Crypto vs CBDC: What is the future of money?
CBDCs are being tested in countries all over the world. Are there benefits, what are the risks, and what does it mean for crypto?
One coin to rule them all?
Central bank digital currencies (CBDCs) are a major topic in the crypto community. That said, I think it’s safe to say crypto investors are less than enthusiastic about CBDCs.
The general tone ranges around CBDCs being a tool for complete and total domination by tyrannical overlords. Here are some recent Twitter mentions for example:
Sounds pretty terrifying. I certainly don’t want to be “enslaved” economically.
Another doozy. I mean, how terrible.
Some elite overlord somewhere could keep me from buying Cheerios because I voted Dwayne “The Rock” Johnson for president in 2028!
Or this “living shit” scaring, Jabba the Hutt lookalike:
This clip has been shared all over crypto Twitter. One problem with the post is Tubby Checkers there didn’t actually say your “freedom” to buy meat will be limited to a carbon credit score.
In fact, he never even mentions a carbon credit score. That’s just tossed in for some good old fashioned virtue signalling.
He does spend time talking about capital efficiency and things like ensuring CBDCs are carefully designed to “not become a vehicle for fragmentation, financial instability and spillover.”
So scary!
What is a CBDC?
It’s a digital ledger.
That’s it.
The difference between that and what we’re using now is the CBDC ledger is maintained by the central bank, instead of your local bank.
The current digital ledger system (e.g., your checking and savings account, your debit card, your business account, etc.) is maintained by a retail bank.
But they, in turn, maintain a ledger with the central bank. Meaning, ultimately, all of your financial transactions are already being recorded by the central bank.
There is also the little wrinkle of cash. But that cash is also maintained on the same digital ledger at your retail bank (or credit union).
But fewer and fewer people are using cash these days, even us crazy freedom loving Americans:
But wait! Doesn’t this mean that 41% of Americans’ purchases are already being tracked by Big Brother?
Yup.
Not to mention — right now — Big Brother can freeze your bank account, garnish your wages, block your credit cards, track your credit card transactions, and subpoena your bank records.
Let’s not forget the fact that every time you deposit large sums of cash, your friendly local banker is also required by law to file a Suspicious Activity Report on you.
Did I mention they can also issue a geo-fence warrant for your phone’s location data?
And they can use commercial facial recognition databases to look for you.
And they can use public DNA databases to find you, even if you’ve never submitted a DNA sample.
Of course, if you’re a freedom super-maxi, you could always pay in cash, and always demand to be paid in cash.
To be fair, it seems to work for drug dealers. And migrant farm workers. Let’s be real though — even prostitutes are accepting credit cards now.
But, your quest for freedom and anonymity doesn’t end there. You also have to:
Never use a cell-phone or internet connected device, never buy anything on credit, force all of your relatives to never use a DNA service, always wear a mask, alter your gait, never post to social media, never get a Social Security Number, never register for Selective Service, never borrow Federal money, never go to school, never receive a vaccination, never travel out of the country, never get a driver’s license, never have a bank account and never receive a birth certificate.
And if you can pull all that off, you’ll be free from your elite overlords!
Good luck with that.
Oh, wait.
I forgot to mention civil asset forfeiture laws.
They’re pretty nasty. So, even if you could (and you can’t) do all that stuff above, they can still “enslave” you financially.
Point is, the “elites” or the tyrants, or whatever bogeyman you want to dream up can already make your life absolutely rekt.
They don’t need a CBDC to do that.
Then why are “they” pushing CBDCs so hard?
They’ll probably be far more capital efficient. They’ll probably make it a lot easier for people that currently struggle to access financial services.
They’ll make it easier to ensure local currencies don’t get undermined by foreign currencies. And, in developed economies with reasonable legal safeguards, they’ll probably afford a decent amount of financial privacy.
That last bit doesn’t mean much.
You don’t have any financial privacy right now.
CBDCs aren’t going to change that. Well, it might get a little worse (or a little better) at the margins.
But for the average Google using, Facebook posting, Twitter tweeting, credit card spending, public school attending, gainfully employed, Social Security registered American, it’s not going to change boo.
But CBDCs are an attack on crypto!
One of the funnier things I see people getting bent out of shape about is how every time someone from a central bank mentions a CBDC, they also toss in a little dig at crypto.
Like this quote:
If CBDCs are designed prudently, they can potentially offer more resilience, more safety, greater availability, and lower costs than private forms of digital money. That is clearly the case when compared to unbacked crypto assets that are inherently volatile.
Why the drive-by on crypto BRUH?!?!
Is it because they’re “going after” crypto? Maybe. They also have another problem that crypto caused all by itself.
Crypto is plagued with fraud, hacks, rug-pulls, and exploits. Not to mention, it’s volatile as shit and everyone knows someone that has been absolutely rekt by playing in the crypto casino.
Meaning, most people don’t understand crypto, they are afraid of crypto, and they want nothing to do with crypto.
Don’t forget there are still people writing checks and paying bills by sending them in the mail. They don’t trust electronic anything.
And all the terrible stories about things like Terra Luna collapsing and losing $60 billion dollars overnight doesn’t do much to calm the nerves of Grandma Paper Pants.
So part of rolling out a CBDC is to distinguish it from crypto, even though it’s going to be using the same technology. For a CBDC to work, especially with marginalised populations, it has to be sold as a safe alternative to cash.
That would have been hard anyway. Crypto made it harder.
CBDCs are already being used
Everyone seems to point to China as the example of how a totalitarian government might abuse the power of a CBDC. But China is doing that already with their regular currency.
But here’s what those evil elites are actually thinking about when trying, or thinking about issuing a CBDC:
All of the countries that are piloting, or issuing a CBDC designed them so they limit competitiveness with traditional bank deposits.
Some of the ways they are tinkering with that is by limiting interest payments, or limiting how much CBDC a person can hold. Those quantity limits are also there to help onboard new users, especially marginalised users.
The last part is also related to the need and desire for anonymity. The evil elites somehow recognised people may legitimately want or need financial privacy, whether buying a gift for a spouse, or from being too poor to afford identification.
So they all had tiered systems in place. Meaning, if you were just doing small transactions, you wouldn’t need to identify yourself or do any KYC. But you’d also be restricted on how much currency you could hold, move, or receive.
Weird.
Isn’t that the same way centralised crypto exchanges work?
Those crafty evil elites must have stolen their idea from BitGet!
These evil overlords also spend a lot of time thinking about financial stability. Concerns about preventing bank runs and fraud, you know — evil overlord stuff.
Being able to process transactions without double spending while offline takes up a lot of evil overlord brain power too.
They are pretty excited about saving time and money on cross-border payments. I think we can all agree that’s an obvious one for evil-doers.
Everyone knows the first step to global domination and enslavement of the Sheeple starts with efficient, non-intermediated, cross-border payment flows.
The bastards!
Conclusion
Are super-genius evil elites with a woke, anti-carbon agenda pushing CBDCs to further their goal of mass enslavement?
Maybe.
I suppose anything is possible. Seems pretty far-fetched to me. I recognise it makes for a more dramatic angle.
And I also recognise it’s not really how the world works. There’s a reason grand conspiracy theories about elites ruling the world in secret meetings work so well.
They actually help people navigate the stress of uncertainty. It’s far more comforting to imagine a group of elites in charge, even if they’re evil. Why?
Because at least someone is in charge. If not, the world really is chaos, and we’re all at the whim of forces beyond our control.
I think central bankers are an over-confident lot that often suffer from enormous cognitive biases and distortions. I also know they’re a very sober, generally boring class of human being.
Kind of doesn’t matter though.
At the end of the day, we gave up freedom and privacy years ago. KYC rules happened during my lifetime. People raised a real fuss about them in 1999.
They gave away the farm without a second thought after 9/11. The same exact, verbatim rules everyone threw a fit about in 1999 passed without a blink in 2001.
Not to mention NSA surveillance, FISA courts, extraordinary rendition, private banks being forced to report on citizens, and literally thousands of other MAJOR infringements on individual and property rights, privacy rights and civil rights in just the last 20 years.
Of course, people do bitch about all of those things. On Twitter.
And once a CBDC does come to America, people will bitch about that too. On Twitter.
And then the next news cycle will start and they’ll find something else to bitch about. On Twitter.
Starting to see a pattern here?
Whether a CBDC turns out to be the start of an elite overlord master plan to enslave me, or just a financial innovation, I’m not losing sleep over it either way.
I already have an alternative — a DDC if you will.
It’s called Bitcoin.
These are just my opinions. I’m not a financial advisor, this isn’t financial advice, and always DYOR. Following any of these ideas might cause you to lose all of your money. I am 100% serious about that. I like tinkering with this stuff, but I’m on record acting like a total baboon. Invest accordingly.
Until next time, be safe, be smart and be sure to tie the camel.
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