CBDC: future of money or an ultimate surveillance tool?
Hello my fellow bloggers! Today I want to talk about CBDC. More and more countries are experimenting with own digital currencies. Should we be bullish or worried? Let’s dive in and find out.
CBDC or a central bank digital currency is a new form of existence for fiat money. It uses blockchain or a similar distributed ledger to represent the virtual form of a fiat currency of a particular nation (or region). In other words this is a stablecoin (like USDT/USDC) issued by the government. There are no actual CBDCs in circulation nowadays. There are some experiments ongoing in several countries, but it is not considered as a legal mean of payment added to all corresponding laws in a certain country. At the same type this is one of the hottest topics for central banks. If you open a crypto news source, like Cointelegraph and search for CBDC, you will see many fresh posts. For example, I see 8 posts for the past 7 days alone.
CBDC are everywhere. Japan and China go full steam ahead with their pilots, Russian official promise to launch digital ruble in a couple of years, EU is working on a digital Euro, Sweden have committed some tests recently. This makes me think we will actually see first CBDCs soon. The question is do we want this to happen or not?
Paper money have served us well for many generations. It is also obvious we don’t need them anymore. I can’t even remember when I used cash last time. After the start of global COVID-19 pandemic, it is just dangerous to use paper money. I have no doubt digital money will be much better in terms of usability. I’m worried about the main feature CBDC inherit from Bitcoin – traceability. We hear every day from people uninformed about Bitcoin that this is a tool for crime. Such people claim it can be used to hide transactions. The truth is that Bitcoin is technically the most traceable form of money. Anyone can track BTC movements. We use the feature every day, for example, by subscribing to whalealert service. The same feature will turn digital money into an ultimate surveillance tool.
If you live in a stable democratic country this may look like a good feature. It can help to limit crime activities, reduce tax evasion, and help to fight corruption. If you live in a country like China or Russia, it is hard to be this positive. Corruption is a part of our government system. Our central bank will make sure digital ruble won’t be used to limit it. We can be sure governments in authorial counties will close eyes on crime usage of digital money for some groups of people and use it as a surveillance tool against any opposition.
Another reason to be against CBDC as it hurts adoption of crypto. For example, in Russia it is prohibit by law to use BTC as payment method. This is partly dictated by the plan to issue digital ruble – no one wants concurrence from this “private” cryptocurrencies. The good side of CBDC is that it can’t transform global finance and break the dominance of reserve fiat currencies. World economy suffers from US dollar dominance, but can’t exists without it. The use of CBDC can solve this problem as digital money will be better for cross-border payments than fiat dollar. What do you think about CBDCs? Let me know in comments below!
Other articles you might enjoy
What reaching $2 trillion in market cap means for crypto No one believes Bitcoin price is fair Bitcoin achievement nobody is talking about
Disclaimer
I’m not a financial of any kind. I encourage you to check all information yourself and make decision only based on your own opinion. All articles are created for solely entertainment purpose.
If you like this post please vote for it and follow my blog. Feel free to share your thoughts in comment section.
