The CBDC: The new race for absolute power.
In human history there have always been episodes where the great potential of a new technology is discovered, then everyone wants to have it to gain an advantage over others. A very notorious example was the nuclear race that occurred after the nuclear bombs were dropped on Japan, as we saw the governments of the most powerful countries in the world know how important it was to have this type of weapon for the supremacy it gave them over other countries or governments. The nuclear race was developed during the second half of the twentieth century, during the cold war 1945-1991.
But unlike the last century, in this 21st century the race for absolute power is not for the excessive increase of nuclear weapons, but rather, for economic superiority. And we are seeing this in part with the different announcements or interest on the part of the central banks of different countries to create their own CBDC, and these countries include China, the United States, Europe, India, Venezuela, among others. But why so much interest in creating a digital currency?
To know the answer you need to know the characteristics and advantages of a CBDC in this era of digital economy.
A CBDC is a type of digital fiat currency that seeks to gain ground in the world using the power of banks, governments, and the enormous impact that technologies like blockchain and Bitcoin have managed to achieve with their vision of digital money. That is to say that CBDC is a way to give fiat money a new opportunity in the world of cryptocurrencies (a world that is increasingly making its way in a weak and shattered world economy) but **while remaining a control mechanism that is in the hands of a few.
CBDCs are NOT cryptocurrencies. They are hybrids, developed by countries concerned about the emergence of free money - cryptocurrencies - since the existence of this type of uncontrolled money means the complete loss of their economic and financial power in the world. CBDCs are the last desperate attempt of institutions to stay alive in times when society already rejects them massively. They are also a form of money that can help them achieve various political, economic, geopolitical and geo-economic objectives around the world, and where spying on citizens will reach levels never seen before.
*But why now? Because of the fear of losing all the power and control they have gained over the years. Since cryptocurrencies are exposing the weaknesses of fiat money, for example in Nigeria, strong controls have been taken against bitcoin and cryptocurrencies because they are destroying the Nigerian economy and its currency. And while this is totally true, in a sense it is good news because cryptocurrencies are taking away the control and power held by a few to give it to the rest of the people and thus give them opportunities to progress, And that is what governments and banks are afraid of. And since they can no longer ban cryptocurrencies because people won't care and will continue to use them, they are fighting fire with fire by creating CBDCs to continue to maintain their control over the population.
Which countries are leading the development of a CBDC?
First we have China, which so far has successfully completed several pilot tests where it has launched a certain amount of digital yuan to the population to make purchases and transactions, so far it has done so in small cities but soon it is expected to be launched throughout the Chinese territory and later will be for international trade.
Then we now have a number of countries that are terrified and opposed to China's economic policies and are concerned about the breakthrough of the digital yuan, so the United States and the European Union have also made statements about their plans for the creation of digital currencies to confront China and its breakthrough in the field of CBDC.
Countries such as India and Venezuela have also made statements regarding their interest in creating a digital rupee and a digital bolivar to boost their economy in the new digital economy era.
But even CBDCs still have many problems to solve, because although many countries are considering creating their digital currencies, it has been indicated that 44% of central banks are in a situation of legal uncertainty that limits their possibilities to issue and manage this type of currencies, so it is unlikely that most of these financial institutions will issue digital currencies in the short and medium term.
Another problem, speaking of the example of Venezuela, is that a large percentage of people do not have access to technology, so it may be very difficult for them to adapt to a new situation where the entire economy is 100% digital, which is one of the main plans of the current Venezuelan government.
Another problem that CBDCs have is the fact that people obviously know that it is still state money and Therefore controlled by the issuing bank or government, So there is no difference between the actual physical money and a CBDC, that is why problems like inflation, inequality and corruption are the main ones that are mentioned, and also for those reasons is that cryptocurrencies will continue to gain ground and despite governments or major financial institutions saying What is a risk to use or invest in cryptocurrencies, the truth is that around the world is proving the opposite, for example we can see how the NFT and DeFi markets are increasing, also the multiple ways to pay with cryptocurrencies around the world, in Venezuela you can pay multiple services AND in stores with cryptocurrencies, in Spain already sold the first house completely with cryptocurrencies,
in countries like Canada and some European countries cryptocurrency funds are being created, but the most impressive thing is that recently JP Morgan announced that it will allocate 1% of its portfolio to bitcoin as a hedge against the fluctuations of traditional assets.
And looking at this picture from a broader point of view, the question we must now ask ourselves is whether CBDC will really be able to outperform cryptocurrencies or will they be an alternative that will go toe-to-toe with cryptocurrencies. We will have to wait and see, but what we do know is that the world economy is heading more and more towards massive digitalization and this makes the trade and use of cryptocurrencies more and more advantageous.
Posted Using LeoFinance Beta
