This is an editorial opinion piece by Pierre Gildenhuysco-founder of a social environmental technology startup based in Hong Kong.
Central bank digital currencies (CBDCs) are being actively developed and discussed in many major countries around the world including 19 of the G20 countries and around 105 other countries worldwide. , as shown by Statistics from the Atlantic Council in 2022. They are being rapidly improved and it is expected that some countries such as Australia, South Korea and the US will start implementing CBDCs in the near future, following the lead of China, which has recently taken the lead. began rolling out these tools in early 2022.
This is not recent news, but it is something that should be mentioned periodically, as it should frighten us all or at least concern anyone who uses any form of monetization in their daily lives. . There’s only one potential benefit to CBDCs: Basically, governments cause the collapse of their currency by getting rid of as many of the money’s assets as possible before people realize it’s gone. marketable to anyone else in their own country or worldwide.
CBDCs are said to be inspired by bitcoin – of course, the countries that are implementing them are likely to build them as the perfect antithesis to beautifully built bitcoin – with the only potential similarity being the distributed publicity. However, I postulate that in the eyes of many governments, “public ledgers” signify being owned and therefore accessible only by the State since they are the voice of the people (in theory). ).
The expected horrors of CBDCs have been discussed for a long time by many Bitcoiners on Twitter and elsewhere, but very few that I perceive have anything good to say, which I would like to change.
CBDCs will most likely implement mainly Keynesian principles, as it seems to be the prevailing school of economics in most of the Western world. Any principle adopted by the US CBDC will likely serve as a blueprint for all others. Some of these guidelines could be that money is expiring, automatically taxed, is only spent in certain areas, and is a purely permission-based form of transaction, meaning that people will be forced to make specific trades that they may not want, forced to prioritize time higher, or forced to forego investments in areas of their choice. Buying bitcoin using a CBDC will most likely become impossible or at least increasingly difficult, as no government wants a coin that competes with the one it controls.
This is a scary prospect. How do Bitcoiners and new adopters get more bitcoins before the self-inflating fiat system collapses? Well, this will likely create a more circular economy, as fewer people will want to hold their trading power in the form of a fully centralized and supervised system. They will most likely make the decision to initiate payments and accept bitcoins for each and every transaction. This way, they are not forced to spend money to try to “stimulate economic growth” by spending on expiring CBDCs that they would otherwise save for a rainy day, or to avoid payments. additional unfair taxes. This is very similar to the extremely common practice of many businesses around the world offering their services at a discounted rate when paying in cash to avoid paying taxes on those services.
This is especially common in places like Greece, where the activity is said to have started because the Greeks didn’t want to pay. tax on “foreign” Ottomans who controlled the area at the time. The practice has apparently continued because people felt that imposing additional taxes on everyday transactions from any power, whether local or foreign, was unjust and excessive. In the eyes of some, this is a form of corruption; however, it should not be labeled as such as corruption implies that the people hiding these transactions are in a position of power that they are exploiting, as opposed to them being the ones being manipulated by their government. take advantage of unnecessary taxation.
It is likely that CBDCs will likely eliminate the small amount of paper money that is still part of world economies today. This means that these countries will rely on technology education and word-of-mouth explanations of how it works. This will cause an increase in technological know-how in these countries, meaning it will be easier than ever to reach members who don’t want to use bitcoin once they realize the fake value they have. holding instead of a hard currency.
In other words, a CBDC could be the perfect engine to cause mass adoption and spark the bitcoin circular economy. At the end of the day, no matter what people love their government or oppose its existence, the sheer inconvenience of having people’s transactions censored and restricted based on arbitrary metrics , such as a carbon emission point or a nutritional value point is enough to turn anyone away from that monetary vehicle.
With people’s savings potentially being consumed to spur faster and more spending in general – as has been done with inflationary practices over the past few decades – people will recognize the How bad is Keynesian specific rule. These principles are advocated by many modern economists today and considered true. Ordinary people in the modern world use those principles practically yes invest all of their assets to make sure they don’t go bankrupt by inflation, while running the risk of potential misinvestment. Many people would be significantly more productive for society by growing their own businesses and would also be happier overall if they could hoard their wealth with hard money that always appreciates in value. value with economic growth, rather than being forced to create the meme economy we’ve experienced over the past few years. This will likely get worse when implementing CBDCs.
The implementation and adoption of CBDCs probably won’t change overnight. The probable time it takes for bitcoin to be accepted will depend heavily on the dreaded features that particular CBDCs implement. These CBDCs will cause a lot of pain and suffering over time they are actively used. The pain they will bring and the methods they will perform is nothing new, but simply a continuation of the methods currently in use. This will continue until people start to interact using bitcoin for their wealth and completely move away from any form of fiat currency.
Creating a vibrant, successful circular economy will drive adoption and incentivize the use of bitcoin. Harder currency with higher marketability needs no better incentive to adopt than a currency that quickly fails due to reduced marketability and rising inflation. If no one wants your money, why do you keep it? Today, Zimbabwean dollars are valued only as collectors’ items, but are not used for goods and services. In turn, this allowed multiple competing currencies to take its place (mainly the South African rand and the US dollar) until the dollar inevitably won and all of Zimbabwe became dollarized. . The same is likely to happen with the dollar and bitcoin will displace due to inflation and CBDCs are likely to take away all that is good from the dollar.
There are many other steps that Bitcoin will need to take to enable simple adoption for a larger world population. More platforms and wallets will be needed to start offering Lightning payments and using SMS (text messages) transactions such as recent development in South Africa. The outlook is somewhat hopeful going forward of CBDCs and their ability to push more people out of fiat and into the world of Bitcoin.
This is a guest post Pierre Gildenhuys. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc. or Bitcoin Magazine.