Your Government Actually Likes Crypto – As Long As It’s Theirs

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Central Bank Digital Currencies (CBDCs) are the digital form of a country’s fiat currency issued by its central bank. They are like cryptocurrencies in that they are issued on a blockchain. However, whereas cryptocurrencies are built to be decentralized, using computers controlled by different individuals across the world, CBDCs are not. They are exclusively controlled by the government, in the same way, they controlled print money, only now the control is tighter. In current applications, they range from tokens used only between banks to tokens available to the general public.

 

How is that going so far?

CBDC Tracker says that “14 countries, including China and South Korea, are now in the pilot stage with their CBDCs and preparing a possible full launch.” It is now popular saying that China hopes to use its first-mover advantage with CBDCs to trump the dollar in relevance, and therefore, geopolitical power.

 

What countries are into CBDCs?

Quite a lot of them. 87 countries (representing more than 90% of global GDP) are looking into CBDCs. 9 have already launched, the latest being Nigeria with the e-Naira. South Africa, Malaysia, Australia and Singapore are partnering up in a test-run of cross-border electronic payments called Project Dunbar. The EU, the UK, Japan, Canada, the Bahamas, and the Marshall Islands are all into CBDCs at one phase of development or another.

Apparently, there is a lot of motivation for your government to get into CBDCs.

This might sound contradictory because the popular view is that governments don’t like cryptocurrencies like Bitcoin – and that is mostly true. However, that doesn’t mean they don’t like blockchain, the distributed ledger technology that Bitcoin runs on. 

 

Governments all over the world are exploring how to use blockchains to power their CBDCs. The issue is about who controls the currency. Most governments don’t like not having control over what you can or cannot do with your money, and the proof of concepts and released plans of the EU and other countries have shown that in the world of CBDCs, your privacy will be mostly a fairy tale.

 

What Do You Mean, “My Privacy Will Be A Fairy Tale”?

Buying and selling stuff with cash is something that gives you some degree of privacy on its own. You don’t write your name and what you bought when you shop with cash in a supermarket. When you shop with a credit card, it’s different. Now the government can find out what you spent your money on. It is the same when you spend with that credit card over the internet. CBDCs are like credit cards but without the card. 

So we are going from cashless to cardless. You would have digital cards: cards that work without the need for a plastic rectangle card that you’d have slotted into an ATM or POS… You would have an e-wallet, just as with cryptocurrencies, but an e-wallet that the government can freeze in the same way they can freeze your bank account.

With CBDCs the government reserves the right to know what you did with your money, and the right to stop you from using your money if they don’t like what you did with it. The speed of blockchains makes this faster for them.

 

But It’s All For The Good, Isn’t It? Anti-terrorism and Anti-Money-Laundering and So On, Right?

 

Depends on who defines what “good” means.

As far as CBDCs are concerned, it’s the government officials and the banks that define what good means. Having everyone compulsorily transact in a monitored way will make it easier to trace people who fund terrorists. It will make it easier to trace people who steal money from public coffers or company accounts. It will greatly assist law enforcement agencies in their investigations. Moreover, what’s there to be afraid of if you’ve got nothing to hide?

 

Unfortunately, it’s not that simple.

 

The government’s definition of ‘good’ does not always favour you, the person who isn’t in power at the moment. Look at Canada right now,  the government is threatening to freeze the accounts of people who helped finance the Truckers’ Protest

 

According to Canada’s Justice Minister, if you are pro-Trump and you’re donating, you should be worried about your hard-earned money.

 

and this is a government that claims to be liberal. What would it be like if they didn’t feign being liberal?

Technology can only help you find thieves. It cannot make you care whether there was a robbery or not. CBDCs are no exception. All the (Know-Your-Customer) KYC and (Anti-Money Laundering) AML protocols in the world will not help us properly punish defaulters if they have coverage from powers higher than us. Instead, CBDCs can easily become a tool for government officials to easily target their opponents as we see in Canada today.

 

What Can Be Done About It?

For starters, get educated about cryptocurrencies and about CBDCs. Also, learn how to protect your privacy. Education will show you the risks of cryptocurrencies, and how to avoid them. It will show you what is at stake with CBDCs and how you can avoid living in a surveillance state. Then you can lend your voice to decision-making processes at whatever government level you can influence.

And, try to educate others as well.

CBDCs are coming, even if governments are being infinitely slow about it. Governments are positioning them as competitors to the private sector’s blockchains, and as an incentive to tighten their policy around anti-money laundering, which is a good thing. CBDCs, however, are extensions of the centralized censored system that cryptocurrencies rose to resist, and the fact of CBDCs being deployed on blockchains does not change that.

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Disclaimer: The views expressed in The Coin Times are solely those of the authors cited. It does not constitute The Coin Times recommendation to buy, sell, or hold any investment. Before making any financial decisions, it is recommended that you undertake your own research. Use the information supplied at your own risk. For additional information, please see the Disclaimer.

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