Photo by Naomi McKinney on Unsplash: Image and text added by the author in Figma
I can remember the Canadian Trucker rally like it was yesterday, and how the State worked with the banks to freeze the assets and to blacklist cryptocurrency addresses of those that were involved in funding it. In some ways, it was the ultimate dystopian nightmare unfolding in real time where the true nature of the State and its collusion with the financial system rears its ugly head like a monster appearing for the first time in a horror film from the 80s.
For those of us in the West who have been used to so much freedom for most of our lives just seeing the State and financial institutions acting in this way was shocking, to say the least.
It drummed up all my childhood nightmares from Fahrenheit 451, 1984, and Brave New World all mixed into one toxic brew. What it also did was reaffirm my opposition to CBDCs and to mainstream crypto adoption if mainstream crypto adoption means the cryptocurrency space will just become domesticated and fully integrated into the Legacy Finance system it was meant to free us from.
The recent Op-Ed from Daniel Dob on Decrypt brings to light some of the promises and perils of CBDCs, which in my opinion, will eventually be used as a force for control by the State and Financial Institutions even if they say it will not.
The whole Op-Ed is short, to the point, and worth a read. What jumps out for me is this:
Dob says:
Through a CBDC, an issuer would have total authority over its own citizens’ money, right down to reversing, blocking, and tracking an individual’s payments.
So what is a CBDC?
CBDCs are just digital fiat currencies with smart contract capabilities and are controlled by the same people who already control the legacy financial system.
Why do smart contracts matter?
They make the money programmable. That means that money can be coded to do certain things if certain conditions are met, all without any human intermediaries.
The advantages are certainly there. Imagine buying a smart house that will unlock the moment your digital ID is queried by some algo that proves you made a down payment on it.
Or imagine a scenario where you sell something and the money is instantly in your account, 24/7/365 without having to deal with bank holidays or middlemen.
Here is another example. Say you have children and you have a fund for them that they can only access the full amount of once they turn 18. You could write a smart contract for that, and no power on heaven or earth could tamper with it or have access to that money except for that person on that date that they turn 18. The possibilities are endless.
The pitfalls
But do you see where this can go wrong as well? Imagine the same scenario with the house, all of a sudden you are automatically locked out because you didn’t make a payment.
Or imagine money being tied to a social credit system, where having the wrong political views means your money is programmed to not be usable for certain purchases or to be used at all if you are flagged as a suspicious person.
Think social credit is not a thing? Certain places in China already have a system of social credit in place. CBDCS with its smart contract capabilities and social credit systems is a match made in heaven, a dark fantasy of technocrats and authoritarian regimes everywhere.
It sounds silly and dystopian but what if you are too fat and the money you are issued is programmed so you cannot spend it on junk food? Far fetched? Not with digital IDs and social credit systems that track everything you do, from how long you spend on the toilet to how efficient you are at work or which political party you support (if any).
How about negative interest rates programmed into the money that is issued? Or how about a tier system in place with different rates automatically programmed in for different people based on credit scores (social credit and otherwise)?
In short, you would no longer have any control over your money, over how you spend it, where you spend it, or whether you could spend it at all depending on your status in the eyes of the powers that be.
Think about the Canadian Trucker rally bank freeze scenario, only instantaneously being managed by a neatly written algo and AI and not a bunch of bumbling bureaucrats siloed away in separate institutions. This could make the blacklisting and freezing process near instantaneous.
Don’t you think that the State and Financial institutions would use that in a weaponized way? The Canadian Trucker rally incident leaves no doubt in my mind that this would be the case.
As Lord Acton was famous for saying,
“Power corrupts and absolute power corrupts absolutely.”
Social credit systems coupled with the programmable nature of CBDCs would be a ticket to ultimate power and control.
The promise of crypto
The promise of Satoshi and the Cypherpunks was not State-issued or corporate money run by multi-billionaire unelected bureaucrats and technocrats but trustless, permissionless, private P2P digital money for everybody, everywhere. BTC saw a world where everyone was free to transact without prying eyes and to do so in a free and easy way, across borders.
True cryptocurrency is not State issued nor is it issued by Central Bankers. Cryptocurrencies like Bitcoin, Litecoin, and Bitcoin Cash are hard-capped assets, with no CEO, no corporate headquarters, and no central point of failure. There is no head of the hydra. Anybody, anywhere can use them.
So where do we go from here?
Me? I’m fired up to start educating as many people as possible about the differences between CBDCs and real cryptocurrency, and how people can start to use cryptocurrency in their daily lives. Knowledge is power.
The kind of mainstream adoption I want to see is a world where individuals and communities can transact freely. Using real crypto is part of that.