Race to be First

Assume for a second that the case for creating a Treasury Coin is correct, that it will generate hundreds of billions, if not trillions, of dollars for the United States Government via seigniorage. In that case, what is to prevent another government from copying it?

Answer: Nothing.

One might argue that an authoritarian country like China would not be willing to create a new currency with Bitcoin-like decentralization. One might think that a country like France is too committed to the larger Euro project to ever consider Franc Coin. And one might be right!

But if just one country recognizes the potential benefits of creating a government-backed decentralized currency, then nothing prevents that country from starting now. The code for Bitcoin is free and open. The UK (or Australia or Brazil or. …) could create a T-coin tomorrow. It could even steal our name! And there is nothing that the USG could do to stop it.

Nor are countries the only plausible competitor. Nothing prevents, say, Texas from creating Texas Coin, following exactly the plan we have outlined for Treasury Coin. Texas could also incentivize adoption by providing breaks to those companies who pay their Texas state taxes using Texas Coin.

Are Australia or Texas likely to be as successful as the USG in creating a competitor to Bitcoin? No. The advantages enjoyed by the USG are large and multifaceted. But, if the USG does not move first to create Treasury Coin, a different government might try to fill the void.

If you think that the idea of a US state creating its own digital currency is absurd, just consider all the other projects which states undertake. New Hampshire, for example, controls the sale and distribution of liquor throughout the state. Setting up its own blockchain currency is much easier than that . . .