Im Just posting to share, you actually decide! CBDC: Central Bank Digital Currency Is Coming
Digital currency is and has been a huge topic within the past few years, especially with the growth of Bitcoin, Ethereum, and several other cryptocurrencies. But with so many other new and popular developments, these new currencies have been shrouded with controversy and a polarization of opinion.
Now, a new development is on the horizon: Central Bank Digital Currencies (CBDC). But don’t be fooled, it’s not the same as cryptocurrency, nor does it bring the benefits crypto offers. Instead, CBDC might just be a new version of the same old central banking system.
A much anticipated paper by MIT and the Boston Fed is expected to be released this fall. The paper will include details of what a U.S. CBDC might look like.
A growing number of people have become quite critical of the current central banking system. Many have described the Federal Reserve as a cartel, a gang that is engaged in unethical actions against the citizenry. If you follow the money and dive deep into how our central banking system really works, it’s not hard to see why people have that perspective.
Because of this perspective, many actions taken by the “financial elite”, like the establishment of a CBDC, are noteworthy, and raise suspicion that these measures will be implemented for more power and control.
Former President of the Federal Reserve Bank of Boston Eric Rosengren provided some key insights as to what a central bank digital currency (CBDC) might look like.
“Rosengren broke out the ecosystem into three buckets: bitcoin, stablecoins, and CBDC, which he referred to as ‘digital currency’….Rosengren also revealed that blockchain and distributed ledger technology were not part of the design in a hypothetical U.S. digital currency. Rosengren stated it is, “…less likely that we are going to be designing a digital currency for the blockchain or for a particular blockchain.” According to Rosengren, he further envisioned a central bank digital currency not as a stablecoin, but rather as a retail payment or substitute for cash. “You can’t pay for something on the internet for ( is ‘for’ supposed to be ‘with’?) cash so the digital currency provides you a mechanism to use cash but in digital form,” said Rosengren”Forbes
So, CBDC is basically cash in digital form. Digital cash that can and will be used to make transactions in everyday life, something that not all cryptocurrencies are designed for. While some cryptocurrencies can be used for these purposes, others, like Bitcoin, are more of an asset for storing wealth. That being said, Bitcoin can still be used to purchase some goods and services and is now legal tender in El Salvador.
There are differences between CBDC and cryptocurrencies. While both can be seen as ‘digital’, their differences are vast and one should not assume that CBDC is the solution cryptocurrencies are offering.
One of the most important differences is that cryptocurrency is on a blockchain ledger, while CBDC isn’t. A blockchain is a new way of creating databases that has huge potential in many industries. Specific to currency, blockchain allows for decentralization of currency, a transparent ledger of transactions and it makes it so no single entity can control all the currency and manipulate its value easily. It also means transactions cannot be deleted or altered, and everyone can verify it.
This level of transparency is not typically favored by those who control an entire country’s money supply – i.e. central banks.
To go deeper, Bitcoin is not a privately owned currency. It’s not part of the “system.” Your wealth in Bitcoin cannot be frozen, controlled, or seized by governments. In fact, governments don’t have any “power” over these cryptocurrencies as they do with modern day currency – the type of control government would have over CBDC.
In speaking about some of the values of Bitcoin, and perhaps other cryptocurrencies, Chamath Palihapitiya, a former Facebook executive said,
“This is a fantastic fundamental hedge and store of value against autocratic regimes and banking infrastructure that we know is corrosive to how the world needs to work properly,” Palihapitiya said. “You cannot have central banks infinitely printing currency.” Chamath Palihapitiya on Bitcoin
With all this in mind, CBDC will be no different than modern day currency, it’s just going to be digital, that’s all. CBDC is not an embrace of cryptocurrency, which remains something entirely different, something governments don’t like and have no control over.
National Security Agency (NSA) whistleblower Edward Snowden, who leaked documents exposing a massive global surveillance being used by the NSA explains,
Rather, I will tell you what a CBDC is NOT—it is NOT, as Wikipedia might tell you, a digital dollar. After all, most dollars are already digital, existing not as something folded in your wallet, but as an entry in a bank’s database, faithfully requested and rendered beneath the glass of your phone.…
In every example, money cannot exist outside the knowledge of the Central Bank. Bitcoin, Ethereum and other cryptocurrencies exist outside the knowledge of the Central Bank.
Instead, a CBDC is something closer to being a perversion of cryptocurrency, or at least of the founding principles and protocols of cryptocurrency—a cryptofascist currency, an evil twin entered into the ledgers on Opposite Day, expressly designed to deny its users the basic ownership of their money and to install the State at the mediating center of every transaction. Snowden
Snowden explains that proponents of CBDCs believe that strictly-centralized currencies are the realization of a bold new standard “where every central-bank-issued-dollar is held by a central-bank-managed account, recorded in a vast ledger-of-State that can be continuously scrutinized and eternally revised.” They believe that this will make everyday transactions safer and easier to tax, making it impossible to hide money from the government.
He argues that this is simply a step to increase the power and control of the surveillance state, one that continually finds ways to take away our right to privacy for the sake of “national security.” CBDC opponents, however, cite that very same purported “safety” and “ease” to argue that an e-dollar, say, is merely an extension to, or financial manifestation of, the ever-encroaching surveillance state. To these critics, the method by which this proposal eradicates bankruptcy fallout and tax dodgers draws a bright red line under its deadly flaw: these only come at the cost of placing the State, newly privy to the use and custodianship of every dollar, at the center of monetary interaction. Look at China, the napkin-clingers cry, where the new ban on Bitcoin, along with the release of the digital-yuan, is clearly intended to increase the ability of the State to “intermediate”—to impose itself in the middle of—every last transaction. Snowden
This is the key difference between CBDC and Bitcoin, Ethereum, and others. These are viewed by both central and commercial banks as dangerous because they’ve been designed to ensure equal protection for all users, with no special privileges or power extended to the State who like to keep their eye on everything.
A guest essay published in the New York Times by Dr. Eswar Prasad, a professor of trade policy at Cornell University and the author of a forthcoming book on digital currencies, outlines a number of pros and cons of digital currencies. One of the cons is as follows,
“If cash were replaced with a digital dollar, however, the Fed could impose a negative interest rate by gradually shrinking the electronic balanced in everyone’s digital currency accounts, creating an incentive for consumers to spend and for companies to invest.” Dr. Eswar Prasad
The thought of banks depleting the savings of every wage worker if they don’t spend it is quite concerning to say the least.
In China, things are moving fast. The country’s central bank, the People’s Bank of China, stated in a July 2021 white paper that the digital renminbi is “ready for cross-border use.” Yet for its state-sponsored digital currency to be realized, the digital renminbi must be interoperable with the CBDCs of other countries. Simply put, their currency must be able to work with digital currencies from other countries.
The People’s Bank of China is supporting the development of global CBDC standards and working with other monetary authorities to launch a multi-CBDC arrangement because of this reason.
When it comes to CBDC, it simply favours the already powerful and allows them more control over people’s lives and an even greater reduction of their privacy. Like many moves the “elite” make, it will all be done under the guise of ‘goodwill and service to others’ when it fact that is likely not the intention.
As new technological solutions arise we see human life becoming simpler and more expansive, but what type of thinking and paradigms back the way that technology is used? In our current world, it is a paradigm of control, disconnection, and domination. Perhaps the most important takeaway here is that as the world evolves technologically we are still not solving real problems because we are stuck in old ways of thinking.
We must begin connecting with the earth, ourselves and something deeper inside ourselves to ask what type of world we truly wish to see. Sitting back and leaving our collective direction up to those currently in power will not result in a meaningful paradigm change. We must come together at a grass roots level and think differently about how we want to live on this planet.