Central Bank Digital Money (CBDC) is not "crypto"

[pmbug]

As a tangent to an RPF crypto thread, I commented that CBDCs <> crypto. I spent some time this morning writing an article on the subject to explore it in a little bit more depth. This issue is a fundamental battleground for financial liberty. I hope it helps clarify the issue for people:

CBDCs = TOFO (Tools of Financial Oppression)

 

[Swordsmyth]

Exactly right.

 

[Madison320]

As a tangent to an RPF crypto thread, I commented that CBDCs <> crypto. I spent some time this morning writing an article on the subject to explore it in a little bit more depth. This issue is a fundamental battleground for financial liberty. I hope it helps clarify the issue for people:

https://www.pmbug.com/threads/cbdcs-tofo-tools-of-financial-oppression.7022/

CBDC is just government crypto.

 

[WisconsinLiberty]

Cryptocurrency versus CBDC
https://www.dbs.com/blockchain/cryptocurrency-vs-cbdc.html


The key difference between cryptocurrency and CBDCs is that CBDCs are regulated and issued by the central bank, while cryptocurrencies are decentralised and unregulated. CBDCs, essentially digital fiat money on a centralised blockchain, therefore hold the same value as physical fiat money.

 

[acptulsa]

CBDCs, essentially digital fiat money on a centralised blockchain, therefore hold the same value as physical fiat money.

Yes, the FRN is currently more digital than physical. They didn't print all those billions the last seven years. Probably couldn't have.

In practice, it feels like a distinction without a difference. In reality, there's a big difference between banks making money the new old fashioned way, by typing it into existence on a keyboard, and governments being privy to every single transaction, and the stuff that's earned by mining and transacted in a less centralized way.

 

[Swordsmyth]

CBDC is just government crypto.

If it's government, it isn't crypto.

 

[acptulsa]

If it's government, it isn't crypto.

You think government can't encrypt things?

 

[pmbug]

So glad everyone bothered to read the article this thread is presumably about. Pithy statements like "CBDC is just government crypto." gloss over huge and important distinctions. Folks who think that way are the intended audience for the article that I wrote. Understanding this issue is important.

...
Most central banks publish press releases and papers on their CBDC projects. They are working hard to develop systems that do the same thing that existing crypto systems are doing. The big difference though is that CBDC systems are closed systems (wallet creation is tightly controlled) designed for centralized control whereas cryptos are open systems (wallet creation is free and available to anyone) designed for decentralized control (with democratic systems for governance of network development and management).

Centralized control means that the central bank controls the creation and ownership of wallets. For wholesale CBDCs (aka wCBDC), this means the central bank controls the dissemination of wallets to participating banks. For retail CBDCs (aka rCBDC), they control the dissemination of wallets to the general public. That's a huge task and in order to do it, governments are preparing to roll out digital IDs that will be integrated with CBDC wallets.

In addition to the opportunity for total financial surveillance, CBDCs can be smart technologies. They can be programmed to reject transactions with specific wallets. The central bank can shut off access to anyone, anywhere, any time. That's total financial control. If you think operation choke point or algorithmic debanking are odious today, just imagine how central bank owned AI systems in the future will decide if you are allowed to buy a loaf of bread. Better keep your social credit in the green comrade!
...

 

[Swordsmyth]

You think government can't encrypt things?

A cryptocurrency, crypto-currency, or crypto[SUP][a][/SUP] is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it.[SUP][2][/SUP] It is a decentralized system for verifying that the parties to a transaction have the money they claim to have, eliminating the need for traditional intermediaries, such as banks, when funds are being transferred between two entities.[SUP][3][/SUP]

Cryptocurrency does not exist in physical form (like paper money) and is typically not issued by a central authority. Cryptocurrencies typically use decentralized control as opposed to a central bank digital currency (CBDC).[SUP][11][/SUP]

https://en.wikipedia.org/wiki/Cryptocurrency

Government currency is not crypto.

 

[acptulsa]

Bern is making a solid case for that. He doesn't need anyone trying to "help" by quoting a useless piece of Wikipedia propaganda (that hedges the snot out of itself by using the word "typically" twice) like it's gospel.

He really doesn't.

 

[ClaytonB]

CBDC is just government crypto.

FTFY

 

[ClaytonB]

You think government can't encrypt things?

Irrelevant. The point is that there is zero privacy in a CBDC. The "crypto" part of it is just a gimmick. "Hey I encrypted the Constitution. Now it's the crypto-Constitution!" This makes as much sense as CBDC. It is not crypto at all, it's just government.

 

[pmbug]

ClaytonB and OB both did good jobs expounding on the intrinsic value issue. Thank you. [see split thread here: [SPLIT] "intrinsic" value - OB]

... what makes PMs different from paper cash or Bitcoin ...

With respect to their use as money, I already posted a link to an article I wrote specifically on that very topic:

The Seventh Characteristic of Money

Feedback would be appreciated - as always.

~~~

This thread has drifted a bit off topic.

...
I care a great deal about this subject however, and I will take every opportunity to try and educate folks about it. There are a lot of people (especially gold/silver bugs) that have deeply held negative opinions about (decentralized) crypto and they tend to conflate it with CBDCs without understanding what is happening in the big picture. Whether you like crypto or not, it is the battleground right now in fighting against a CBDC world.

The issue is not gold vs crypto. You are welcome to your value judgements on crypto's worth and let free market competition reign.

The issue *is* CBDCs. Even though I am a self professed goldbug, I am also honest enough to recognize that the War on Crypto is part of the plan for (eliminating competition and) forcing CBDCs on the world. Even if you don't "like" decentralized crypto, you should be supporting it. Financial/economic freedom hangs in the balance. No big deal.

 

[ClaytonB]

Even if you don't "like" decentralized crypto, you should be supporting it.

 

[Madison320]

Even if you don't "like" decentralized crypto, you should be supporting it. Financial/economic freedom hangs in the balance. No big deal.

I support the right of anyone to buy and sell crypto. I'm just predicting it's not going to work and therefore it's not going to help in the fight against cbdc.

 

[Occam's Banana]

ClaytonB and OB both did good jobs expounding on the intrinsic value issue. Thank you.

[...]

This thread has drifted a bit off topic.

I have split all the off-topic posts to a new thread (here: [SPLIT] "intrinsic" value). [1]

Any future posts on that topic should be made to that thread instead of this one.



[1] I've also moved similarly off-topic posts on the same subject from the FTX thread to the split thread. The moved posts from this thread start with this post.

 

[Occam's Banana]

https://twitter.com/jk_rowling/status/1261351775698694147
& https://twitter.com/CitizenBitcoin/status/1261377118379880449

 

[ClaytonB]

https://twitter.com/jk_rowling/status/1261351775698694147
& https://twitter.com/CitizenBitcoin/status/1261377118379880449

 

[pmbug]

Innovations in the decentralized crypto space continue. Solana (SOL) recently announced a new tech called token extensions:

https://www.youtube.com/watch?v=CEuKahqOYbs



It is the advances like this in a free market with crypto innovation that will make it difficult for CBDCs to compete (or justify an existence).

 

[pmbug]

Morgan Stanley has warned about the risk of the U.S. dollar losing its dominance, fueled by growing interest in digital assets, including bitcoin. Emphasizing that the U.S. dollar’s dominance “is being increasingly scrutinized,” the investment bank stated: “A clear shift towards reducing dollar-dependency is evident, simultaneously fueling interest in digital currencies such as bitcoin, stablecoins, and CBDCs.”
...

https://news.bitcoin.com/morgan-sta...could-significantly-alter-currency-landscape/

He was partially right. Consumers are interested in crypto. I don't see anyone interested in CBDCs. And this is the point of this thread. Crypto is the free market competitor to authoritarian CBDCs.