Author: Tey ElRjula
“The way I view the Federal Reserve, and any other institution is its basically, a computer program just like Bitcoin, it’s an open source computer program.”¹
David Andolfatto – Vice President St Louis Federal Reserve Bank.
The statement made in January 2015 is quite tricky, and the metaphor would be similar to compare a pair of Soccer shoes to another of Running shoes.
As one reddit user puts it eloquently: “if you relax the concrete requirements of a concept so much like this you are perfectly capable of stating that anything is anything else. “
So, is the Federal Reserve a protocol like the Bitcoin protocol?
In general, a protocol is an unwritten rules or guidelines that are peculiar to every culture, organization, and observed by all parties in the conduct of business, negotiations, politics ….
Definitely protocols exist within the Federal Reserve, whether it is how to address the former Chairman of Federal Reserve Bank, or a re-introduced bill in the US House of Representatives like “The Federal Reserve Transparency Act”.
In its technological term, protocols represent the specific sets of rules and instructions that each computer follows to communicate with one another.
TCP/IP, HTTP, FTP, DNS, SSL and many more protocols are embedded in the Fed’s system. Yet still it does not level up the similarity to Bitcoin’s Protocol.
Since 1791 with the establishment of First Bank of United States, to 1913 the Enactment of Federal Reserve Act, central bank protocols remained the same:
“banking cartels compelling the common man to maintain and support them”.
The claims of similarity between the Fed’s system and Bitcoin’s protocol in constitution, law, governance of money and its payment processes are in-accurate.
The Fed’s protocol is clustery centralized, and definitely not Open Source! The programs, codes, and rules used are NOT free to the public to view, edit, and redistribute.
Although the Congress created the Federal Reserve in 1913, yet it had no constitutional power to do so. It has ceded control over the value of money to central “private” banks.
Article I, Section 8 of the U.S. Constitution lists the powers of Congress. Among them are the power to borrow money on behalf of the United States and the power to coin money, establish currency and determine its value. The American Constitution makes no reference to a centralized bank to carry out these actions.
The comparison fails to stand when the Bitcoin protocol embeds the governance of money and its supply, even payment processes in a public, open source, and decentralized manner. With rules based on algorithm, mathematics, probability, science, cryptography and economics.