Bitcoin

Central bank digital currencies are doomed to fail

Remember my words: “Governments and central banks will never care about your wealth and your privacy as much as you do. It is precisely in this reality that central banks’ digital currencies are doomed to fail.”

They say if you can’t beat them join them. That is exactly what the CBDC is trying to do. They want to join the cryptocurrency camp without giving their citizens the privacy and democratic freedom that a truly decentralized digital currency offers.

In a recent article I’ve pointed out that regulation and law enforcement are a necessary part of cryptocurrencies to achieve mass adoption. I definitely believe it, but the CBDC won’t do that.

Central bank digital currencies are doomed to fail
Central bank digital currencies are doomed to fail

CBDCs will not decentralize wealth. They will not decentralize power, ownership, or control over money. They neither give people the ability to monitor nor do they have sovereignty over the value of their wallets.

The institutions that create these CBDCs will openly and publicly promote the virtues of their innovation and their ability to use the best cutting edge technology to make the value transfer between them more efficient. They will publicize the need to make an archaic financial system more efficient and modern. For a moment, consider two of the countries that are leading the way in developing their own CBDCs.

Who is leading the development of CBDCs?

The Bank of Russia released one Consultative document describing plans to develop a digital ruble. That’s the way it is! The Bank of Russia is working on a digital ruble. This news is fresh out of the oven, as announced last month. But what was also recently announced is that The Russian government is not so friendly about cryptocurrencies or the issuance of new tokens. In other words, Russia wants a piece of the digital currency pie, but only if the government controls this digital currency. This is a fundamental problem with all CBDCs, none of them want to give the keys to people.

To be fair Alexey Guznov, Head of the Legal Department of the Central Bank of Russia, He said earlier this year that possession of cryptocurrency won’t be illegal as long as that cryptocurrency is acquired in a jurisdiction that doesn’t prohibit it.

China is already testing its digital yuan. This country is also trying to launch its digital yuan. Trials are underway in Hong Kong Bay and state banks are testing a digital wallet on a large scale. The electronic payment program for digital currencies implemented by China has two tiers, one for central banks and one for commercial banks. While commercial banks can use blockchain technology to process some transactions, the central bank level will definitely be centralized.

Nevertheless CBDCs are about more control, control over wealth, over individuals and of course over data.

It’s CBDC versus cryptocurrency, not East versus West.

The rush from central banks around the world to create their own digital currencies is not a battle between East and West. Far from it, It’s more about pitting CBDCs against cryptocurrencies, and they don’t have to worry about central authorities censoring or controlling anything.

The point is, the two fighters are not the same. CBDCs are actually just fiat currencies in digital form. The format may be different, but the goal is the same: Maintain control of the financial system in general and punish those who fail to comply with the rules set out by a central bank or government that makes decisions.

Think for a moment that the European Central Bank is soliciting information from the public about what a digital euro would look like. The ECB website lists many benefits related to the development of a digital euro, in particular that the usability of a digital euro comes into play whenever an extreme event such as a natural disaster or pandemic occurs. However, there is a clear, not so subliminal message that should be highlighted in the description of the digital euro by the ECB:

“It could also be of critical importance as people turn to foreign digital currencies, which could weaken financial stability and monetary sovereignty in the euro area.”

Let’s accept it The synonym for the expression “foreign digital means of payment” is Bitcoin (BTC). The central banks don’t want you to use Bitcoin, Ether (ETH) or any other decentralized cryptocurrency. They want you to use a currency that they can track. You want to be able to decide which regulators and tax authorities have access to your financial data and which do not. CBDCs are not an attempt to revolutionize finance or technology.

They are essentially a final effort to keep control of people. Even if actual decentralized currencies pull wealth, power and influence from the clutches of the old world.

They can’t beat us or join us

Holding decentralized value and power in the hands of the people is what gives power to cryptocurrencies, non-government-backed digital currencies that simply use blockchain technology.

Central banks can certainly use blockchain technology and say they are joining something they cannot defeat. but the reality is that they cannot join. We, as global citizens and supporters of cryptocurrencies, will not and should not allow them.

Cryptocurrencies have come a long way since Bitcoin was introduced in 2009. At first people ignored them. Most people laughed at them. Now the central banks are trying to fight the cryptocurrency revolution. Eventually we will win the battle and the wealth will be in our wallets where they belong.

The views, thoughts, and opinions expressed herein belong solely to the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Mark Binns is the CEO of BIGG Digital Assets Inc. He believes the future of cryptocurrencies is a safe, compliant, and regulated environment. He first discovered cryptocurrencies in 2013 and fell in love. As CEO of BIGG Digital Assets, Mark oversees the Blockchain Intelligence Group, the maker of Qlue, BitRank and Netcoins.

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