[taler-marketing] branch master updated: rework introduction

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grothoff pushed a commit to branch master
in repository marketing.

The following commit(s) were added to refs/heads/master by this push:
     new 19e87b9  rework introduction
19e87b9 is described below

commit 19e87b9a285c928240d455fc67b861108f5c3676
Author: Christian Grothoff <grothoff@gnunet.org>
AuthorDate: Wed Jan 26 19:51:33 2022 +0100

    rework introduction
---
 2022-privacy/privacy.tex | 235 ++++++++++++++++++++++++-----------------------
 1 file changed, 121 insertions(+), 114 deletions(-)

diff --git a/2022-privacy/privacy.tex b/2022-privacy/privacy.tex
index d34b0ac..f3378df 100644
--- a/2022-privacy/privacy.tex
+++ b/2022-privacy/privacy.tex
@@ -31,10 +31,11 @@ thinking about its role in the context of the Digital Euro 
if it wants the
 project to succeed.
 
 Along the same lines, the French council scientific numerique published a
-report on ``Notes and Tokens, The New Competition of Currencies''.  Here, the
-authors make similar false assumptions about inevidable properties of CBDCs,
-going as far as stating that a CBDC is not possible without an E-ID
-system.  Our paper attempts to set the record straight.
+report on ``Notes and Tokens, The New Competition of
+Currencies''~\cite{french2021}.  Here, the authors make similar false
+assumptions about inevidable properties of CBDCs, going as far as stating that
+a CBDC is not possible without an E-ID system.  Our paper attempts to set the
+record straight.
 
 % [oec] Shouldn't we also mention GNU Taler already here as an example for an 
alternative?
 }
@@ -42,117 +43,98 @@ system.  Our paper attempts to set the record straight.
 \section{Introduction}
 \label{sec:intro}
 
-
-Currency is ``\emph{something that is used as a medium of exchange;
-money.}''\cite{dictionaryCurrency}. For the french dictionary, currency (i.e. 
la
-monnaie) is an ``\emph{Instrument of measurement and conservation of value, 
legal means of exchanging goods}''\footnote{``Instrument de mesure et de 
conservation de la valeur, moyen
-légal d'échange des biens.''}, or ``\emph{Unit of value accepted and used in a 
country, a group of countries.}''\footnote{``Unité de valeur admise et utilisée 
dans un
-pays, un ensemble de pays.''} \cite{LeRobertMonnaie}
-
-% Money is therefore used both for exchange and for the conservation of
-% value. Historically, humans have used several objects allowing to exchange
-% easily and at the same time to preserve their value. It could have been be
-% salt (to pay Roman soldiers) or shells (in Africa and in parts of the
-% Indo-Pacific)\cite{cattaneo2016man}. Since antiquity the western peoples have
-% used metallic coins which were  replaced during the twentieth century by 
fiat currencies.
-
-The expected properties of a currency are therefore: conservation of value and 
availability for exchange. One must therefore trust the issuer of the currency 
to obtain these two properties. Historically, minting money was a sovereign 
privilege. The states inherited this privilege and creating money was a 
privilege transferred to the central banks. 
-
-% Actuellement, la monnaie est créé par les
-% banque centrales (wholesale currency) et les banques de détail (à travers des
-% crédits accordés à leurs clients) créent aussi de la monnaie (retail
-% currency).
-
-% Central banks were initially linked to the state, which delegated to them the
-% privilege of minting money. There are currently many states that no longer
-% have a purely national currency. The 11 European states of the Eurozone have
-% transferred the management of the Euro to the European Central Bank. The
-% African countries of the franc zone use the CFA franc, which is ``\emph{a 
fixed parity
-% currency with the euro, whose value is guaranteed by the French treasury}'' 
\footnote{``une contre-valeur à parité fixe avec l'euro, dont la valeur est
-% garantie par le trésor public français''}\cite{WikipediaFrancCFA}.
-
-
-Recently, new currencies, the digital currencies, have appeared. The first and
-best known of them is Bitcoin \cite{nakamoto2008re}. These currencies are very
-heterogeneous and based on different principles. Some use a blockchain
-(Bitcoin was the first currency to use it), others do not and are tocken based
-(Taler\cite{talerPrinciples}).  Among those using a blockchain, some use proof
-of works (Bitcoin), others use proof of stakes
-(Ethereum\cite{dannen2017introducing}). Some are totally transparent
-(Bitcoin), others protect the anonymity of transactions (Monero
-\cite{noether2015ring}).
-
-Most digital currencies seek to have the properties of a currency, the
-conservation of value and the availability for exchange. For the two largest
-of them (BTC and ETH), we must note that since their creation they have been
-able to play the two roles of a currency. These currencies are both available
-for exchange and can be hoarded. These currencies are subject to great
-variations in price, but they are far from the variations of the Argentine
-Peso. Some also have limited availability for real-time transactions, with
-Bitcoin for example requiring a very long validation time preventing its use
-for everyday purchases, but can be used for remote purchases (on the Darknet
-for example).
-
-Central banks manage fiat currencies. These currencies are also mainly digital
-(and therefore virtual), transactions using real coins and bills are becoming
-increasingly rare. The quantity of money, as well as
-the interest rate at which this money is made available to banks, allows 
central
-banks to influence the value of the currencies they manage. The large virtual
-currencies (Bitcoin, Ethereum, Bitcoin cash, Monero, ...) do not have these
-means at their disposal and are self-regulated (with rules written into the
-algorithms). Their characteristics are then closer to those of the gold
-market. The fight against inflation is done by limiting the production of new
-money.
-
-In the rest of this paper, we will study the possibilities of realizing a
-Central Bank Digital Currency (CBDC). There are two types of CBDCs, retail
-CBDCs and wholesale CBDCs. Central banks will be interested in using virtual
-currencies for two main purposes. Virtual currencies can be used to trade
-between banks and between the central bank and banks (wholesale CBDC). An
-example of wholesale CBDC can be found in the description of the project
-Helvetia of the Swiss National Bank\cite{BISHelvetia2020}. Central banks can
-also develop a virtual currency to manage the current expenses of the
-citizens, providing in this case the equivalent to the current bills and
-coins. This is called retail CBDC. The rest of this paper will concentrate on
-retail CBDC.
-
 This article presents our comments regarding two papers that have been written
-by the European Central Bank (ECB)~\cite{ecb2021}  and the French National 
Council for
-Digital\footnote{Conseil national du numérique} (CNNum)~\cite{french2021}. 
-
-In the next section, we explain why the ECB should not be the only guardian of
-the privacy of the european citizen. We see no use in modifying the role of
-the ECB.
-Section~\ref{sec:coupling} presents how the coupling of a CBDC with an
-identity system is a bad idea. We address in
-Section~\ref{sec:disintermediation} the risk of a retail CBDC to promote the
-disintermadiation that would make traditional bank useless and how it can be 
addressed. 
-
-The second part of this paper presents solutions for developing a good
-CBDC. In Section~\ref{sec:tokenization} we present how tokenization can help
-to build a eGold or a system allowing micropayments in Bitcoins and
-Ethereum. We then present in Section~\ref{sec:design} the design principles
-that any retail CBDC must integrate, and finaly present in
-Section~\ref{sec:taler} the GNU Taler system that can be used to implement a
-retail CBDC. 
-
-
-% FIXME: We had discussed doing a brief introduction of terms here:
-% cryptocurrency, CBDC, retail CBDC vs. wholesale CBDC.
-
-% Emmanuel: you wanted to integrate this with your critique:
-
-% Part two of the report is of a much better level, one should still note that
-% the ontological difference between pure digital currencies and traditional
-% currencies is not very well addressed.
+by the European Central Bank (ECB)~\cite{ecb2021} and the French National
+Council for Digitalization\footnote{Conseil national du numérique}
+(CNNum)~\cite{french2021}.  As the French report is using some rather unclear
+definitions of currency and crypto-currency, we will begin with a brief
+introduction of terms and technologies.
+
+We will then explain why the ECB should not be the only guardian of the
+privacy of the European citizen and why coupling of a CBDC with an identity
+system is a bad idea. We address a question raised in the ECB's report on
+the risks of a retail CBDCs promoting disintermediation to a degree that
+might threaten traditional banks.
+
+The second part of this paper presents account-less solutions for developing a
+good retail CBDC. We explain how tokenization can help to build a eGold or a
+system allowing micropayments in Bitcoins and Ethereum. We then propose a set
+of design principles that any retail CBDC must integrate, and finally argue
+that a retail CBDC based on GNU Taler would not only satisfy these principles,
+but also could provide an added value over existing commercial solutions for
+citizens and businesses.
+
+\section{Currency, crypto-currency and payment systems} \label{sec:terms}
 
-
-% After introducing retail vs. wholesale CBDC, we should
-% mention French report's confusion between retail CBDC (SNB-Taler
-% paper) and wholesale CBDC (Swiss Helvetia project).
-
-
-\section{The ECB cannot be the Guardian of Privacy}
+Currency is ``\emph{something that is used as a medium of exchange;
+  money.}''\cite{dictionaryCurrency}. Form the French dictionary, currency
+(i.e. la monnaie) is an ``\emph{Instrument of measurement and conservation of
+  value, legal means of exchanging goods}''\footnote{``Instrument de mesure et
+  de conservation de la valeur, moyen légal d'échange des biens.''}, or
+``\emph{Unit of value accepted and used in a country, a group of
+  countries.}''\footnote{``Unité de valeur admise et utilisée dans un pays, un
+  ensemble de pays.''}~\cite{LeRobertMonnaie}
+The main desired properties of a currency are therefore: conservation of value 
and
+availability for exchange.
+
+For more than a hundred years, most currencies were issued by central banks.
+Over the last decade a large number of new crypto-currencies have appeared,
+and these currencies are not tied to any central bank. The first and best
+known of them is Bitcoin~\cite{nakamoto2008re}. The various crypto-currencies
+are very heterogeneous and based on different principles. Some use accounts
+with balances with a blockchain used to establish a consensus on the account
+balances (Bitcoin was the first currency to use it), while others allow the
+transfer of fungible tokens that are disassociated from any transaction
+history (Z-cash\cite{zcash}).  Among those using a blockchain, some use proof
+of work (Bitcoin), others use proof of stake
+(Ethereum~\cite{dannen2017introducing}) or most recently proof of wasted human
+lifetime (Play to Earn~\cite{p2e2022}). Some are rather transparent (Bitcoin,
+Ethereum), while others allow private transactions
+(Monero~\cite{noether2015ring}).
+
+Crypto-currencies do not have a central bank controlling the rules governing
+the currency. Instead, software developers program rules into algorithms. New
+rules are adopted if they find the consensus of the ``miners'' (for
+crypto-currencies using proof-of-work) or ``stakeholders'' (for
+crypto-currencies using proof-of-stake).  In general, the rules are written to
+produce some artificial scarcity of the currency minted according to the
+rules, so as to convince hoarders of the value of their limited-edition
+bitstrings.  A key design challenge is thus to provide ample rewards to
+``miners'' and ``stakeholders'' that facilitate transactions while maintaining
+a limited supply.
+
+Crypto-currencies are beginning to gain functionalities through the addition
+of payment systems on top of these basic currency mechanisms.  In general, any
+payment system enables participants to make financial transactions, but does
+not in itself establish a new currency. Compared to the transaction mechanisms
+offered by the underlying currency, payment systems can provide credit, make
+transactions faster, cheaper, more private or more usable. Payment systems may
+require their users to trust payment system providers, as these intermediaries
+may introduce new failure modes into the system. As a result, payment service
+providers are generally regulated entities, at least when they deal with
+traditional fiat currencies. Examples for payment systems used with
+crypto-currencies include the various proprietary crypto-trading platforms as
+well as distributed layer-2 solutions like the Lightening
+network~\cite{lightening}.
+
+In the rest of this paper we will focus on the design principles for a Central
+Bank Digital Currency (CBDC). There are two types of CBDCs, retail CBDCs and
+wholesale CBDCs. Wholesale CBDC is expected to be primarily used to trade
+between banks and between the central bank and banks. An example of wholesale
+CBDC can be found in the description of the project Helvetia of the Swiss
+National Bank~\cite{BISHelvetia2020}.\footnote{We note that the French report
+  confuses project Helvetia (which implements a wholesale CBDC) with an
+  entirely different proposal~\cite{chaum2021} for a retail CBDC.}  In
+contrast, a retail CBDC is intended to be used by citizens and businesses in
+their daily lives for their ordinary expenses, basically providing a form of
+digital cash that is, like physical cash, a liability of the central bank.
+The rest of this paper will concentrate on retail CBDCs.  Our discussion will
+assume that the currency for the CBDC already exists, and thus focus on the
+requirements for the payment system that facilitates ordinary people to make
+digital transactions with such a currency.
+
+
+\section{Central Banks cannot be the Guardian of Privacy}
 \label{sec:guardians}
 
 The ECB's report starts with a public interest-oriented self-image of central
@@ -711,5 +693,30 @@ they should keep up even if we question their universal 
realization.
 
 \end{document}
 
-Yet to integrate:
+Cut for brevity:
+
+
+
+Most crypto-currencies seek to have the properties of a currency, the
+conservation of value and the availability for exchange. For the two largest
+of them (BTC and ETH), we must note that since their creation they have been
+able to play the two roles of a currency. These currencies are both available
+for exchange and can be hoarded. These currencies are subject to great
+variations in price, but they are far from the variations of the Argentine
+Peso (which is commonly considered to be a currency). Some also have limited
+availability for real-time transactions, with Bitcoin for example requiring a
+very long validation time preventing its use for everyday purchases, but can
+be used for remote purchases (say for international remittances) where
+latencies and costs are actually competitive compared to existing payment
+systems.
+
+Central banks manage fiat currencies. These currencies are also mainly
+digital, as often the actual transactions are facilitated by digital payment
+systems bolted on top of the currency provided by the central bank.  While it
+is in most cases still possible to use the central bank provided physical cash
+directly, transactions using real coins and bills are declining. The quantity
+of money, as well as the interest rate at which this money is made available
+to banks, allows central banks to influence the value of the currencies they
+manage.
+
 

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