The backstory
Several years ago, before even Central Bank Digital Currencies (CBDCs) became a common term, I said government-created stablecoins would play an important role in the adoption of cryptocurrencies and would be great for businesses. Blockchain and cryptocurrency technology being a protocol for money, businesses could avoid the high fees from card networks and even payment providers.
Many bitcoin maximalists may be against CBDCs and I have to disagree to some extent. I say this as a Bitcoiner but I do admit I was once against Bitcoin. I take the contrarian view where CBDCs can bring positive impact on society and business. Fiat and CBDCs will still exist at least for a long time, while BTC is the best money you could have. And I highlight that I differentiate between money and currency.
The original thought
When I initially thought of my hot take, it was that in 5–10 years time , everyone will be saying “Not your keys, not your money” . But maybe not , here’s why I think so:
With CBDCs implemented, people would get used to the concept that you only own the money in your crypto wallet. Because eventually they would figure out you can only be certain you can withdraw your CBDCs/tokens by using non-custodial DeFi products , some of which would be created by the banks or trusted institutions.
The paradox and the reason
Therefore, this brings up an interesting paradox to claim that these individuals would saying this. Because why would they care about CBDCs/ fiat, when fiat loses its value and diminishes in purchasing power over time — hello inflation! These users would be holding Bitcoin, the best store of value in the modern 21st century on the planet called Earth. Hence, my conclusion on how CBDCs could actually spur the adoption of Bitcoin. However, this does assume the CBDCs are public and open-sourced with the spirit of OpenBanking and not a centralized system where you don’t really own a wallet like having to use approved wallet providers.
I would like to note that this isn’t a prediction but rather an interesting thought experiment.
A caution to those in policy making
As a final thought, there is a caveat when I say CBDCs benefit society. I strongly advocate for governments to not use CBDCs as an excuse to undermine the rights of privacy, a human right recognized in the UN Declaration of Human Rights. Many would say that the only reason for governments to consider implementing CBDCs is to use the power of blockchain technology and the transparency of transactions (at least transparent to a higher authority) so that they can track every user’s transaction.
How dystopian would it be if modern democratic societies devolve to what would eventually become a framework for a social scoring system.
#techhottakes #bitcoin #cbdc #privacy
Photo by Karolina Grabowska: https://www.pexels.com/photo/selective-focus-of-bitcoins-on-laptop-computer-5980738/