Fedcoin Objectives

As implied by Value Proposition there are two aspects of Bitcoin that make it a target of state attacks. The state may attempt to introduce a cosmetically similar money, which can be referred to as Fedcoin.

This could be introduced as a split or alternative coin. The objective would be to preserve the superficial aspects of Bitcoin while eliminating its value proposition. This would protect tax revenues while propagandizing Fedcoin as a “safer” alternative to Bitcoin. There are two essential distinctions from Bitcoin. Fedcoin will allow the state to arbitrarily create new units (seigniorage), and to deny transaction (censorship).

The seigniorage objective can be achieved by a hard fork that introduces one new consensus rule. This rule allows the introduction of new units in the case where the state has signed a (coinbase) transaction. The censorship objective can be achieved by a soft fork that precludes confirmation of transactions that lack state signature.

Preventing the state from compelling these forks is the central purpose of Bitcoin system security. The economy guards against the hard fork and miners guard against the soft fork. The resistance of these people preserves the value of the money relative to state controlled alternatives.