Bitcoin Forum

There's been a lot of talks about the Federal Reserve's plans to develop a Digital Dollar in order to phase out paper money for good. The US is aware that China has launched a CBDC of its own, leading it to act fast in order to maintain its grasp on the global economy. I wonder what would the impact of a Digital Dollar be on crypto itself? Knowing that people prefer convenience on top of security/reliability/decentralization, it's likely the majority will "ditch" crypto in favor of a government-backed digital currency.

By the time all countries have their own digital currencies, it's likely governments will become more oppressive against crypto/Blockchain tech. We're still a few years away from seeing a Digital Dollar in circulation, so there should be nothing to worry about at least in the time being.

Thoughts? ???

I'm not expecting a US CBDC to offer advantages over crypto. They won't offer lower transaction fees, or a private key based system allowing sole ownership and control over funds to end users. They will not adopt a hard deflationary model, which could qualify their CBDC as an inflation protected asset. They won't implement a gold standard whereby their CBDC can be exchanged for precious metals. There won't be high interest earned by staking CBDCs as there is with crypto.

The approach regulators and the state makes to CBDC rules out every avenue which could allow them to be competitive in global markets. In an era where social credit and state surveillance are concerns, CBDC could be viewed as extensions of these programs, which I think most would prefer to avoid.

CBDC will have a difficult time to overcome the many obstacles and skepticism most will have towards it.

If it is pegged to the dollar, CBDC might be used as a stablecoin in countries like venezuela, turkey and argentina which could help residents to avoid inflation. That might be one area it could have real world application. Although given the preference for regional lockouts where video games made in japan can't be played in the USA, as an industry standard, it is possible that may not be an option outside of forex which already exists.

As far as I'm aware CBDC is mainly a fancy experiment but not a serious project. At least central banks that  created ones did not demonstrate any significant results.

Hydrogen explained it pretty clearly. In addition I can say that in the best case we will get CBDC that works just like tether but without any scandals and with reputable issuer.  And first, it doesn't seems like central banks are actually willing to make tether-like CBDC. They still want to remain control over it. Second, do we actually need CBDC? What issues would be resolved by using CBDC? It might be that no one just needs it.

For all those who will not understand the difference between CBDC and Bitcoin until then, it will not be too important anyway, because the only difference between paper and digital fiat is that the government will be able to control us much better than now. Those who value privacy will certainly gravitate even more towards Bitcoin, but I do not mean only those good people, but also criminals who prefer banknotes above all.


It's always a possibility, but the authorities still have very powerful instruments today to do great damage to Bitcoin, only if they want to - all they need to do is follow China's example. In addition, the CBDC will be introduced gradually, so we know from the example of the EU that it has been proposed that each adult resident will be able to have a maximum of 300 digital EUR one day when it becomes available.

If they peg it to the dollar then inflation is still an issue because the money supply is not finite. They can create currency out of thin air, it just becomes digitalized under a CBDC system. If they chose to peg it to something like gold then it might help with inflation. There is no indication the countries floating the idea of a CBDC have aims of doing that though (granted, we're very early).

IMO the goal of a CBDC is to eliminate paper money in an age where everything is digital, and while the government is at it they can use it as a mechanism to control the money supply easier than paper-based currency. They would present CBDC's as a crypto competitor when it is nothing remotely similar.

Even if  the entire countries have their own CBDC it can't pose a threat against Bitcoin. We have had many countries adopt Bitcoin lately and the highest that can be done in regards to Bitcoin if CBDC takes over the world is that Bitcoin will be a store of value other than a legal tender.

CBDC is only a digital version of the normal fiat and it will still retain the intial value the paper currency have

I think they will have their own respective uses in the financial system.

I could see a digital dollar being what we use in stores for everyday transactions, while bitcoin being a strong reserve asset/SOV.

I would love to see the LN take the load of everyday transactions, but in all honesty, the government use various legal means to ensure their currency is what is used in stores.

In my perspective, it will be good. Anyone who thinks that it will not be good, did not really understood the assignment at all.

If you do not need BUSD, USDT, USDC and GUSD, but you can use whatever government calls their digital currency, DUSD? :D Then you know that it is not binance, it is not Winklevii twins or some bitfinex hackoff tether company in Bahamas.

It is the USA government that guarantees you that this money has dollar value. That would be awesome for crypto and for trading, ALL of the pairings will become that, we won't have all those USDT and so forth pairings anymore, we will have this new one and I believe it will certainly be great than what we have currently having (not sure how many of you are making use of stablecoins with cautions but I always do have a secondary thought like it may end up similar to Liberty Reserve).

CBDC is no different from fiat money, all provided and controlled by the government, it will even be more strictly regulated than the current way of circulating fiat.
We love cryptocurrencies not because they are convenient but because of their decentralization. I don't think people will give up crypto because of CBDC.
Crypto have opened up a convenient digital world, certainly countries are working to come up with their own CBDCs for each country.
Until they come up with regulations to crackdown on crypto to force people to accept CBDC, but it is not possible to completely ban cryptocurrencies.

Any financial instruments that are built by the government are bound to get more support in future with integration into things like the tax system. Ultimately we have to accept that Bitcoin was simply a very successful test model, it might hold it's novelty for a long time especially with so many richer people invested in it now but for practicality it's highly likely other cryptocurrencies will end up taking up the role of digital cash. You might argue that having government backing, with all the funding the goes into creating physical cash right now, would give better stability and less outside interference - as long as people were confident that the system could not be inflated without solid justification.

I disagree.  Even with oppression, Bitcoin and some of the Altcoins will still find their way into the world.  Digital USD is fun until it is not.  It is fun until they start seizing your rights and until you find out they can cut off your finance by just flipping a switch on their side.

To me, Cryptocurrencies are not going anywhere even with CBDC's up and running.  Sure, some will leave our community but if they leave Bitcoin for Digital USD, then I am actually happy about it because they were not here for the technology and what features Bitcoin brings anyway.  Whoever chooses dirty digital USD over Bitcoin is definitely not here for decentralization or freedom of finance.

They can try, and they probably will try to make Bitcoin obsolete but they will not be able to do so.  I have even seen them promise CBDC's are going to combine digital finance with privacy which is just deceiving.  Nobody can tell me a government is happily releasing a version of fiat that has privacy built in with no backdoors for it.  And if there are backdoors, there is no privacy.

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Regards,
PrivacyG

The majority of people are still inclined to use Fiat currencies in which the government issues it, and that is the current setup, and right now and they are just trying to digitize it.

I’m looking at it in different ways; one is that they will make it easier to print more cash. I hope that it will be transparent in how much there is, and probably the Blockchain can do something with it.

The other thing that I see is that they are too late in the digitization in which that bitcoin has already filled the role of that as the digital currency or something.

Better be careful and hedge.

It probably won't be as dramatic as anyone thinks. It's already a digital affair. Physical printing of paper money is a very small part of money creation in the US, most of it is done by someone going into a computer and changing a number.

About the digital dollar. We see dollar as a highly influential currency that almost all country require in intertional transaction and the US has control over it. Now that the digital version is going to go in the air, will that amount of control go under it? For example with the Ukraine and Russia war that dollar is in scarce quantity in the soil of Russia, can the digital version also be controlled to be limited in a particular area/country just as in the situation of war or invasion as the precent situation?

CBDC is centralized, so the fees should much lower than the decentralized one since they can control it. Perhaps, they charge some additional fees on such requirements e.g. fees for inactive accounts, fee to convert etc.

Nope, if government officially announce on television and news about CBDC, citizens will automatically trust it. Moreover if they got forced to use CBDC and they forbid of using cash.

Who said this? I disagree. People don't care with those you mentioned above, all shitcoins have low security/not reliable/centralized but people tend to choose shitcoins because they're looking for pump and dump. How I can say this? because shitcoins won over Bitcoin, Bitcoin dominance is 41,9% while the rest percentage (58,1%) is shitcoins. If they care with those stuffs, they will buy Bitcoin, not shitcoins.

IMO CBDC wouldn't have any impact with Bitcoin since the value is $1=$1 pegged with dollar.

I don't think it's going to make any difference at all tbh, maybe set up global payments or something to make it easier and some other niche qol improvements, but that's about it. Its core idea isn't really any different from fiat, so it shouldn't be a threat to crypto. Heck, it even actually improves the tracing of what and where funds go (that uses it), so basically the government is improving it's ways to track how our money is spent and where it actually goes.

It's just fiat put into a computer, not much is gonna changer.

the impact is almost non-existent. after all digital dollars will not enter the crypto market. it will only be used as a means of payment, maybe in the end it will only be like E-money and cannot be used to buy crypto. and one thing i know, it is not a crypto coin and will not be called an altcoin/stablecoin.

It is wildly different from fiat money. Of course it is centralized, but which stablecoin are you using that is decentralized. Sure maybe there are few like DAI, but the reality is that we have plenty like USDT that are mainly centralized.

This is why it is not same as fiat, if you could put CBDC into an exchange and make profit from that, then it means that we are talking about something decent and profitable for the traders to use CBDC instead of tether. I am not saying that we will all do that, all I am saying is that there is a chance we may end up doing this. This is why I believe that we should not be really upset over it right away without seeing it first.

I really doubt it would affect anything related to bitcoin a lot in the long run. Sure, in the short term people might prefer its conveniences, but hell - use cash/netbanking stuff at that point? Because US Digital Dollar - whatever that may be - it sure as hell wont be decentralized. It probably also won't offer the same benefits as bitcoin - for which people actually choose bitcoin. I'd say the general mass that has already adopted bitcoin will stick with it, and most other people would be indifferent?

I guess one of the factors coming into play here is that it would probably be much more stable, realistically speaking compared to bitcoin, so it might find more use in the day-to-day life of people - for buying goods, products, just general shopping. Fixing prices in bitcoin is still a hassle at the moment, its been fluctuating quite wildly. A digital US dollar might help in that aspect, and maybe bitcoin is pushed a bit more towards being an asset for speculation?

You are thinking about it like it's paypal, think about it like it's currency and you will see a lot more options. First of all there could be some payment accepting of it a lot easier than crypto, so instead of considering it as payment processor, think of it as payment. It is officially governments money right? So, it has absolutely no difference between regular dollar you hold in your hands in that case, which means you can pay with it to any place you go.

Now imagine someone makes a connection of automatically turning bitcoin to this digital dollar, in that case you can carry just crypto in your pockets and when you want to pay, it will automatically be accepted everywhere around the nation.

I believe there will be two consequences. The first is that people who are now still reticent about cryptocurrencies will stop seeing them as something strange, because after all, their government will have created one. The second has more to do with what you say, because it is normal that most people prefer a currency backed by their government than by a company, but there is one currency out of all those called crypto that is essentially different and that is the Bitcoin. I think many people will understand that having Bitcoin is like having digital gold and that it is something that appreciates over time as opposed to CBDCs that will depreciate over time.

Maybe I'm biased but I think Bitcoin will be the winner.

like CBDC, digital dollars will not affect the crypto market. I'm even sure that it's not a crypto coin and can't be called a stablecoin either. the technology used is clearly centralized, and that's why digital dollars are not crypto. something that is not crypto will not affect the market. People are already aware of it all so even if it were to be launched today, the crypto market would not react.

I fully see its impact on the cryptocurrency market as well as other financial markets. As far as I know, it is like a national bank's acceptance of crypto market products. Both the US and China understand that it affects the currency itself and the development plan of the country. So let's wait and see what happens with CBDC products.

I think the Digital Dollar will benefit banks and governments more than it'll benefit individuals themselves. The end user will enjoy convenience/ease-of-use, but that's it. Privacy will be long gone as the US government will have a complete view of the digital ledger. What kind of impact will the launch of a US Digital Dollar have on crypto, is yet to be seen. Either decentralized cryptocurrencies experience greater adoption because of the Digital Dollar or all the other way around.

It really doesn't matter as long as crypto stays true to its roots. With long-term preservation of decentralization and censorship-resistance, we might be able to see major cryptocurrencies living alongside digital Fiat for generations. Who knows how a full-fledged digital economy will look like in the future? Just my opinion :)

That is the biggest difference. If you are reaching to a level where it would be beneficial for the fiat world, as much as the crypto world then I would totally understand the difference. But, if we are talking about something that is beneficial for only crypto world then it can't be too successful in the long run. So, in order for CBDC to succeed, we need to get a lot more fiat investors to get into them as well and make it a hyped and wanted thing.

Obviously, we will have a lot of people who are going to be great about this but that doesn't mean that the amount of people who are interested based on the population but it is based on the interest shown. 1 person showing 100 amount of hype is better than 10 people showing 50 total.

CBDC have an effect to crypto but it's minor that we almost not feel it but for the usdt? We are not sure if the effects will be the same as CBDC or not because we know how influential USA was because they are the supplier of dollar and we saw how big the demand of usdt by basing on its volume and other statistics.

CBDC and usdd are cryptos because they run on the blockchain and cryptos main technology is also blockchain. Their value is also stable because they are based on the local currencies so it's safe to call them stablecoins. If stocks and others that are not cryptos can affect cryptos, how much more these digital currencies that are very close to being a crypto?

Without a doubt we are going to see the day in which most countries will have their own digital currency, but it does not really matter, as long as they keep creating their currencies under the same economic principles then we are going to keep seeing huge inflation and economic crises that only get worse and worse, so even if governments increase the oppression against bitcoin, it will still remain as an alternative to their fiat system, as there will always be people like us that can see beyond their lies and if possible will avoid to use those digital currencies as much as we can.

The introduction of and lunches of Bitcoin has awaken most Countries to lunch their own digital currency.

That means in the forthcoming generation (s) there will be no paper money for transactions, because everything will be done online and technology is gradually taking over the international system.

Countries like Nigeria and British have already lunch their E-Currencies (Reserve) https://www.bankofengland.co.uk/research/digital-currencies

With this, you can confirm that nations in the world will soon use Digital currency for smooth and easy transactions.

The main problem that will be faced by most Countries is bad network.  Because the third world countries are still suffering from that..

Government-issued digital currencies are inevitable, as banks don't want to lose a piece of the pie. When launched, I think governments will become more aggressive against crypto in order to force people to use their currency. Even in a democratic country like the US, it's possible the government will turn against crypto to help boost the adoption of the Digital Dollar. Crypto will still remain as an alternative to Fiat, but most people will prefer CBDCs because of convenience.

How everything will turn out to be in the future is certainly a mystery to all of us. As long as decentralization prevails, nothing else matters. Just my opinion :)

I see CBDC very worrying what comes to "traditional" cryptocurrencies. Governments are going to regulate cyrptos to the death and take market share easily.

They don't have to say it, but governments can use for example "airdrop" to make their CBDCs the most held crypto in the country/world with a push of the button... just create "wallets" for everyone based on for example social security numbers, etc., and airdropping a few crypto dollars to every citizen.

In a such scenario, what are the ways for Bitcoin and alts to compete? ...and ultimately there are no rooms to compete because of regulations, you need to be a bank to be allowed to exchange etc cryptos. We're not yet there, but dreams of wide adpotion will eventually turn against the whole crypto community. Let's have fun as long as it's possible, and create cryptos that are REALLY decentralized and impossible to regulate. That's the only way to survive in the long run. Trust me.

There will be no practical difference between dollar CBDC and the already existing Usdt in the crypto market. Both after all are centralized and will only represent the exact value of the paper dollar since the both are tied to the exact fiat value of the corresponding digital asset.

The only concern for digital dollar will be the stricter regulation when comparing it to Usdt. But there will be no influence whatsoever of this CBDC dollar on crypto since it's not decentralized

dollar cbdc is nothing to worry about in the development of cryptocurrencies. Until now, cryptocurrency is still decentralized, and as long as it is maintained without government intervention, crypto will remain on track. Moreover, until now in crypto we are more popular USDT than CBDC dollars, so USDT stable coins are the most widely used by investors or traders with various respective goals. here highlight a free decentralized system. so even if the country makes its digital currency, I don't think it will affect crypto

I would guess that it would have the reverse impact instead. Governments are already not that much against crypto right now, and places like the USA are supporting them enough, hell Coinbase became 100+ billion dollar company in stock market because of this. If the digital dollar comes out, then they will want people to use crypto even more, so that they would use digital dollars as well.

This would be the door that connects government and crypto together, and include banks in this one as well. So, you could have a "crypto-like" thing in your bank account, making it easier to deal with crypto directly under the supervision of the government, they will certainly want that.

Exactly. The launch of CBDCs will put crypto to the test as governments increase regulatory pressure. By encouraging the use of government-issued digital currencies, most people will have no need to turn to crypto as an alternative payment system. A Digital Dollar would be as fast and cheap to use as crypto (probably even better) with added convenience. Only those who care about their privacy or want to escape from the clutches of central banks and governments alike will use crypto for day-to-day payments.

One thing for sure is that increasing regulations will only do more harm than good for the mainstream adoption of crypto/Blockchain tech. We should expect constant opposition from governments in order to force people to use CBDCs. Ultimately, it's all about decentralization. As long as decentralization wins, we'll have nothing to worry about. Just my thoughts ;D