries (and their central banks) that determine world economic policy that matter. Whom would you sooner believe, the U.S. Federal Reserve chairman Ben Bernanke who says that he doesn't understand gold, or 8,133 tonnes of gold in the U.S. Gold Reserves which constitute almost 72% of the U.S. foreign-exchange reserves?

... and eventual growth. If the number of people of Ecuador grows, the new money needed will have to be bought first, with exports.

Central banks all over the world hold gold.
While dollars certainly forms a chunk of their reserves, to ensure that foreign payments can be met, the remainder is diversified.

Gold is the only currency that is here to stay. Dollars come and go, but gold remains. Fiat is for the masses, gold is for the elite. Never listen to nonsense they may ever say to you, central banks of the most developed countries of the world (e.g. USA, Germany, France) wouldn't be hoarding it "just for fun".

2 !

No, this is not possible, unless your government is going to print fake dollars. What you meant to say is that most likely the government of Ecuador is going to emit some allegedly dollar backed currency, but I wouldn't be so naive (that this currency will be backed up by anything at all).

No. Ecuador just uses US dollars but doesn't benefit from devaluation.

So essentially ecuador is an extension of usa but without all of the social security and medicare help lol

It is not a matter of "approving".  It is a matter of having the ability to issue real dollar equivalents.  FED-approved banks can do this, because of their reserve at the FED, against which the FED will issue real dollars fresh from the press.  The FED can guarantee certain bank accounts independent of the bank itself.  So people having money there are relatively sure that they will see their actual dollars if they want to withdraw it, even if the bank has problems.

The equadorian gouvernment cannot print "real dollars".  If people want to get out their "dollars", the equadorian government or its bank will have a big problem, and will have to issue limiting rules.  They can only pretend for these points to be dollars under very restrictive conditions of redeeming or paying abroad... which means it are not really dollars.

If I were an Ecuadorian citizen, I would immediately redeem my points against genuine dollars, to be amongst the first.  Like in a bank run.

The reason they have dollarized the economy is because investors/people need to have faith in the currency.
Why would people trust this any more than they would trust  a fiat currency issued by the Government of Ecuador?

Exactly. The economic point of this, is not the fact that it is electronic, it is about who manages them.

The US gets the income even now without any digital currency just for the fact we use the actual US dollars in Ecuador.
The FED prints dollars and benefit from it and Ecuador takes their share of inflation.

In the year 2000 the Government published as great news that the US had authorized us to use their currency. Yes, what a surprise they did.

If the new currency is so popular that it takes over for dollars in Ecuador, and they manage to keep the peg, the government will have an income stream which is inflation plus growth. In the current situation, the US government earns that income, and they hate it, of course.

Perhaps civil wars will start breaking out in various countries in the future, as outcomes of rebellions of citizens pressing for separation of money and state.

You are right of course they are not real dollars, let us call them EE (Ecuador Electronic) dollars.

The issuer will say to potential users that they are as good as normal dollars. Then they will peg them to the dollar. They may put some reserves behind them, but if the project is successful, those reserves may start to dwindle. There will be lots of restrictions I suppose, every transaction is connected to a name for tax purposes, there will be volume limits in conversions and so on. But if successful, seignorage will go to the state. In the end, the peg will break, the EE dollars might be pegged to a lower level etc, just like with normal fiat in cleptocratic countries.

Take away point: It is a fiat system, a source of income for the state. The inhabitants may or not find that using them is advantageous.

I see your point partially, mainly the part that Ecuador can't print actual bills so if they issue too any digital dollars there's a chance people won't be able to redeem all of them. Let's hope that doesn't happen.

However it doesn't make sense to say it doesn't have an agreement with the FED. Of course it doesn't, only US banks need to be authorized by US authorities. Ecuadorian banks are approved by Ecuadorian authorities.

The Government of Ecuador was authorized by the Government of US to have US dollars as official currency and legal tender. And the Government of Ecuador approves all banks in Ecuador including this new system, certainly not the FED.

I think it was the economist that had an article about the prospect of Greece adopting bitcoin.  I agreed with their point that it would be a bad idea for any country to adopt a highy defaltionary currency such as bitcoin, as well as being against what cryptocurrencies are about.  Crypto is internet money, it is the money of the people, it is like Wiki and Reddit, it doesn't need to be printed out and adopted by the old media.  Ecuador should probably loosen their crypto controls and their economy could become a bitcoin, or Ecuadorcoin hub in the future, right now they are probably best off sticking with the USD.

Absolutely.  It doesn't make sense to have a centralized decentralized currency

If the idea is to have central control and accountability, then there is no NEED for the bitcoin protocol.  The whole cryptostuff was incorporated in bitcoin just to be able to get rid of central control.  If there is central control, there's no need for mining, there's no need for difficulty, there is no need for nodes or this or that.

After all, the central authority can play "miner" but without the difficulty.  It can make public a block chain, but without difficulty, and PUBLISH simply the hash of the last centrally approved block.  Everybody can then check that the block chain corresponds to that hash, and can see all transactions in it.  As the central authority is to be trusted (voluntary, or by force), there's no need for the mining competition.  The central authority would also have a protocol to choose the "block reward", and as such issue more or less coins.

A "statecoin" would be a simplified version of bitcoin.  It would be a total disaster if imposed.  The central authority could see all transactions, cash couldn't exist, and we would be at the opposite of what bitcoin stands for.

The point is that banks are doing this, but these banks that do this, do that with the agreement of the central bank issuing the money we're talking about.  The Ecuadorian government is trying to play "American bank" without committing to the regulations issued by the FED.  They behave like a rogue bank.  After all, the printing possibility of a US bank comes from the fact that they have an agreement with the FED: people trust an American bank because they have a reserve at the FED, and because the dollar is imposed as legal tender in the USA. 
The points on the Equadorian accounts will be legal tender in Equador if the Equadorian government asks taxes in these points, and within Equador, these points will be "national money", but they will not be redeemable against GENUINE dollars abroad, if the Equadorian CB doesn't have sufficient reserve dollars to honor all redeeming of points into actual dollars.
An American bank doesn't suffer from that problem because it is supported by the FED.  But the Equadorian CB isn't.
So these points will FLOAT against the dollar, as if it were an independent currency.  Ans because the Equadorian CB cannot print actual dollars, in contrast to the FED, it has a finite reserve of $$, and if it uses that reserve to sustain the course of points against $$, it will end up not having any any more.  The FED can print $$, but the Equadorian CB can't.  It can issue POINTS.  It can make believe that it are dollars.  But it can't ISSUE dollars.  It can make believe it issues dollars by getting real dollars out of its reserve.  But that will only last so long.

No, now they make their population BELIEVE that they can print dollars.

The point however, is, that if you want to use these "dollars" abroad, people will want to see REAL dollars.  So or the CB of Equador has a significant stock of real US dollars, or these points they call dollars are just a make-believe.  Now, as every monetary asset has this make-believe in it, there's nothing really wrong with that, but I wonder whether they really "print dollars".

I could do that too, you see.  In my town, I could set up a server to which I allow people to access with their phones, and have "points" on them which I call "dollars" or "Euros".  As long as people are selling stuff TO ONE ANOTHER and use their accounts, they may believe they are actually using dollars or Euros, and adopt prices as if they were.

However, the day that they want to purchase oil from Saoudi Arabia, I'm not sure that the Saoudis will accept points on my server as "dollars" or "Euros"

They might go to a bank, or an exchange, to exchange their "server dollars" into bank dollars, but then an exchange rate will be installed...  So then they will see that their "points on my server" are only worth $0.01 or so
(not 0, because after all, you CAN buy bread at the bakers' in my town with it...)

not every altcoin is useless .. darkcoin is implementing really good protocols and ideas that could be implemented in the future onto the bitcoin chain, storj with a decentralized cloud storage that uses bitcoin mechanism is so revolutionary that im following the project.. it just takes a good eye to see them.

Well in fact banks have been doing that all over the world for a long time.

As I mentioned in OP:
https://www.youtube.com/watch?v=Hg_1iXbIjFQ

The Ecuadorian Government wants to have the biggest bank of the country and the benefits that come with it.

In this case, they are actually being able to print digital dollars.
This is something they wouldn't have thought possible previously.

Governments won't be willing to give up control of the currency.

I'm sure they care more about being able to 'print' digital currency than to take advantage of the features of bitcoin.

The possibility of rapid increase in price, universal acceptance, large community - these are things which make Bitcoin successful.
Somebody should tell the Ecuador government that.

I still dont see the point, just use Bitcoin and stop mentally masturbating with useless alts IMO.

Seems ripe to use BitUSD

This seems like a good step anyway.. Perhaps someday Ecuador will accept the cryptocurrency, the benefits of the government issuing their own crypto is just too good... Thanks for the clear up on the news.

Just an update:

Accounts can be created since December 2014. However they can be really used to send and receive money since last week.

At the moment there are only ~7,000 accounts so it's not very popular at all.

200 points among banks, restaurants, stores accept the electronic dollars. However most of them haven't made a single transaction yet.

Let's see how this goes. Apparently there won't be a significant change.

You should come and visit it again! I think it has improved a lot in the last 15 years.

It's forbidden to buy or sell anything with digital currencies other than dollars.
The punishment is seizing both the currency and the goods. There's no jail at least.

I haven't heard of any case of seizing anything yet.
I guess that's because bitcoins weren't very common here anyway before the ban.
It wasn't very easy to buy bitcoins or find a place to spend them. And, with the ban, that
kind of services can't be publicly announced so it can't growth.

Running a node, mining or holding coins is not explicitly banned.
Only transacting it is forbidden at the moment.

Thanks for your reply.  I visited Ecuador once and loved the country, it was just after USD had arrived there.  Hearing news of the "ban" meant little to me, we heard about China banning bitcoin and the truth was it was actually easier to use and more common there.  What does this mean as a ban?  Are people going to jail for running nodes?  Any internet monitoring to report?  Cheers --   

When this new project was announced the Government banned all the digital currencies other than U.S. dollars,
so no one is using BTC or other cryptos (at least publicly and very little privately in my experience).

The digital $ will be used in about one month so nobody is using it yet. I'll post an update when it's publicly available.

*face palm*

thanks for the information. 

Can you tell us your experience, is there anybody using public currencies in ecuador or is it really all corporate fiat? 

That's very detailed information thank you, yes a lot of people spread pure bullshit around here so it's nice to get someone reliable explaining things, there's plenty of more legitimate rumours I have heard of countries that are going purely digital or at the very least plan to. I personally wouldn't rule out the idea of some fancy new 'world' currency or something coming out that will save us all as Max Keiser predicts but I'm not sure that a lot of countries will even last that long to be able to implement it.

Great. A bank run would now mean a run on the Government.
Wonder how this would play out. 

Inequality will exists forever this has been discussed a lot. If you are there first supporting -> you take bigger risks -> you get more reward. Law of life.

It's only money, the creator and supporters do not shoot for an "to everyone based on need" society. The fiat systems of the current world does not either, in fact it is designed to steal from the widows and fatherless, pumping new money into the oligarks' pockets at an exponentially growing rate.

Having a universal currency would be the best thing to happen. But again with bitcoin, some form of inequality in terms of distribution will exist.

Thanks for clearing that up.
The media got their story all screwed up.

And now they can print dollars. That's what they have been eager to do all the time.

Mobile battery sales will go up in Ecuador.

Thanks for the insightful information. It was nice of you to clear that up.

Specific cryptos for countries is a dumb concept, as demonstrated by AUR and the rest of knockouts. We have Bitcoin, a currency for planet earth. Everything else is deprecated.

I see there have been several rumors and misinformation regarding this digital currency in Ecuador.
As an Ecuadorian, I thought it'd be useful to post some facts:

Ecuador's currency is the US dollar since the year 2000 and that won't change at the moment.

A project to create a new  digital or even crypto currency does not exist.

What will happen in about one month or so is that people in Ecuador (myself included) will be able to create accounts in the Central Bank of Ecuador from our mobile phones.

We'll be able to make payments (i.e. transfers to another account) using our mobile phones only; we'll be able to make deposits on hundreds (thousands?) of points; and we'll be able to withdraw money from the same points, plus all the existing ATMs. Everybody will be able to send and receive payments this way, so we won't need to carry cash anymore.

What's new here is that these accounts are accessible from the mobile phone only, and no Internet connection or smartphone will be required (everything will be via USSD). The idea is to allow everybody to hold an account, even the poorest ones.

Also, because almost all Ecuadorians will have an account in the Central Bank of Ecuador, the Government will be able to use the money held in that Central Bank, effectively issuing virtual money (which is a common practice of all the banks in the world, nothing new here: https://www.youtube.com/watch?v=Hg_1iXbIjFQ).

This digital currency will still be US dollars. There is no new currency involved.