Federal Reserve to explore the creation of digital currency

Published 3:03 pm Wednesday, March 16, 2022

If you missed it, last week President Joe Biden signed an order urging the Federal Reserve to explore if the central bank should create their own digital currency.

There are two types of cryptocurrency — proof-of-work and proof-of-stake.

“[Cryptocurrency] is proof-of-work,” said Lee Jesse, owner of Technology 9, of Albert Lea.

According to Jesse, a proof-of-work is a hash (passed data through a formula) that make up the currency and is accumulated by a miner (a person who doesn’t pay for cryptocurrency). A person wanting cryptocurrency can also go through Coinbase to exchange money for digital currency. And that digital currency can then be used for investments.

“Mining is just kind of proof-of-work so you can build up a little cash,” Jesse said.

Digital currency has been around for over a decade, though he cautioned buying from any random exchange, as some are less popular.

“It’s kind of like the wild, wild west,” he said. 

Jesse said that in doing this Biden was trying to protect investors from the unreliable coins.

“Crypto works on a block-chain system,” he said. “There’s a ticker that goes on in the internet every few minutes during the day.”

And, according to Jesse, when you’re doing a block-chain, you have proof-of-stake and buy the coins up. The coins then go into a server, which accumulates more coins (money from an investment).

During those ticks, distributed systems can be built.

When using bitcoin investors develop both a public and private hash. The public hash is used to identify where a person is buying cryptocurrency from or where it’s using digital currency. The private hash goes into an investor’s wallet

Cryptocurrency is like an iteration of the internet, he said, and that it’s in the early stages and compared coins to stocks. He also believes the more press it receives — and the more money people make from it — the more mainstream it will become.

“With anything else I think it takes the government a while to come up with regulations for all this stuff,” he said. “I think the government’s aware of it, but sometimes the government takes awhile to catch up with this newer technology.”

Jesse said prices on coins have already risen with talk of regulation, but cautioned more stringent regulations would mean prices would have to stand by themselves because the digital currency serves as a commodity. And while Coinbase is the largest exchange currently, it’s not the only one.