Welcome back everyone. I am Caspian Sea and I'm joined
as usual by my partner in crime. Mr. Bennett Tomlin, how are you
today? I'm doing well.
Cass, how are you? I'm good.
We have a great guest. A return guest Rohan gray.
You have a million fantastic titles.
I will you know what I'll do? Is I'll record them after this.
Well, re-record the whole thing and true to my word.
Here I Am the embarrassed and Unprepared co-host of crypto
critics Corner Caspian, Sea to say that Rohan gray is the
assistant professor of law at Willamette University.
The research director of the digital fiat currency Institute,
a consultant to the UN International.
Telecommunication Union, 's focus group on digital currency
and helped author. The e-cash ACT.
It's wonderful to have you here, row on.
How, how are you today? Yeah, good.
Thanks for having me. I mean, it's exciting week, you
know, the realm of digital money.
So it is an exciting week and we have you on specifically to talk
about something quite exciting which is the e-cash bill that is
being introduced that you helped work on.
Yes. The electronic currency and
secure Hardware act which just perfectly spells e-cash.
So, you know, when you when you write enough bills, the acronym
really starts to matter a lot for you and I'm just really
happy. This one worked out.
I could, I think I've already won really, you know?
Well yeah, I mean let's talk about it so so Bennett I want
you to start this one out as usual.
You have you have some high-quality questions when it
comes to the intricacies of legislation like this.
So, go ahead and start us please.
Well, I mean, I think the easiest place for us to start
here, would just be for Rohan. Can you just give a brief
introduction to the objectives of the e-cash bill?
Yeah. So, uh, so the overarching
objective is to develop a Should digital dollar the replicates
and maintains the privacy, and anonymity and decentralized,
processing features of physical cash to the greatest degree
possible. So we designed the bill to be
centered around the treasury rather than the Fed.
So it's explicitly. An intentionally not a CBD.
See the word CBC doesn't tell you really anything.
Other than its issued by the central bank and if there's one
thing that this is not, it's issued by the central bank, but
in contrast to most traditional banking in, Technologies.
The rely on a Central Banking intermediary, or a rely on a
commercial Bank intermediary. And then, that whole network,
has a central bank on the backend, or in contrast to a lot
of crypto assets. That use a block chain or a
distributed Ledger. This involves no Ledger
whatsoever. So just like physical cash, you
issue the the token, it gets stored in a physical instrument
or a device and you make transfers by simply changing
possession or moving things. Clean those devices rather than
changing Ledger based balances. One thing you mentioned there is
that it was very explicitly being issued by the treasury and
not by the fed. And so I was, I was really
curious when I was reading the bill.
Why? That was the choice?
Why the treasury instead of the FED?
Yeah. Why are you using this language?
Well, if you know, I think one of the problems is that we've
had this discourse now for going on, I don't know a decade, maybe
a bit longer about government digital currency.
A sort of almost around the same time as Bitcoin people started
to really seriously talk about the government should be around
digital currency. But the at this point, at least
that discourse has almost become completely centered around
models and Technologies and approaches where the central
bank is the central actor. In fact, you know, the Biden
executive order that just came out around crypto uses the term
CBC almost interchangeably with a digital dollar and as I said
before, that term doesn't actually tell you anything.
It doesn't tell you why it's issued.
It doesn't tell you how it's designed.
It doesn't tell you who He's going to use it.
The only thing it tells you is that it's issued by the central
bank, which if you're a central Banker is great for you because
you control the whole process, right?
You say I don't know what it's going to look like.
I haven't decided that yet. We're still looking at options
but the one thing we're in. Sure of is we're in charge.
I think it's going to be us who's going to be the driver.
See. But and this is where I have a
problem with that is that in the very next breath.
The very next thing that comes out in those debates, all those
conversations is the central Bankers say well of course we do
provide Retail Services well of course.
Course, we would have to make sure that anything we did had
the same know, your customer and anti-money laundering rules that
apply to every other account that we offer.
Of course, we probably want a two-tier system where, you know,
our existing intermediaries provide the Last Mile Services.
So suddenly what started off as just a well, we should be in
charge becomes actual constraint parameters on the design and
function. And if you look at physical cash
it actually has very little to do with the bank account.
It doesn't A ledger as I said, uses Hardware rather than sort
of quote unquote software as its Baseline kind of method of
validating, transactions and validating people's claims on
account balances. And perhaps, most importantly,
in the u.s. context, the FED does not issue any form of totem
Federal Reserve notes in our pockets.
They had the Pharaohs name on them but they're printed by the
Bureau of Engraving and printing which is in the treasury and
coins that we use every day are issued by the mint, which is
again in the treasury. And when you have your Stimulus
cards sent out. They are sent out from the
Bureau of the fiscal service in the treasury.
So if you're going to start from an objective point of view, if
you hadn't had your brain worms from the FED, CBC discourse and
you were going to say, we want to issue a hardware secured
token-based form of money. That goes to retail actors and
can be held directly by them, which government agency is the
one to do that, the answers to treasury.
But so, you essentially are saying that you see the central
bank as swaying too much. Power, if you are to use that
terminology. And so by explicitly, using the
terminology that you're using, the context that you're using in
the language that you're using, is to avoid that and rely on the
treasury, which is not, as I guess, I'm wondering.
What is what's the difference there between the treasury and
the central Bankers? Well yeah, so the first thing
is, as I was just saying, you know, horses for courses, this
is designed to be pluralistic, it's not in competition with the
CDC. It's not in its stead of a cvtc
you want to fet. Which I support you have it, you
want postal banking which I support you have it.
What this does is say, we've always had different forms of
money. We've had accounts and tokens
for five thousand years. We don't need to choose between
them. In fact, we should be doing the
opposite and making sure that a digital dollar has every option
available, so that individual groups with different needs
different values. Different priorities will feel
like there's a form of a digital dollar for them.
Most people in their wallets have a credit card or debit card
and maybe some physical cash depending on How much in the
future you live and so this is really an attempt to slot into
that final category. It's to say that this has all of
the benefits of cash privacy and anonymity.
You don't need a third party to approve your payments, but it's
also got the risks of cash which is if you lose your wallet, you
lose your device, you lose the money.
So people aren't going to be wholesale leaving the banking
system for this, but they are going to be using it the way
that we use cash today. Now, so that that's, that's the
sort of why does this fit in with With the cash instruments
rather than be account now, from a political point of view.
Yeah, first of all Central Bankers are Bankers, you know,
I've been making this joke all around the way, but you asked a
bunch of Bankers, what they think technology can do, they'll
say a better bank account, right?
You know, this is the old blind. That's attributed to Henry.
For these said, if I ask the public, what they wanted, they
would have said a faster horse. Well Central Bankers, you know,
there is more in Heaven and Earth than there is in central,
Bankers philosophy, when it comes to digital money and
there's a reason why set Things around the world haven't really
paid much attention to this and that's because it has its
grounded in values. Different from the ones that
they have Central Bank is a lot of data.
They love analyzing data. They are firmly embedded in the
AML kyc regime, that applies to accounts that says, you have to
have identities because you, as an account manager, have
responsibilities to third-party actors.
And those third parties do not have a reasonable expectation of
privacy because they're sharing their information with you as a
third party, so they're coming. From a world where there are
playing the legal framework, there are playing the technical
framework of accounts and that's fine for account money.
But if we want to do something different, they're the wrong
people to to ask. They're also not going to be
committed to it. So if a spook or a cop comes to
them and says we need a back door.
Do you think the chair Powell is going to stand up and fight for
civil liberties? He sort of secretly been an ACLU
plant this entire time. I mean, I'm not I'm not
convinced so you know, the question of who's actually going
to support this. Well, I'm not convinced that,
you know, former Federal Reserve chair Janet Yellen.
Now secretary cherish, you do Janet Yellen is going to be
particularly interested either. But the thing about the treasury
is, it works under the pleasure of the president of the
president politically accountable.
So this is a way to say this is a debate that should be being
had in public behind, you know, in front of everybody in the
town hall. If you don't like it, you have a
right to have a voice. This isn't some technocratic
Central Banker, it's all independent.
If you want to even have anything to do.
Do with it, you're undermining Central Bank Independence, all
that stuff is irrelevant, and we're cutting it out from minute
1 in this, in the conversation, that was one of the really
exciting things for me, when I was reading the bill is because
unlike the CBD, see proposals, which I've read which almost
entirely focused on like settlement between the banks and
stuff like that because that's, that's what the feds doing all
the time. I don't even want to provide a
regular bank account this, they really wrong to only do
wholesale banking. That's the only Really feel
comfortable with yeah. And this was so clearly focused
on the end user and trying to emulate as much as possible.
The cash like experience for that end user.
Do you think you can speak a little bit to how a system like
this would actually work? Because like what we've
established so far is that involves these secure devices.
It does not use a distributed Ledger like a blockchain and
that it can be used offline and that's a challenging.
Set of requirements. Yeah, yes, you type.
You know, so it also makes Little Ponies and just gives
them out to people every day. So, the first thing is that in,
this is a really important point for crypto Advocates, I think to
understand which is the conversation around, how to
design an effective decentralized.
Crypto instrument is trying to solve two problems.
The first problem is the decentralized payment settlement
storage your standard Payments Technology stuff.
The second problem, however, is monetary Theory, monetary We'll
see how much the issue to who to give it to under what conditions
and the thing that Bitcoin and others have done is they've
combined those two. They've said we need a system
where we don't trust any one person not only to process
transactions. But also to determine how much
tissue. Now, if you're a person that
doesn't believe in Democratic public money, okay?
You you probably won't like a version of a digital public
dollar, but if you accept that public money has a place, it
will continue to have a place. And the public cash is actually
Probably an important thing to preserve, even if you don't like
it, but only because if you want private Monies to have privacy,
you probably need to convince people that it's worth having
privacy and money in general. And most people are going to
experience that with public money first.
So if we lose the battle over public cash, my viewers would go
lose the battle over any privacy in crypto as well.
So even if you don't want to use it, even if you don't like it,
you probably want this thing to exist at be legal, so that
there's some cover for the things that you want to be legal
to. But The problem is that because
in the 90s, when we were twice, seriously talking about how
we're secured options and that was, you know, before cell
phones before Web 2.0, all that stuff.
It was back when the only option was prepaid cards and there was
serious efforts around that. The bank of Finland, did the
Avant card in England, they had the mondex card in Canada, in
the early 2000. They had, mint chip card, what
happened to those? Well, a lot of them fail because
governments weren't really interested at the time and then
9/11 happened. And then the idea of having any
privacy went out the window for 20 years.
So there it was a, it was a moment where a lot of crypto
Advocates said, well, nobody's picking up what you're putting
down. So we do move into a system
where we only use software and it we're going to issue a
private money and so they're solving to technical problems or
trying to at the same time and it leads you to stuff like proof
of work or proof of stake and all of these questions, which
are very complicated. But if you have centralized
issuance, which public money already does then, all you need
to solve for is the decentralized payments, and
that's a lot easier because you can do it.
Of the initial security and counterfeiting protection at the
point of issuance. And then all you're doing is
transferring that security instrument between actors.
Whereas, with crypto, you have to solve the problem of how to
issue it as well in an untrustworthy way.
But to go question how it works, there would be some sort of
offline or air-gapped or spill something like that.
At the central bank at the treasury.
They would meet these in the same way as they mint coins or
notes, they would ship them out. You would buy a prepaid card or
you would go to a bank and you would basically make the corner
withdrawal or you could even do it on an app on your phone, you
would withdraw the money from your bank account.
It would be the equivalent of the bank, buying pallets of
physical currency that would buy with their Reserves at the
central bank and that would be uploaded onto your device.
And that device would have some sort of trusted executing
environment or a physically unclimbable function, and you
would then be able to communicate with any other
recognized Hardware device that could include prepaid cards and
other phones, and the idea would be you Essentially asked that
device, you would do a handshake and say, hey, do you have this
amount of money? They would say, yes.
They might not tell you how much they have, but I would say we
have as much as you need. They'd say, okay, I want you to
send it to me, they put your signature, their signature and
it would go to the next device and the original device would
lose that signature. It would be destroyed and there
would be a new signature that would come in.
That would be whatever the new balance is on that instrument.
So if you try to spend it to somewhere else it wouldn't exist
anymore, it would show that that other that other bucket
equivalent. Value was no longer valid.
Now, that's not perfectly securely.
You can always crack Hardware, just like you can crack any
system, but there are two considerations that one is, we
would put denominational caps on these devices, may be like
10,000. I didn't put a specific number
in the bill because we didn't want that to be the fight and
day one. That's going to be a political
question. But I will say, you know, as
high as possible. And so even if you do hack an
individual device, you're maybe getting $5000 $10000.
You're not getting a hundred billion dollars.
So if you want to be transferring you, Pablo, Escobar
level money, you're still going to be having duffel bags worth
of stuff. It'll just be duffel bags worth
of prepaid cards or cell phones rather than paper money.
But the other aspect is that the individual Hardware devices
themselves are going to be something that you could
separately from the transaction validate.
So there could be little kiosks all over the place, you tap the
phone to see if any balances and they could do a check with an
existing list of kind of Eight dollars.
So just like with physical currency, someone pays you 100
dollar bill. You put it up to the light, you
run a pain over it, you have a backlight nowadays.
There are all sorts of devices that can validate.
You could have a system or an easy device that could validate
that the funds you are receiving are, you know, still still
authorized. But that would be a separate
process to the transaction. You wouldn't be having to get
you know, third-party Uncle, Sam or Banks green light to actually
process the transaction itself. And any record of all of that
stuff would exist, only on the device, it wouldn't be, there
wouldn't be some place in the cloud, you know.
It's very interesting to me because you have essentially
answered one of my questions which was while I can understand
that. Maybe the transactions are
private. It appears as though any
physical whether it's a card or a physical Hardware, wallet, or
whatever you want to call it, right?
That, that will have traceability.
Right? And I guess maybe there might be
some concern concern about that. Like, I guess here's, here's a,
I have a, I have a twenty dollar bill right here.
There's a serial number on it. So it is identifiable obviously.
But what I can do with this 20 dollar bill now that it is in my
wallet. Whether I'm kyc door, am Elder,
whatever at a bank, is I can take this 20 dollar bill and for
instance, pay in a, in a legal immigrant to do something and
that doesn't have to be traced and that illegal immigrant now
has that dollar and or that twenty dollar bill and they can,
they can use it. They see fit.
It doesn't seem like there's room for that kind of a
transaction in the e-cash ACT. Is that incorrect right?
Nothing. Yeah.
They're they're they're absolutely is because you buy
the device, right? But you don't have to give a ml
K YC. When you buy the device, there
might be certain intermediaries that will ask for that, but I
could imagine this being available at a convenience
store, next to the the transit cards, like you could buy this
at the postal service. Next to the prepaid debit cards
that they sell where you don't ask for permission, you could
buy A prepaid phone and it would have this built into the phone
functionality and you know, you could buy the phone.
The other thing is, you know, just because the initial dollars
have to be, just because certain intermediaries might charge kyc
rules. Once you have one of these
devices that the dollars that get sent to that device, don't
have any kyc so you could get a hundred dollars from your bank
account, the bank would know you would you $100, but if you give
it to me, there's no record that the hundred dollars on my a cash
account came for the cash card came from yours.
Say so you know you use barcodes there but coins don't have a
barcode coins are the most private form of public money
also issued by the treasury and they don't have any bar code
whatsoever. So there is no record of who
owned a coin before you did and there's no record of, you know,
every every person who's ever owned a banknote except to the
point of issuance in the point of redemption again.
But if you had intermediaries who you know, provided this as a
service, you could come in with physical cash, give it to them,
they give you a card and that would be it.
It now that doesn't prevent other forms of good
old-fashioned, gumshoe, detective work, you know,
there's still surveillance cameras everywhere, your phone
still got a million other surveillance devices on it.
If somebody, you know, hacks your phone and is logging every
keystroke you're still going to be screwed, but it does mean
that the money itself is dumb, you know, it's a dumb
instrument. It's not, it's not calling to to
Central Command and it's not it's not something where you
have to have an identity to use it because that would defeat the
point of it. Frankly, you know, this is one
of the things You've seen with, with those prepaid cards, the
government sends out and things, which is a lot of people aren't
trust them a because they're going to charge fees and be
because, you know, if you're undocumented or if you're a sex
worker or something, they're going to try to stop you from
using it, but being able to use your money however, you want.
I think is a are pretty quintessential American value.
And dare, I say it is, but one of the best things about living
under capitalism is it's that whole Pretty Woman idea.
You know, my money is good as yours if I can.
You know, on the internet. Nobody knows you're a dog.
Well if I want to pay for something on the Internet then
Hopefully, nobody will deny it to me because of my race or
gender or sexual preference or political lives.
As long as my money is good and I think this is an attempt to
preserve that feature as much as possible.
I remember when you came in here before 4 episode 16 to talk
about the stable act, huge, you up like a quadrant of like
public money versus private money and then privacy
respecting money versus non privacy, respecting money.
And like at the time he said the goal would be to try to get
something in the quadrant of both public.
Guaranteed and privacy respecting and so six months.
Yeah, congratulations on getting that bill introduced and you
were quite down on it at that point.
If I remember correctly, I think you, you did not think that that
was even a real possibility at the time.
Yeah, I mean old pal powder. Congressman Lynch, who really
took a leap of faith in this one.
I mean, he's no use no radical. Progressive is a moderate.
And, of course, we had receded, Talib, who came out with the ABC
act, which sort of pointed in this Direction, with a sense of
Congress, but it was a relatively short and brief.
And this is Reese's really you know, in a chance to write the
whole thing that the best way that we could and Congressman
has been absolutely 100% supportive or all along the way.
We just had the ACL u--'s, senior political strategist,
come out and say that if we can only show digital dollar, it
should be this kind Jerry Brito from coin Center.
Said, I'm not sure if we should issue a digital dollar but if we
should that he cash Act is the best version.
I've seen people like Steven deal and Isabella Kaminsky,
who've been very critical of both crypto and one hand and of
cvtc's or the other and their surveillance capacity say This,
this looks legit, it checks out. So I think, you know, I'm not
saying we did it perfectly but I think as far as an initial kind
of Salvo into this debate. Hopefully now finally, there is
a perspective in that kind of, you know, privacy pro-public
quadrant. And the fact that we've had the
reaction we've had, you know the Wired Magazine article on this
was really really fantastic. I think just shows how missing
this perspective has been in the debates so far.
It's been crypto Advocates saying you know, why do you hate
freedom and then public money? Because saying you know, why do
you think that capitalism is good for the average person and
that's what I'm talking past each other and and it's possible
to believe in public goods and believe in privacy and now we
finally have a kind of load stuff or what that would look
like in this conversation. Can you one of the questions
that I have is about the Privacy board?
Can you kind of go over the Privacy board because it's just
one, it's an interesting concept but to I'd be interested to see
how well that works in. Reality versus how it looks on
paper. Yeah, I mean, look, we didn't
give them the power to sort of override with the with a
supermajority vote, the whims of the treasury or anything.
This is really about the transparency side.
You know. I think a lot of people say, do
you really trust the government to do this?
You know, and of course I don't trust the government to do this.
I don't trust the government to anything.
That's not why you have a government, you, you demand
things of it and you hold it accountable.
That's how power works. But it's the same government
that lies about feet, fisa courts, and mass surveillance,
Lots. Of course, I'm not going to just
take them at their word, but part of the thing to do here is
to give privacy Advocates a foothold in the institution.
And so those independent privacy board members have a term that
they can't be removed, except, you know, by the president.
They have to give a report about it but also they have access to
all the internal materials they can write on the official
letterhead with budgets that they can control individually,
as well as collectively separate from the treasury.
And my hope would be that the appointment of people to those
positions would be something that privacy Advocates would
take very seriously, you know if you're a lawyer you care who
gets on the Supreme Court, if you're an economist you care who
gets on the FED board, if you're a pro privacy person, hopefully
you care who gets on this committee and if it turns out
that they're lying and they're putting back doors into things
and all that kind of stuff, I would want those members of the
committee to blow the whistle and for people to use that as a
red flag to mobilize, not because I think that that's
enough for because they think, That's the, what's one of the
ways that you can can get a kind of temperature?
Check about whether this thing is going off, the rails, from
what it's supposed to be versus what it's actually doing.
Returning the before, when we were talking about kind of the
different types of money, if this were to get past and become
a thing that was relatively broadly used like beyond the
pilot phase of this. What effect do you think it
would have? And some of the other existing
forms of money. So like both the kind of pseudo,
private money of the Need transmitters like venmo and the
more outright private money of like the stable coins and then
just payments processors like visa and stuff.
Yeah, I mean I right now I think a lot of financial institutions
had cash for two reasons. One is it's hard to profit off
it and be they can't gather data of it.
So there's very little to offer a private for-profit actor for
sort of being involved in his Public Service.
It's almost like an easement you know you don't really like the
fact that your house has a pathway to the beach that other
people use but you really can't find an explanation for why
Ocean View our taxes the beach so I guess I guess, you know, I
have to let them walk on my land, you know, it's sort of
like that. I think the bank's know that
they can't really say that people shouldn't be able to
access cache but if they could they would.
So in one respect, I think that the war against cash which has
been waged for many years now by banks by fintech companies by
data companies and by governments is hard to win in
part because cash just looks like it's quite.
It looks like it's old. Its looks like it's in the past.
I think it's really important but this allows us to keep The
spirit of cash on both sides of the digital divide.
If you believe in cash is a concept, you can support
physical cash and this. So for example, the law that was
just passed in Philadelphia, requiring Merchants to accept
physical cash. They can't go cashless because
that was causing severe Financial inclusion concerns for
example or when people say they made up about cash being a
vector for covid. You know, the World Health
Organization said there was no evidence that cash was actually
a Victor for covert, but it was a good narrative that cash is
Dirty. We're going to go cashless.
Well, if you had to switch to digital cash for a while, you
could still have all the benefits of privacy even if
we're having the debate about the cleanliness rather than
saying, oh cash is dirty, I guess we all go into
surveillance money now but to the private question you're
talking about, I think first of all, it will make a lot of
money. Transmitters may be less
attractive by comparison. What has been will offering?
I mean, I guess you get the option to share with your
friends when you pay someone something, which I cannot
believe people actually enjoy, but apparently, some people do.
So, maybe they'll still want to have the Money surveilled, it's
just Cash, Plus taking a photo up and putting on the Internet
or something. But then when it comes to
something like stable coins, you know, on one hand, I want people
using stable coins because it's the only kind of money, like,
public money like instrument. They can use in certain
contexts. So if you can use it, actual
digital cash instrument, I think it'll take the wind out of the
sails of the stable, Queen industry to a large degree.
But also to the extent that there are laws prohibiting
people from engaging in illicit activity, and and that stable
coins, allow you To get around. Those jurisdictional rules in
your jurisdiction, physical cash, already, does that.
As well, there are whole countries that use the u.s.
dollar, is their primary medium, and that would be something they
could do as well. So, I think certainly, it allows
you to do money transmission in a cleaner crisper way.
And to give one basic example, that in the covid relief, we
proposed using prepaid debit cards to get to people who
didn't have a bank account, but we part of that was that we
propose to have an emergency responder call, that would go
and knock on people's doors and actually put the money in their
hands. Because we recognize that it's
not enough to just have a piece of technology.
You actually have to get people to be able to use it.
That was what the way that we dealt with the access problem,
but the people who don't trust the banking system, a prepaid
debit card is still connected to a bank account on the back, and
it's just a numbered account that, but they could be shut
down. That can keep a record of all
your transactions. All of that kind of stuff.
If you want to donate it to political dissidents with your
prepaid debit card, and the government wanted to prosecute
for that, they could find that information at that bank
account. So this is an attempt to really
do what prepaid debit cards. Do what a venmo balance does,
but better, but the way that it should work, which is actually
cash, like, not account, like that said, there are reasons why
as I mentioned before, you might want to not put all your money
in this because it's risky. You were taking all the risk
yourself, just like most people don't want to run their own
email server because even though you can do that, it sort of
comes with additional complications.
So I think that this is not going to get rid of
intermediated money in general, but it is going to take a chunk
out of them. For the purposes that they are
currently using that as the nearest approximation to cash,
this will be a much better approximation of cash and the
people for whom that's their primary goal will be likely to
use this. Instead, the timeline for this
seems either incredibly optimistic or maybe I'm not
giving the government enough credit.
But I even for pilot programs like I'm seeing 90 days after
passage 180 days after passage. And I'm, I'm thinking to myself
like and I understand there's Options for for certain measures
and stuff but it just feels incredibly optimistic.
I'm wondering if the reason for that though is because you do
feel as though Bitcoin, stable coins, anti-government sentiment
anti-u, s-- dollar sentiment anti cash sentiment is getting
stronger and stronger or if it's just like a basic thing that
you're just throwing in the law like that any law has to have.
I think historically all good protests have the word now.
At the end of all of their posters when they're having
demands. And and I think, you know,
Justice delayed is Justice denied.
And frankly, when it comes to putting a particular number in,
we were always going to be a key.
If it was five years, people would say, well, five years is
infinity and digital terms right now.
So we put it in to be two years and that kind of thing.
And I think that's still a pretty long time.
And, of course, you know, I'm an academic you say, you'll deliver
something in three weeks, you deliver it in six months.
So I know, I don't expect them to necessarily keep to these
timelines, but you have to set an initial Expectation for them
to fail to meet in some sense, but I think the reality is that.
Yeah, this is a, this is a fast-paced area where we do have
to move quickly. The good news is and this is one
of the reasons I felt comfortable doing it.
Putting those timelines in, is that there are Technologies out
there, there are vendors, there are people working on this kind
of stuff who can get started with proofs of concept and that
kind of thing. And, you know, my hope is that
it'll take a while for this bill to get past right?
That doesn't happen overnight. If it's going to happen at all,
in the meantime, the fact that this is even being Scoffs to the
reaction. It's been received.
My hope is that it will be a kind of green light to
technologists. That this is an area.
They should be spending more attention on than they have been
up until now. I mean, when's the last time you
heard about any digital money project, that didn't involve a
bloody blockchain and now people who may or entropy interested in
that kind of Technology, might know that there are sort of
actual interested parties on the other side who might want to buy
what they come up with and use it.
So this could take six to 12 months, 18 months to pass and
that gives people a time to do the development the tech but
also there aren't Companies that have already tested this.
In other countries that we've had prepaid cards for a long
time. There are hardware-based trusted
executing environments on phones that, you know, Google and visa
and others have already been looking at.
So I don't think that when it comes to testing this stuff,
we're sort of starting completely from scratch, it's
more. A matter of show us what you've
got. And we'll look at the mall and
then make a decision. It's really more about kind of
playing the field of vendors than it is about needing to
actually test the technology. You from day one, right?
I mean, I don't think that there's any kind of issue maybe
there is in America. I don't know how technologically
advanced we are when it comes to payment systems through phones
and stuff, but I do know from my time in China, when I was there
in, like, 2018 2019. They know you're a tourist.
It's not about like the way you look.
They know you're a tourist. If you use cash, that's how they
can tell. That's how they can tell what's
going on. That's how they know if you
don't have a Chinese bank account and if you're not Used
to used to being there. You could speak perfect Mandarin
and if you pull out cash they're like oh, where are you actually
from? So I wonder if you are cuz that
is as tracked as you can, probably get is like a Chinese
issued telephone with money on it from your Chinese bank
account. I mean, I'm sure the Chinese
Communist party is paying attention to every single
transaction. Yeah, I assume NSA short shrift.
They're doing their very best as well.
So so so, do you think I guess there?
That's that's my where I'm coming from.
Here is like as quick as this could be implemented, I assume
you want to take more time because you want to make sure
that that isn't the implementation, right?
Yeah. So we directed the bill to use
open source, software, and Hardware wherever possible.
And I think that's going to be a huge part of the transparency
along with the along with the monetary privacy board.
And and if, you know, if it's all behind closed, cause I think
there's a very real risk of Falls the way of mint chip,
which was the Canadian Mint attempt to do a hardware secure
digital Dollar in the early 2000s and they used proprietary
hardware and it just didn't it did.
There was too many risks associated with it but and and
this is sort of deeply ironic I think.
But China actually has a prepaid, a reloadable
stored-value card version of its digital.
You on that actually does work offline and is Anonymous in very
small denominations. Now, I don't know if I trusted
it, certainly not open source and I don't know if if I
consider the denominational They have to be sufficient, but God
forbid they out outrun us on privacy and anonymity and that
ends up becoming better than the US dollar.
I mean, you know, the US dollar abroad is a sort of as potent.
A symbol of American capitalism is there is, and if we don't
have a digital dollar, you know, out there then it's going to
completely disrupt how people use the American dollar.
So unless someone's saying tomorrow we should try to, you
know, D dollar eyes, every country that's ever used,
physical US currency. See which I don't think anyone
actually wants him. If they might say they do for
optical purposes, we got going to want something that can be
can be held by average people that easily.
Now the text, as I said, I don't think the technology is actually
super hard to develop but making it transparent and clear is
definitely going to be important.
So I you know, would say the next step for people on the tech
side are interested is start you know trying to work with people
who have access to White Label prepaid card technology Etc.
And start getting some Stuff out there that's open hardware specs
that you could manufacture it multiples places so you're not
going to be building Tech that's dependent on one manufacturer or
that you know if there is a blob to try to create an open source
version of that particular part of the software Etc, as soon as
possible, as I said that the timelines are not as important
as the Integrity of the project obviously, but if we do leave
this forever, it will be too late and people will have become
accustomed to using, you know, thank God.
It's not going to A bloody Facebook's currency, right, but
but, but we're waiting, right? We're waiting for the network
effect to hit. We're waiting for everybody to
go. Well, I just use them then or I
just use Excel and that to be the thing that 15 years from now
just become synonymous with the act of pain and we want to we
want to make sure that it's not PayPal, it's not their MO and
it's not some dangerous stable coin and it's not a government
surveillance coin, you know, all of those options.
I think it's much more likely that it's going to be some
private sector one, because they're the ones that can move
fast while. Everybody is Jump, get you know,
jamming the public sector from being able to act.
But look, six months is enough, time to do all kinds of things.
If you look at the six months, after the Patriot act's, they
built a surveillance State pretty damn quickly.
So when the weather is a, will there's a way to act quickly
and, you know, my favorite building that for a really long
time though, give them credit there too.
That's fairly an extension, you know, they added a whole new
stepped out. But they went on a spending
spree vertical integration. Exactly.
They went, they went National,
they were reached. During actual but yeah, you
know, if people said look the stakes the stakes of this big,
the stakes are the future of privacy and transactional
freedom. And we either go one way or we
don't. And if we wait three years,
we're fucked frankly. So what do we do?
You know, I don't I didn't make the timeline.
The timeline was there. That's just how fast this stuff
moves. So either the government, you
know, picks up the slack and makes it work or it doesn't.
But the good news is and I had the opportunity to interview,
the former mint director, Philip deal when we were talking about
Trillion-dollar coin proposal but he was actually testifying
in 1995 saying that the mint should issue a stored value card
to replicate the features of coins.
Saying we are the only entity in the government that cares about
privacy. It should be us and I mean, talk
about Back to the Future, but he's the kind of visionary
director of The Mint that got stuff done real quick.
And I could imagine if we put the right person in charge of
this program, who really had an axe to grind or something to
prove and we gave them enough. For autonomy that this timeline
is do they just quickly want to say that to deal that if he's if
he's somehow here's this podcast he got me into coins and I am
unfortunately still 100% neck deep into coins.
I love the Canadian Mint and the, the u.s. man, I still have
my first coin that I bought in 1999 and I have the sets from
1999 of the state quarters. I was obsessed.
He loves that program. Yeah, and he's an example of a
bureaucrat who takes Pride And in making government work well
and we're so not used to seeing those kinds of people used to
seeing people that have got their, you know, their eyes on
the watch, the one foot out the door, and they're waiting to
take a paycheck from some private company on the other
side. And their job is to stall.
Bad regulation for business. And to maybe do you know, that
old Kamala Harris joke? We're going to provide 10,000
dollars of debt. Forgiveness to someone that sets
up a small business in a disadvantaged community
disadvantaged community for three years or whatever
bullshit. And the idea of just doing
something big and simple, and good.
And taking credit is just Anathema.
But those people exist, we just have to empower them and put
them in the right positions to actually do it.
Yeah, well, he got a lifelong, a lifelong supporter out of me.
All it took was some silly quarters with the pictures on
them. I mean I I still talk about
that. Yeah, Texas businessman is my
favorite public policy maker. The military space.
Go figure that not what people would have predicted.
Exactly. The point, the point is just the
point is just, if you want someone like, Him.
I don't imagine he'd say, oh, it's impossible, I can't do it.
It's a all right. I'll do my best to.
Let me get back to you if I need a little bit more time, but, you
know, we'll put pedal to the metal and that's the, that's the
mentality we need, you know, these crypto people who say,
well, what do you expect government?
Can't do anything. And then they turn around and
then they get upset that the government is corrupt and
doesn't do anything. It's like yes, you get the
government that you expect have higher expectations, you know,
my kindergarten teacher had high expectations.
They also get mad when the government does two things.
That's remembering every Clarity things.
If we wanted was not the regulatory Clarity, we got that
was a huge mistake, right? Asking that was a mistake.
Yeah. One of the requirements in the
bill is that the e-cash be interoperable with the exams,
with existing financial institutions, is that just in
the sense, like, you can go to your bank and deposit cash.
So, if you go to your bank, you can deposit e-cash or is it like
a deeper integration than that deeper integration?
But definitely that's a part of it.
The other part is thinking about things like future, Of sale
devices, we don't want people to be developing Future Point of
Sale devices that explicitly exclude, this option for me,
being able to be used and the same would be.
For example, if you're going to develop a phone and create a
secure Enclave on the phone for private currency, to make sure
it has that option. But basically the idea is, is
that we want to and we want to make sure that that, you know,
you go to a store or something. And it's credit checking or
e-cash. We want that to be the choice.
We want that to be the normalized.
Choice. And the other part of it is,
when you force the businesses to do that, then businesses can
turn around to the government and say, you're not providing
enough support, you forced me to do that.
So, to give an example, in Australia, we have compulsory
voting and it's not like, it's not like you get locked up, you
know, you pay a seven dollar. Finally, you write a letter
saying I'm sorry? I was busy.
I was on the toilet that day didn't get to the voting booth
they like oh that's fine. You know they're very relaxed
about actually enforcing your non-voting but the point of it
is to set the expectation that you're going to vote.
And then also this is I think the Secondary point of
Americans. Don't think about because they
just think about in terms of like individual can coercion is
that you then have to actually make a combinations on the
public policy side so that people can vote.
You can't force him to vote or say they have devoted their not
provide an accommodation. So we have a public holiday on
Election Day. We have mandated time away from
your employer etcetera. Etc.
So if we have a system that says you have to accept any cash
interoperability then, the government then also has a duty
to facilitate that interoperability.
Our ability and that keeps the affirmative responsibility on
those with the power to actually change things.
It's funny because it's reminding me of like actual
important moments in American history.
Yeah. The great like Lincoln with the
Greenback like, you know, like FDR floating the dollar like you
know, it doesn't even have to. It doesn't even have to be a
like, a financial thing. I'm like, I'm even thinking
about like other moments in like whether it's fighting
essentially, what you're fighting for his privacy in a
new age and I That that is a valiant effort and you're
fighting for it in a public way as opposed to a private way.
Yeah I mean a lot of the debates around you know should we even
have cash? It'll what if people use cash
for bad things are the same debates we had about the
internet itself, you know, aren't we going to use the
internet? And and frankly it's the same
debates we had back in the enlightened about whether or not
people should be able to read and have a piece of paper that
they can access to. Right?
And so I think it really is that fundamental and one of the
things that's interesting is that this is very much picking
up a conversation that really true.
Old off in the late 90s but the reason that it Trail off there
was the Patriot Act was these other things but also that was
the last time we were talking about sort of the bare bones of
the internet and what he wanted to look like it was the
Telecommunications Act of 96 etcetera and I think one of the
things that we failed there was, we failed to ensure that the
finance layer was consistent with the principles of an open
internet. So you can create, you know,
peer to peer nodes, all that stuff.
But if you have to pay because everybody, everyone ABS
material, right? Even businesses, even websites
have to pay for the electricity. If you have to pay money to run
your internet thing, then if the money is centralized, then
that's where I'll get you. And I think this was this was a
huge failure of the internet Freedom Movement to not put cash
sort of front and center as a policy priority.
And then when they did fail to convince governments in the 90s,
the fact that they kind of turned to private monies, I
think was a huge error. What we needed was you know,
more mass In the, the, the cypherpunks should have allied
with progressives and labor unions and all those people that
God forbid. It's the messy politics that you
can't fix by writing code in your bedroom.
But it does. It is what actually gets you
things like a 40 hour work week or the right against
self-incrimination or you know, holds those bastard cops
accountable when they beat people to death.
That's that's what actually changes things is mass politics
and this is an attempt to bring monetary privacy you know into a
realm of mass politics and away from a realm of Financial
grifters and Libertarians who think their freedom fighters.
I will say that this is the only piece of legislation.
I've read, well, reading it where it got like actually
excited because because it is like such an attempt to avoid
the self-fulfilling prophecy of claiming government can't act,
right? It's, it's an attempt to do an
important thing in a big way that can potentially help
people. And clearly like written with
With care and with an understanding of what would be
necessary to actually pull it off.
And so like, that's why I was, I was extraordinarily gratified
when I saw the open source parts of the bill because I think if
it had ended up being closed Source, it would have been
immediately DOA because you can't actually believe in the
Privacy. If you can't verify it, if no
one can verify it, right? And so in order for to truly be
private, adad to be open and it was it was just gratifying to
see the members of the House who came forward to sponsor it like
being willing. Stand behind that principle.
Yeah, well, my old law professor happened when you helped draft.
The GPL license with Richard. Stallman, you know, he probably
yell at me and say, why didn't you call it free software?
You know, open source is already a compromise and I think he's
right on that. But II think, if I read the word
free, their people would get very confused and think they
meant free as in free beer, not free as in Freedom.
So, you know, for those listening out there who are the
kind of people that say it's canoe not Linux and it's free
software. Not open source, you're right?
And I'm sorry and you know, I that's a legitimate criticism
but hopefully I pissed off the right people on the other side
that you're still consider me on team.
So right now I'm just thinking about Richard stallman.
Yeah, you know, and I have a lot of respect for the canoe Tyler
program, which was an attempt to provide a kind of, you know,
free software answer to this. But they made a compromise with
their technology that was asymmetrically Anonymous.
It was Anonymous for the payer, not for the payee.
And the idea was that you would sort of Still Force Merchants to
have to record transactions. So you could monitor it for tax
purposes and I understand that. - but with respect to them, this
is where I think. Technology is playing monetary
theorists is probably not. You know, I am willing to own
cash, being symmetrically anonymous and to say the lawyers
can monitor and deal with the risks of tax fraud and things on
the back end with other ways and that it's more important at this
stage to have a digital cash instrument.
That works like cash than it is to preemptively bacon
compromises with tax collectors into that instrument.
At this point, I consider this to be a kind of small C
conservative defense of cash, like freedoms.
And that what we want to do is preserve as many of them as
possible. We kind of, we're turning into a
Bend. We're doing a hard turn into the
digital realm and we got to try and keep this car like within
the lines of the road as much as possible.
So maybe they'll be situations in the future Etc, where there
might be additional things when you think of it.
At this point, the goal is to not let this transition destroy
the privacy of cash and if someone wants to make an
argument for why, when you get rid of one little thing fine,
but they should be making that affirmatively and The gene that
they getting rid of something that we've enjoyed for thousands
of years. I think, I think the end of cash
is the extreme radical position. Not protecting it into the
digital world. That's something we were
discussing like two episodes ago and we had Josh Cincinnati on is
that? That cash is kind of like the
only remaining broadly acceptable, private currency and
that the further gets pushed to the periphery.
The more you have to accept that like, your transactions end up
being monitored and the government.
Yes, ends up learning all that information about you, but so,
Does the credit unions and the artery the advi-- targeting
agencies and anyone else who can afford to buy it.
And that's right. And and and you're only as
secure as the database, the government has and we've seen
this already with ADD hop, they say first, we'll get all of your
data and somehow will store it securely and you're like well
I'm not sure about that side of things and frankly you know it's
it's like the what is it? The Kobayashi Maru, the only way
to win is not to play, right? The only way to win when it
comes to Safe data. Practices is to not collect He
data, unless you absolutely have to.
And I think this is the only model that is really trying to
embrace that principle of data minimization from day one.
What a way to end it with a. Well the way I remember it, a
quote from war games, maybe it's more games.
Thank you. I know, I think Kobayashi here
you just have to be William Shatner and then you can win but
yeah, but yeah. But yeah, what a way to end it.
I think that is, it makes sense. That, here we go.
We're ending it with the, with the war games smoke.
But I hope that At this, get some legs and, you know, makes
it through. I mean, what are what are we are
we talking good odds? What are you thinking?
Well I you know, I think, I think the National Security
State is a formidable enemy and I think there are formidable
enemy within the Democratic party as well as across the
aisle. And I think, you know, there is
a chance that this is going to have a cross-cutting coalition,
you know, the people like Tom emmer and Warren Davidson and
Hollingsworth. And I was, I think, should in
theory be supportive of this given that other statements.
Now, I have, I am long past being shocked, if it turns out,
It's just hate government more than they like freedom and
privacy, but at least given their statements.
Now in opposition to a cbgc. The thing that they say they've
wanted is exactly what we're trying to do with this bill and
that would hopefully be some cause for an alliance there.
But I do see this, you know, Crosscut a lot along different
lines. I mean, we spoke to people the
ACLU and they haven't taken a position on money in years
because they didn't really know what to what position to take.
But the minute we proposed this them like, oh, this makes a lot
of sense. Thank you for doing this.
And I don't know. How many politicians want to get
in? On the Democratic side?
Want to get on the wrong side, the ACLU and as I said, coin
Center is out there saying, we don't sure we want any digital
currency, but if Government digital currency, but if we do
have one, it should look like this.
So compared to surveillance coin, you know, this is
hopefully an option that actually has a legitimate
interest base. Now, again, the forces on the
other side of formidable, I would never claim they're not,
but this isn't simply a kind of far-left thing.
It isn't simply a blue versus red thing and it's not Been
really a top versus bottom thing.
In the sense that there are a lot of reasons why, you know,
Elites and others might want to care about this.
There's the CIA and was the one that invented tour for God's
sake. So it's not that there aren't
legitimate. Use cases for privacy amongst
the leads, as well as look, the holy polloi, but I think it is,
it is going to be interesting to see, you know, who ends up
either thinking that it's more important to have, you know, the
ability to catch the bad guys, and to protect the good guys won
and to that, they hate cryptos. So Much that anything that
sounds like it's sort of quote unquote, promoting dark money is
is too much of a handout to crypto and they would rather
kill cash if it means being able to kill cryptos.
Well, I hope I didn't. Those are going to be the
Coalition in opposition to this but hopefully, as I said, even
some crypto people who might not care that much about public,
money can hold their nose and support this because it's part
of a larger movement to protect values that they care about.
And the protecting those values in general will have benefits
for the things that they actually do care about.
Well, thank you for joining us. For on what a another
educational and informative episode with you.
And I hope hope everybody takes a look at the bill, the act and
decides how they feel about it and if they think they can make
it better to voice that, but I appreciate it and I think Ben
and I are both excited to see this and have you on so thank
you. Yeah, it's a pleasure.
Thanks. As always for thoughtful
engagement, appreciate it, another great episode of crypto
critics Corner. This time featuring Rohan gray.
I want to thank Thank you for listening.
Hopefully you enjoyed it. Go ahead and hit the rating or
review button on, whatever podcasting platform you're
listening on. And while I'm grateful that
Bennett decided not to cancel the show, I do have to let you
know that Bennett Tomlin decided to fire me given my criminal
background. So I guess this will be my last
week with crypto critics corner, you will be joined by Bennett
Tomlin next week and a new host rumor has it that it's going to
be just in son. Thanks for listening for all
this time, everyone. Sorry, this is how it ends.