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Digital Dollar could be issued on the Ethereum blockchain

  • A bill in the U.S. House of Representatives contemplates the issuance of a digital dollar.
  • A project of the blockchain Hyperledger consortium, eThaler, could use the Ethereum blockchain to issue a digital dollar.

The United States House of Representatives is considering sending a direct subsidy to American citizens. The subsidy is part of a stimulus package announced by the US government to counter the effects of the COVID-19 pandemic on the national economy. While the bill is still being debated, it considers the issuance of a digital dollar.

The draft law provides that the US government could provide up to $2,000 for the country’s weaker citizens and $1,000 for minors. To ensure that citizens receive the money, the bill proposes to create a system of digital wallets that can receive the digital dollar. The traditional markets and the crypto market responded positively to the announcement and the US government’s stimulus package. However, the US government was criticized for raising a record $2.2 trillion in new government debt for this purpose, while the measure still has to be approved by Congress.

Ethereum based eThaler in discussion for digital USD

The members of parliament behind the proposal already have projects in the pipeline that could implement the issuance of a digital dollar. According to Forbes, the Hyperledger Consortium and its eThaler project could be the perfect solution. The eThaler project will allow the issuance of a digital central bank digital currency (CBDC) on the Ethereum blockchain.

Among others, the consulting companies Accenture and InfoSys and the Itau Bank in Brazil are working on the project. The group is developing on the basis of Hyperledger Besu, an enterprise version of Ethereum developed by ConsenSys. Commenting on the idea, Hyperledger chairman Vipin Bharathan said:

That’s a significant step, and I argue that such crisis situations always produce new ideas, and acceptance of new ideas, that will live on long after the coronavirus has burned through the world.

Furthermore, eThaler has also implemented the Token Taxonomy Framework (TTF) emission system and is compliant with the ERC-1155 token standard. Unlike other Ethereum’s ERC-20 standard, ERC-1155 is a standard that supports multiple types of tokens. For example, a central bank could use it to mint fungible digital dollars or bonds. In addition, the GitHub site of the project reveals:

A fiduciary token will remove one of the main obstacles to any value transfer network, a fundamental requirement for frictionless digital capital markets.

The eThaler can be divided, just like Bitcoin, in the decimals required by the issuing bank. This feature will make it suitable for micro transactions. The eThaler is fungible by design and will have the value of the underlying asset (in this case, US-Dollar). However, it can also be suspended or “paused” by reducing the decentralization of the project. About the project and the idea of issuing a digital dollar, Bharathan said:

It may not start off with a bang with a wallet holding a trillion dollars. But over time, it may.

The information currently available are very limited. Moreover, it seems questionable whether a digital US dollar could really be realized within some days. The developments therefore remain to be seen.

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Reynaldo Marquez has closely followed the growth of Bitcoin and blockchain technology since 2016. He has since worked as a columnist on crypto coins covering advances, falls and rises in the market, bifurcations and developments. He believes that crypto coins and blockchain technology will have a great positive impact on people's lives.

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