The U.S. Federal Reserve will not only issue its own cryptocurrency but will also make sure Americans use it. That’s the prediction of currency guru Doug Casey, who has an uncanny record of being correct about economic and political trends. His latest book, Surviving Fedcoin: How to Protect Yourself (and Profit) from America’s Coming Currency Change, argues that the U.S. government will issue its own bitcoin—viewed as “the last arrow” in its monetary quiver.
What is Fedcoin?
Fedcoin refers to a cryptocurrency or protocol established by a central bank. In 2015, economist Albert Szmigielski suggested the Fed could premine all currency on a blockchain, issuing it in the genesis block and then exchanging Fedcoin for dollars at 1:1. J.P. Koning elaborated that the Fed would create a new blockchain called Fedcoin, with special authority to create and destroy ledger entries, while maintaining two-way convertibility with paper money and electronic reserves.
Mathematician Sina Motamedi provided a more technical explanation: the central bank could fork the Bitcoin protocol, retaining decentralized transactions but allowing the central bank to set block rewards discretionarily, achieving “decentralized in transaction, centralized in supply.”
Why Would the Government Issue Fedcoin?
Casey dismisses the stability theory. He argues the U.S. government is bankrupt, with liabilities far exceeding assets. Social Security is insolvent, and 47% of Americans are net recipients of government transfers. Past tools like quantitative easing and near-zero interest rates are exhausted. Fedcoin offers the government unprecedented centralization of supply and transparency of demand, enabling unprecedented economic control.
Adoption would be driven by requiring Fedcoin for tax payments or entitlement access, gradually pushing toward a cashless society. Casey warns: “With blockchain and Fedcoin technology, they can see everything, everywhere. Without cash, you have no privacy.” Every transaction is recorded, allowing the government to tax or even confiscate accounts at will.
Privacy vs. Control: The Ultimate Battle
Fedcoin could become the anti-cash tool. Physical cash allows anonymous transactions; Fedcoin would let the government know exactly who receives money and what it’s spent on. Smart contracts could programmatically prohibit certain purchases—banning obese people from buying sugar, gun enthusiasts from buying ammunition, or teenagers from buying beer. The government could control society without passing laws.
Casey likens this potential revolution to the Industrial Revolution. Bitcoin and blockchain were originally liberating technologies, but entrenched powers will try to co-opt them. The best response is better technology that leaves those who wish to tame it behind.
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