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My article published on stealthex.io (https://Stealthex.io). Feel free to comment

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Central Bank Digital Currencies: a Threat or a Blessing?

Central bank digital currencies (CBDCs) have been in the rumors since 2013, with China allegedly developing in secrecy a government-issued centralized cryptocurrency to fight off increasingly popular Bitcoin. But it wasn’t until September 2015 when the Bank of England had publicly discussed for the first time the use of a blockchain-based central bank currency as a way to implement negative interest rates, and March 2016 when the phrase "central bank digital currency" had been coined.

To be sure, CBDCs have been a scarecrow for the cryptocurrency community for quite some time now. But how real is the danger? And couldn’t it in fact turn out to be a blessing in disguise for Bitcoin and its brothers in arms over the long haul? A sober look into the reality of CBDCs and their seemingly brewing stand-off with cryptocurrencies is due and invited.

A New Twist on an Old Tune

As soon as CBDCs started to make headlines across major news outlets in 2019, a new wave of soothsayers has risen. This time, Bitcoin skeptics and haters alike have gotten something looking solid on the surface. CBDCs came in handy to scare the cryptocurrency public into fear and depression for being touted as an ultimate weapon that would destroy Bitcoin. Aside from the regular fear mongering that has been following cryptocurrencies through years, there are a few apparently rational considerations that could, at least in theory, herald the autumn of cryptocurrencies.

As it happened, the first proposals on CBDCs were in fact inspired by Bitcoin and the idea of a distributed digital ledger underpinning it. Moreover, they were actually suggesting the use of blockchain technology in one way or another. Today, this is no longer the case, and the concept of a digital fiat currency as it presently stands has little to do with blockchain. But how much would then a CBDC be different from conventional fiat which is already digital almost everywhere but in a few exceptionally backward countries?

A number of mainstream economists try to address this issue, with Nouriel Roubini, a professor of economics at New York University and former senior adviser to the White House council of economic advisers and the US Treasury, leading the assault on Bitcoin. He goes as far as to claim that CBDCs are going to replace most private digital payment systems like PayPal and its likes by allowing anyone to transact directly through the central bank. That would reduce the need for cash and make traditional bank accounts along with digital payment services obsolete and unnecessary.

In his view, cryptocurrencies are no more than a pile of overhyped blockchain technologies promoted by a bunch of “starry-eyed crypto-fanatics”. Roubini reasons that once CBDCs arrive, they would instantly displace cryptocurrencies, which, as he senses them, are far from scalable, cheap, and secure, nor they are actually decentralised and anonymous according to him. Whether his prophecy of an impending doom for crypto has any real ground remains a matter of scrutiny, which takes us to the next part of this essay.

Much Ado about Nothing

The argument in favor of CBDCs taking over cryptocurrencies is essentially based on misunderstanding Bitcoin’s primary value proposition. Although the advantages and benefits of CBDCs may be real, to a varying degree, the idea of a central bank digital currency doesn’t part ways with the original idea of fiat money itself. In other words, CBDCs will always remain a somewhat enhanced or updated version of fiat. As such, every major flaw or fault that fiat has ever revealed can be rightfully ascribed to this form of a centrally-controlled currency.

Most importantly, CBDCs don’t seek to address the arbitrariness of their governing bodies, that is to say, central banks, in the majority of cases. Whatever has been said positive toward CBDCs can be reversed through the misuse and abuse by the monetary authorities. It is just a matter of time till they start turning advantages of CBDCs into disadvantages as has always been the case in the past, but now more efficiently and with a vengeance. And this is in stark contrast to Bitcoin which sets forth a distinctively different governance model by removing any central authority from the equation.

This point has been reiterated and emphasized by many notable and well-known figures in the cryptoverse. For example, Barry Silbert, the founder of venture capital firm Digital Currency Group and a major investor in the blockchain space, strongly believes that central banks won’t be capping the supply of CBDCs because they “love to print money”. In this manner, CBDCs aren’t going to fix broken monetary policies carried out by most, if not all, central banks. Then we are instantly back to square one.

And that comes down to a simple but time-proven truth that fiat currencies, no matter what form they may take, are set to depreciate and lose value over time. There is no way around this, and CBDCs will be of little help here, if ever. On the other hand, these currencies allow central bankers to gain more power over financial activities of the general public by requiring common people to use the financial system based on a CBDC, and, by extension, subjecting them to other forms of control in their efforts to maintain state supremacy over money – in addition to its costs and restrictions.

Put shortly, digital currencies issued by central authorities cannot on their own pose a real threat to Bitcoin and undermine its value proposition coming from its decentralized nature and capped supply, especially in the long term. But could it play out in an altogether different direction? Could CBDCs actually help, in some convoluted or even controversial way, non-central bank currencies such as Bitcoin, and contribute to their mainstream adoption and wider acceptance? As it turns out, it is not totally impossible, and this might be the most interesting piece of the CBDC puzzle.

A Blessing in Disguise

Now that we established that CBDCs are unlikely to hurt Bitcoin, it is time to explore the opportunities they could offer the crypto space. Barry Silbert says that the efficient and cost-effective infrastructure every financial institution will have to build in order to safely store and support CBDCs happens to be the same infrastructure that could be used to transact with and provide support to cryptocurrencies. Consequently, Bitcoin will benefit in the long run from the world’s central bankers issuing their own digital currencies – when these currencies start to fail at the end of the day, which is inevitable with any form of fiat money as many economists claim.

At a fundamental level, CBDCs, if they kick off for real, are set to compete not so much with Bitcoin and the rest of the pack but rather with other central bank currencies, digital or otherwise. Whatever nation launches such a currency first, the others will quickly follow. You don’t exactly need a master’s degree in economics to understand who will benefit most from the dog-eat-dog fight that will without doubt ensue, just like fiat currencies benefit from cryptocurrencies competing with each other.

As a follow-up post, many people seem to erroneously assume that CBDCs are going to be blockchain-based. Although we don't know that for certain as no central bank digital currency has been launched yet (with China presumably now testing the digital permutation of its currency), there is little doubt that these currencies will be heavily centralized (read, no blockchain will be used). As a result, it is not so much about introducing a new currency in its own right but about developing a new payment system for the existing one

And China is also looking to become a major regional player

This can be the future for real. I also saw Lithuania kinda trying to do the same thing. To celebrate their Act of Independence, the Bank of Lithuania, through LBCoin, is issuing 24,000 blockchain-based digital tokens and 4,000 physical silver collector coins. That's all using NEM's Symbol blockchain (https://blog.nem.io/lbcoin-the-worlds-first-digital-collector-coin-from-bank-of-lithuania-using-nem-blockchain/). I guess Ripple and NEM are leading the way of integrating blockchain everywhere.

True, and don't forget the pseudonymity and the borderless nature of Bitcoin. With CBDC, perhaps KYC will be mandatory, so people's financial activity can be heavily tracked... Good bye online gambling! And it's easier to convert BTC into local currencies at the moment (well, based on my experience dealing with both). I think CBDC & fintech products are competing in the same market, but not with Bitcoin.

Anyways, it is definitely not a blessing since Bitcoin will move towards a niche market if it cannot compete as mainstream everyday e-cash. Like I said:

There's another issue which I decided not to touch in the article

If the idea of a CBDC is utilized to its full potential, it will strike against today's bankers (not central bankers, though). Really, if people will be able to transact directly through a central bank (as Roubini suggests), what is going to happen to commercial banks? Indeed, if they are no longer needed, it will free one hell of a lot of resources (read, it is a good thing), but I don't think many bankers will be happy (read, it's unlikely to happen)


I don't agree, and I explained that point in the article. CBDCs will be a new payment system essentially, not new money. So how can they hurt Bitcoin beyond what regular fiat already does? People will see the advantages of a CBDC, but these are also the advantages of Bitcoin, divorced from the CBDC's disadvantages (most important, inflation)

Decent article, didn't realise you'd started your own site for content, but I think the notion that CBDCs would impact Bitcoin is an old one, and disproven much earlier. The fact that the English CBDC has already firmly rejected the idea that it would even be blockchain-based (and also flatly said it wouldn't be a crypto!) already means that it has deliberately distanced itself from any crypto association will likely influence others (like the ECB) to also do the same.

I won't deny that using more transparent and programmable tech can't be a bad thing for fiat though.

This is not my site, I was just asked (and, well, paid) to write on a topic which is familiar and interesting to me


I don't actually think that the Bank of England deliberately distanced itself from any crypto association

Rather, they were at first kinda paying tribute to blockchain and Bitcoin, but with time, it became obvious there's simply no need for blockchain technology in a CBDC. Bitcoin may have pushed central bankers toward developing such currencies but nothing beyond that. Anyway, no CBDC has been released yet, so it is a moot point


Whatever they come up with in the end won't address fiat's major issue, which is relentless money printing ("they love to print money")

Well, currently, central banks use RTGS or other techniques. Central banks will settle transactions if the transfer occurs between different commercial banks afaik. Perhaps the CBDC only renews the old RTGS system. Commercial banks still do what they do best poorly, e.g., giving loans.

What made I'm interested in Bitcoin is for remittance or commercial usage across countries. At the moment, PayPal sucks, and Bitcoin is the cheaper solution for that purpose. If CBDC can somehow make remittance and international commerce easy and cheap, we will lose these markets. Since we already lose the "buying coffee" market due to the scalability problem (the so-called trilemma), the one who stays here will be the "e-gold" and the gambling market, and it's niche.

That's a topic for another article

Bitcoin has lost this battle because it is "good" money (and fiat "bad"). So even if we removed all technical obstacles like confirmation times and transaction costs as in free and instant transactions for all, this wouldn't mend matters. People would still continue to hoard bitcoins, and probably even in larger amounts

And personally, I don't believe that with a CBDC you will be able to make cross-border payments like you do them with Bitcoin, i.e. without any restrictions as if borders didn't exist. If we assume that, it would mean that central bankers went nuts. They will never let go of this milk cow (and our handcuffs at the same time) that international remittances are

All good on you, deisik, always happy to "welcome" another person of the words.

I do disagree that there is no need for blockchain tech (however you want to call it, I'm aware of many discussions that the term itself is erroneous), I'm fairly certain that some of the mechanisms, such changing access or ownership to existing supply, rather than moving that supply, is a good way to track and secure monetary flow, which would be very important to an issuer.

But you're right, that infinite supply is a problem, but that's also not necessarily fixed by blockchain anyway... you can still hardcode finite supply without blockchain, or, as Bretton Woods did, ensure that you only create new supply when you could back it up.

Will the government make use of Blockchain? Since they like to think that there are some things that should be kept as private, are they going to make use of the Blockchain and every transaction that people are making to be public on that Blockchain? I don't think they are going to do that. We can't say yet, China's CBDC would serve as an example, and we will get to understand where they are really heading with this.

And another thing I like to point out is that central bank cryptocurrency is not going to be anything like decentralized cryptocurrencies, they won't give the kind of freedom that you will get with Bitcoin. The government won't create something they can't control, they will always have control over it, and I do understand that in some ways it's important that they do have control over it. But anyone expecting something hundred percent like Bitcoin is getting it wrong.

It looks more like fiat with another name, just that... I see no advantage on central bank digital currencies.
One argument was that you could transact directly with the central bank this way, without the need of third party banks, but there are third party banks which don't charge any fee and their services are really good, so what would be the advantage to deal directly with central bank?

Wouldn't that overload the public system and increase the costs of their services even more (as they would have to offer more support to customers, so more employees should be needed)?

And congratulations to you for this article, very well wroten! Success!

But there's a crucial difference, one of a kind

You can't change the supply of a cryptocurrency such as Bitcoin other than by consensus. But even in that case, it would seriously undermine its value proposition. Put simply, Bitcoin will no longer be Bitcoin. On the other hand, Nixon ended the dollar convertibility to gold single-handedly, and it didn't kill the dollar. In a nutshell, just declaring that some CBDC will be hard-capped won't suffice unless there is a working mechanism in place to enforce and ensure this cap, the one which can't be removed arbitrarily on some dubious pretext

Tether's a crypto that can and has changed its supply if/when it wants to. Buterin's also proposed a max supply at some point, and I'm not sure Ethereum's really been too concerned about consensus (that's how Ethereum happened right? Classic argued as you did, that it would undermine value proposition but weholders all went and proved them wrong). So yeah, if a CBDC has crypto or not, it can determine supply (fixed or not), and it can change it if it wants.

I mean, the point here isn't about the tech, but the politics. If it's centralized, which a CBDC by definition is, then it simply doesn't matter what tech it uses, it can and will change how the currency is defined when it feels like it. The tech won't make a difference. They can even disregard the tech if they get bored of it. I hereby put forward Petro.

Central bank digital currencies are really not an improvement in my perspective. They are merely digital and will not at all be decentralised. They won't even be anonymous or even pseudo-anonymous. On the contrary I think government will try to make them more transparent and visible. Moreover the real reason why people have problem with traditional currencies is the artificial creation of money which would still remain the problem in CBDC. So yes CBDC would come but no they won't be anything magical. Moreover I don't know why some experts say that bitcoin could flourish after that I on the contrary feel that governments would first place restrictions on bitcoin before they make their own currency.

Central Bank currencies are nothing but a hilarious joke for cryptocurrencies, they are not cryptocurrencies!! With a non volatile nature and something backing them up , they might as well be fiat2.0

Things I can think of:

Pros:
-The government will be able to track the users
-Good option for traditional people who do not trust the cryptocurrencies and such
-Secure and hassle free transactions
-can stop Corruption
-won't charge excessive fee for transferring
Cons:
-Zero Privacy
-Same as fiat , only online
-Kills the whole concept of cryptocurrencies
-Would try and dominate the market by banning cryptocurrencies first
-Would be very volatile and stable which won't be good for short term trading much

What infrastructure?The only infrastructure that cryptocurrencies need in the blockchain.Any other "infrastructures" will be totally unnecessary and would create more problems rather than solving the existing ones.
CBDCs are just a big BS.They can't help for mass adoption of Bitcoin,they could only do harm for the cryptocurrency industry,not because they are better or superior in any way,but because they will be supported and promoted by the central banks and governments,which eventually might try to destroy cryptocurrencies in order to boost CBDCs.

If the central bank is the sole issuer of money, i.e. a trusted authority, what advantage does a blockchain provide?


Bitcoin did it, right? :)

Tongue in cheek, of course. It doesn't really matter what the protocol rules are if the central bank is the only one running validators.


I agree with him on this. I see an overall trend towards asset tokenization occurring. That idea is very compatible with digital asset exchanges and cryptocurrency. It's a natural trajectory.

If using some of the tech blockchain's provided, then definitely can help in traceability, if implemented with bank branches or recognized national bank members as nodes, which is a lot better than the current system any central bank's using now (decades old accounting technology where money can be hidden or obscured). Knowing exactly how much fiat is in circulation, preventing fake money being created outside the system, would be one really simple advantage they don't have right now.


Yeah, Bitcoin did! =) And that's a step central banks could follow. You're right of course, it doesn't matter but if the bank would choose to publicise this blockchain (view only access perhaps) it could help increase public confidence, and general transparency/accountability overall. Sure, they can still choose to change that but change would be noticed and they'd have to explain.

See? You just voiced what I had in mind

Even if the supply model of a blockchain-based project like Ethereum can be changed, what about a centralized currency run by a single entity, that is to say, a central bank? So no matter what kind of Bretton Woods they suggest or come up with again, without something that would actually stop them in their pursuit to work around the hard cap or peg they set forth in an agreement, this agreement won't be worth the paper it's written on

The threat from Central bank digital currencies (CBDCs) are not that it would be faster and cheaper than Bitcoin, but rather that it would get the full support of the governments. We currently have some freedom to use Bitcoin as a Commodity in many countries, because the governments allow it and commodities are regulated. What happens if the Banks collude with governments to ban Bitcoin and to support their fiat based token.  ???

Remember it is all about control and manipulation for governments and they already control the Banks and they manipulate fiat currency values via the Reserve Banks. Governments also hate cash, because it is difficult to track and trace fiat transactions with cash, so they will boost technologies that they can control and then give them a full transaction history of every token used... from the time that it was created/mined.  >:(

Digital currencies issued under a central authority doesn't get used to be a cryptocurrency. They are just digital currencies, which means traditional fiat were given a digital accessibility. When the central authority of every nation got its cryptocurrency its usage gets limited within the country. This way there is a need for a common asset that can be used everywhere. Maybe that will happen with the help of universal cryptocurrencies like bitcoin, ethereum.

i look on the title again and i didnt see that he said crypto . cryptos are different from them but i dont know if they are a threat or not because there were already digital currencies before , before cryptos existed . we can say that cryptos copies an idea with them but not totally because cryptos has its own new feature .


 they maybe limited because they arent popular as a btc and eth  but if they were a crypto , any other country can use them . 

I can't actually picture how the government being able to track their citizens is a pro (unless as in professional)

Maybe, it is a good thing for the government but definitely not for the simple folks. I don't think they will be happy about the Big Brother looking over their shoulder into every shekel they spend and every nickel they earn


I don't see either how CBDCs are killing the idea of cryptocurrencies. As explained in the article and further in the thread, CBDCs are not a new form money, it is the same good, or not so good, fiat but in a different package. And if fiat didn't kill crypto, there is no reason to think that CBDCs will. It could be argued that they can somewhat hurt cryptocurrencies but not in the sense of killing their entire concept. They don't offer anything fundamentally new

Maybe you should replace the word "cryptocurrency" into "Bitcoin" since lots of cryptocurrencies out there were issued by the "central authority," including your beloved Ethereum :)
At the moment, perhaps every currency that uses cryptography can be put on CMC.

lol digital currencies are actually fiat, they are pegged to every currency.

Well I respect your opinion on this one but I think you need to look for other angles with this one, this isn't going to be on the table if this not brings any good or benefit.

One I can think of is that central bank is more secured to transact with, they don't need to pass your request, documents or anything you need them to do for you unlike third party banks they still need to pass it to the central bank. Talking about the fees, I doubt there is no third party bank that does not charge any fees, banks is a business after all. Centralized banking is what we need if we want to transition into a digital one, is this a threat or a blessing? We cannot determine it yet as early as now, perhaps we are able to experience it.

*written* just correcting your little mistake here mate  ;)

If they could, they would have done so long ago

Besides, I've heard it a few times that CBDCs would not so much hurt Bitcoin and its brethren but regular banks and financial institutions. The tech that exists today can potentially make many banking jobs redundant. Starting from this reasoning, it can be concluded that bankers should collude or lobby against CBDCs, not cryptocurrencies. Crypto is still a tiny speck in the global financial space, not worth the effort of obliterating it

Every thing in the world has positive and negative effects, including the Central Bank Digital Currency (CBDC) has positive
and negative effects. For me CBDC can be a threat because it can dominance digital transactions, many people will be more
trusting and comfortable using CBDC rather than using cryptocurrency. Especially for lay people, moreover CBDC has full support
from the government, so it can indeed slow the growth of cryptocurrency.

I agree with most of the article, but also with what @mu_enrico wrote. I would "rate" Bitcoin's borderless nature, as an advantage with respect to CBDCs, even higher than its ability to work as a "digital gold" with limited supply.

Of course this depends on the requirements CBDC issuers establish to access the currency. I don't think you'll have to be a citizen of the issuing country to be able to use that system, but a pretty hard KYC process (for example, including your tax number if you're a citizen) is very likely. Perhaps a method for guests (e.g. tourists) would also be established, but I can't imagine a system as open open as Bitcoin. So people which wouldn't like to expose their privacy too much, would not see in CBDCs the tool of their choice.

Perhaps some offshore countries could try to boost the popularity of their CBDC with a pretty open system with lax KYC. But anyway, really privacy-aware persons would not use that.

Well, if they were serious about such a hard supply cap, they could include it into the Constitution, if they find the political majorities for that. A change of this rule would be possible, but very difficult. However I don't see that occurring at least for the short to medium term because monetary policy is still renowned enough in most political and economic ideologies.

Before, the Central bank digital currencies see the cryptocurrencies as threat but their perspective is now different. Because they know that the cash may lose its value whenever people start patronizing and adopting cryptocurrencies. They are now aware on the technology that the cryptocurrency can bring, right now we experience poor transaction and payment system and for sure Banks will not collude with government to ban it but maybe the banks will be the reason to see that the mass adoption will happen,

As for me, there is really too much noise around the CBDC. Those who say that this is a weapon to destroy a decentralized crypto understand that they assume the destruction of air with the help of oxygen?
I do not see anything wrong with CBDC as such - even if you can then buy the same btc through IT. Just someone in gov who understood the principle of "divide and rule" and decided to try to join the movement from the positive side.

They could just peg it to gold or whatever, and get done with that

Indeed, they would most certainly discard this peg eventually (as it happened after Bretton Woods with the US dollar redeemable for gold), but they could just as easily ignore what is written in their constitution. Not even speaking of countries like Russia where the constitution has lost all of its meaning as the legal basis of a nation. And economically, hard-capping fiat doesn't make a lot of sense. It is not the lack of a cap vigorously followed through that turns fiat into a weapon of mass impoverishment, but its misuse by central bankers

I suppose that's true, but based on the current state of affairs it shouldn't matter. Nobody seems to mind that the Fed printed $2-3 trillion out of thin air over the past few months.

If the money supply increase were published on a blockchain, I can't imagine it would make any difference. "We're trying to prevent a depression" would probably suffice as a good enough rationale in either case.

Perhaps youré right and nobody cares, but perhaps also once people have a route into looking at things a bit more transparently, like the Bank of England looks like it might (and HM Treasury already do field public questions for example on budget and spending). Many governments are trying out open concepts like public call for comments on proposals and budgets, monetary issuance could very well be the next step -- inspired by a blockchain style ledger.

I know people are dumb in the end, but sometimes, give them the opportunity and tools to demand for accountability and it could change thinking. And at least help them determine if the excuses use to print more money can be validated.

Believe me you, I'm not saying the fiat structure will ever be good, but one step of improvement is better than nothing!

There's a central access where potential control can be influenced by
people who have higher authorities.


But the fact that there's still lapses that can take place when there's a
central authorities still possible.


Indeed, the very reason why people are trying to find something that can
cater this and can enhance the system.


The government should be responsible with how they will handle this situation,
with them in the positive side
the chance that it will build a better relationship between  crypto users and
it's govern rulings.

And since monetary aggregates still get published on the Web, it doesn't change much. On the other hand, we only see the stats, not the process itself as it develops and unfolds in real time, i.e. after the damage has already been mostly done, and we are left to face the smoking ruins, so to speak. In this manner, seeing with your own eyes how the central bank starts to pump money into the economy, and steals your purchasing power from you would be tremendously interesting and probably disturbing (unless you hold bitcoins, of course)

That's why it is never gonna happen in real life

The central bank digital currency will definitely be another form of what we have already use.

They understand the benefits of liberal mate they are just been selfish and want what is best for themselves. Mind you, each and everyone of them is either a mother or father and theres no way they will combat the challenge in their family without the existence of liberal.

Lets just hope that every governments love the idea though because none them appears to work on it anymore.




follow-up post, many people seem to erroneously assume that CBDCs are going to be blockchain-based. Although we don't know that for certain as no central bank digital currency has been launched yet (with China presumably now testing the digital permutation of its currency), there is little doubt that these currencies will be heavily centralized (read, no blockchain will be used). As a result, it is not so much about introducing a new currency in its own right but about developing a new payment system for the existing one

And China is also looking to become a major regional player

Every governments in the world appreciate blockchain and from my own understanding theres no way the CBDC will survive without the use of blockchain.

I dont doubt that CBDC will be centralized and the issue of the CBDC is to integrate another payment system which maybe a solution to cost of cash transfer and global trading.

They are the only country which make indepth research about digital currency after the advise giving to central banks/governments by the IMF boss but they could also mislead other countries with their centralism nature.

The are researching for a longer period of time but still there are no Central Bank Digital Currencies in the market. I think the are facing some issue over it. They will only adopt the digital currencies if it proves to be more beneficial than the fiat, for them. The system will be obviously centralized with  gov having more control, and if gov can successfully digitize the whole system then they will able to track every penny.

CBDCs will surely become a thing, and to what form they would take and whether or not they utilize the blockchain or use other tech is still speculations up to now. The only thing that this does to bitcoin is prove that digital currencies are viable for widespread use and that's it. People would still use bitcoin, or at least hoard them in the future for profit if CBDCs are introduced and nothing will be changed in terms of the market. There would always be a line dividing cryptocurrencies from state-issued currencies, and we know that people know that too well and also know the difference. For now, no one should worry about that since CBDCs becoming a thing isn't a threat to bitcoin or to crypto as a whole.

A CBDC is only another form of fiat

So how did fiat survive without blockchain for a few dozens of years if we start counting from the end the gold standard in 1920's (with America going off it in 1934)? Moreover, what's in it for central banks? They are the source of trust and truth (well, as far as money is concerned), so why should they rely on blockchain, and for what purpose exactly?


But seriously, how come that you don't doubt that CBDCs will be centralized and at the same time claim that CBDCs won't survive without the use of blockchain? I for one see no connection here

China is in the process of creating their digital currency for very long time and I don't think there is no issue on creating a coin by the government itself. But releasing it to the public will take time before that they need to create payment setting then only they can replace with CBDC completely over fiat.And the point of creating centralized tokens is just to keep the new system in the centralized way and government is looking for more control over the user's transaction there is no doubt in it.

???

There are many things which don't bring any benefit, but we are still enforced to do or to follow by our national laws.
This can be one of them, who knows...

Hummm, so the benefit would be to not have your documents in third party bank's hands. That could be a good one, I agree. But my main concern is the cost of this system fully operated by the central bank.
And of course there are a lot of digital banks already which don't charge any fee (monthly, over transactions, credit card annuity...). Do a search about them, you won't regret!

Thank you, I appreciate this! ;)

CBDC is a threat and blessing at the same time. It's certainly a blessing for blockchain sector and the whole economy, but CBDCs will be traceable unlike cash. In my opinion, it's a threat to our privacy.

So I'm assuming they have a central body for the use of CBDC and that central body would then be responsible for transactions across various platforms, making things a lot easier? This idea would only encompass country by country I assume and assuming how BTC can transact from country to country, it doesn't really seem that notable of an option to choose them over BTC when BTC could basically do the same. Just like what you said, they basically failed to do anything to fix the fundamental problems of fiat. They just improved the medium or rather ways of transactions between each other, making it seem a lot easier when the essence is still basically the same. It's like upgrading the case of your SystemUnit to make it look cooler, while your insides are still the same. Or hell, even adding RGB to make it look like it's actually a fast setup.


It is a good idea indeed, but hell, people are business-minded, money minded. To hell for everyone's ease of life, if I don't profit, no one else does kind of mentality. A central party to control most would actually allow up for a lot of decent improvements since most disagreements could be met with proper solutions immediately.

If every country's government supports Bitcoin, then Bitcoin will become legal and in that case, the central bank can introduce digital currency. With Bitcoin being decentralized, the central bank will never be able to control it because it will take a long time for them to convert Bitcoin into currency. There are many problems to be faced in this case. However, the government of many countries is not supporting Bitcoin because it is not under anyone's control.

In my opinion CBDC is not a threat to Bitcoin, because CBDC is the centralization controlled by the government. Whereas Bitcoin is decentralized
which nobody can control. It is likely that CBDC will become a blessing because it can increase digital currency users, can help mass adoption of
Bitcoin with CBDC. People will start leaving fiat currency, because they want fast transactions and efficient. CBDC can realize this desire, if many
people already believe in using CBDC. Then indirectly popularity Bitcoin will go up too.

I think the purpose of CBDC and the crypto currencies we have up till now are fundamentally different. One is the digitalization of an already existing system, just switching the exchange from physically to electronically while other is a completely other asset class. CDBC will come anyway, the main challenge will be the exchange of those. Will there be something like a Forex Exchange for CBDCs? China was already beyond cashless, I once even got problems in a big restaurant because I wanted to pay with Yuan bills. Everything is already on WeChat or AliPay. The westeners will have to get used to that way of interacting with money.

One more thing, probably the most important one and crucial for the survival of elderly people: Have you ever stood at the counter of your local supermarket behind an old person that digs in her wallet searching for some change, as if this is the first time to go shopping and are now wondering that they need to pay for the goods? If yes, you know what I mean. Electronical cash prevent death stares to old people!  ;-)

To sum it up, CBDCs are not likely to help simple folks because helping them would come at the expense of regular bankers. But if we take this part away from CBDCs, what is left then? The irony is that central banks will have to make CBDCs useful to the general public if they want more control over the financial activities of the populace. But this is impossible without hurting regular banks, to some degree

Anyway, it will be interesting to find out what CBDCs are going to look like in practice once they arrive

It may not be a threat to bitcoin, but Imo it is a threat to future of cryptocurrency overall.
Because now if a person new to crypto will try to dive into the market - he'll most probably end up with holding something more decentralized.
But if CBDC would be a thing - a person new to crypto wouldn't dive that deep to get into real decentralized market and will end up with centralized CBDC which is not so different from having regular money on bank account.
This way the rest of crypto market will die eventually, because most of users will miss out

Lol all we are doing here is just assumptions, we don’t know what exactly is going to happen when the government creates their own digital currency. No government has done that yet, so we can’t tell. We only heard that the People’s Bank Of China is creating a CBDC but we don’t know what follows after that. Every government has their own opinion on cryptocurrency. Some of them likes and accept cryptocurrency, but there are those that doesn’t want it. If they are done creating their own cryptocurrency we don’t know if they are going to force people to use theirs. We just don’t know, but I really don’t hope for that.

Like what most people on this community have concluded against government backed digital currencies, those digital currencies may work in negative for cryptocurrencies in short run but in long run they may work in a way like promoting crypto currencies into new people. Because, it is assumed to be happening like people will understand the difficulties of using government backed digital currencies so they will get into a decentralized one over the time.

The harsh truth is that it can't be "a thing", even in theory

And while someone may in fact get lured into this stuff, due to negligence or incompetence, and probably on hearing from someone like Nouriel Roubini that CBDCs will obliterate cryptocurrencies, it won't take long till he sees that a particular specimen of CBDC a) won't be able to hurt crypto, and b) will start losing value after the CB in CBDC starts printing it like it ain't no thing. That way, no thing, no matter how you look at it (sorry for double negatives)

I don't buy the conspiracy theory angle. Central banks are not beholden to consumer banks. The Fed is much more concerned about preventing a depression than catering to the business model of JPMorgan Chase, for example.

I think the pandemic exposed serious deficiencies within the banking system and also bureaucracies like unemployment agencies. CBDCs could be very useful there in terms of cash infusions, possibly preventing much of the economic shock we saw in March-April.

The banks do have powerful lobbyists though. I could see them opposing this on a fundamental level. We'll see whether Congress is in their pocket or not when the time comes. The Fed and others in favor of CBDCs do have some influence, and legislators also have an interest in the potential benefits for economic stability.

What really would make it difficult is that if they sell more bitcoin than they have. Right now banks have the right to loan out more money than they can and they even buy shares and stocks of companies as well, so they get only a a certain amount but basically feel like unlimited amount of loaning out and investment with a lot more money than they have.

I am super afraid they will do the same with bitcoin and CBDC type of stuff, it is a start and the moment people start buying so much that there will be 25 million bitcoins loaned out or invested into, people will realize that is not even possible but it is going to be too late. I don't know what to do about it neither, we just have to educate people not to do it and it would be basically hurting their own finances but we can't stop everyone.

Well, that remains to be seen and then probably bought, the conspiracy theory part

I don't know for certain but let me guess, isn't JPMorgan Chase one of the chartered commercial banks that can elect some of the board members of the Federal Reserve regional banks? Couldn't it turn out that the Fed is now so much concerned about preventing a depression specifically because it caters to the business model of JPMorgan and their bros from Wall Street?


As far as I know, the Fed has put on hold the idea of a digital version of the dollar. So it's now your time to guess who may have already won this battle

In light of collapsing economy, JPMorgan plans to lay off several members of Congress


CBDCs have nothing to do with Bitcoin or any other cryptocurrency, for that matter

I have seen lots of different opinions on this issue of central bank digital currencies (CBDC).

Some people have said they don’t like it and they have also given their reasons for not liking it, especially something that has to do with the credit score system. And some have also said that it’s a good thing.

What I would have to say about this is that people have to be careful and always hedge with cryptocurrency. And when I say cryptocurrency, that’s to say that CBDC's are not cryptocurrencies, for me they are something different.

And that's what I'm doing myself and advising everyone else to do

CBDCs can't and won't be a hedge against inflation. If anything, they will most certainly be a major driving force behind it. This reason alone will suffice to obliterate any argument in favor of these centrally-governed currencies before crypto. To claim otherwise would be equal to suggesting to hedge against inflation with regular fiat. This is patently insane. But would it be less insane to suggest to do the same with a CBDC?

How are they going to support a decentralized currency in the first place? If they do that, they would be looking for their own grave in terms of financial coz basically no one's got the control over bitcoin. This is why legalizing or not is up on the table for talks, there are some things to be considered and factored, depends on the type of state that they have. Besides, no one will use bitcoin as a currency if it is mass adopted, we are all be embracing the fact that it is volatile and we can make profit going in and out of it.

You're just running in circles.

The only problem with bitcoin for the government is it is decentralized, that's why most of the governments now are creating their own digital currency called CBDCs which is more likely to be in used for about next 2 to 3 years.