What will be the impacts of Digital Dollar on cryptos such as Bitcoin?

[Cryptions]

It looks like the USA is seriously preparing to launch the crypto version of the US dollar (regarding the Whitehouse)

placing urgency on research and development of a potential United States CBDC

https://www.whitehouse.gov/briefing-room/statements-releases/2022/03/09/fact-sheet-president-biden-to-sign-executive-order-on-ensuring-responsible-innovation-in-digital-assets/

I believe this can be seen as a positive step towards the wider adoption of cryptocurrencies in general because of government-backed crypto is most likely going to be the one that "mainstream users" will use, simply because of it's "trusted" and "backed by the central bank". Furthermore, it's quite sure it will be easier to use than for example Bitcoin or alts.

However, this may mean that Bitcoin and alts market share declines instead of gaining more users. "Traditional" cryptocurrencies may stay in the interest of "crypto circles" as well some investors, but "mainstream" users turn back to them as there's an easier alternative to use.

Furthermore, I believe this is a leap towards a dystopian society, actually a dystopian world. The executive order directs:

agencies to work with our allies and partners to ensure international frameworks, capabilities, and partnerships are aligned and responsive to risks.

and

mitigate economy-wide (i.e., systemic) financial risks posed by digital assets and to develop appropriate policy recommendations to address any regulatory gaps.

Which in my view says directly that the US is going to lead international efforts to regulate cryptos at a detailed level, meaning ultimately they will be regulated almost in every country as tightly for example banks. This kills innovation and decentralization not to mention privacy.

[Gozie51]

Putting dollar into digital currency in form of CBDC is nothing like other countries who have done that too, I don't see any difference that will happen or affecting bitcoin. Nothing will affect bitcoin if fiat is being taken into digital space if it won't affect bitcoin supply of 21 million then bitcoin is independent of any currency.

[hatshepsut93]

Absolutely zero effect. Digital dollar has existed for decades, doing transactions via the Internet, ATMs, payment cards is exactly that. From a fundamental perspective, there's nothing revolutionary about creating another digital fiat payment method, even if it "runs on blockchain" or is a central bank digital currency. It's not competing with Bitcoin in any new way.

[fiulpro]

The impact would actually be : Nothing as long as the government does not interfere with anything and does not stop people from using them as well therefore I do think that it would be advisable to keep your investments in Bitcoins and not go for any digital dollar but hold on ! Wait a second don't we already have - Usdt? We already have those coins over there and people use them for exchange as well. The digital dollar will be much like that in existence and you should be know that the government would control it pretty much from every side as well.

Competition is not something that would be there because these are just fiat labelled with the digital dollar 💰 name. Which is same as using contactless.

[odolvlobo]

A CBDC is just another I-can-make-a-better-bitcoin project. It is not surprising. Everybody goes through this phase in their Bitcoin journey. This one is no different except that it is a government project. It is a farce, and it will fail in the end.

Why is it a farce? The goal of a CBDC would be to make the financial system more efficient, and that efficiency gain would come from the removal of banks from the process. However, the banks run the financial system and they not going to participate in their own demise.

You can see this in the Federal Reserve's recent paper on CBDCs. In it, they give banks a central, yet mostly undefined, role in the system. In the end, the paper describes something that is indistinguishable from the current system. It is no wonder that the Federal Reserve lacks interest. They cannot imagine a system in which banks play a minor role at best. It is a farce.

However, although a CBDC cannot ultimately deliver a more efficient and effective financial system, it can deliver a more efficient and effective system of control and subjugation. It gives the government the ability to surveil and control the smallest details of each and every person's lives. Ultimately, that must the true goal of a CBDC because that is it's only value.

A real alternative to a bank-run financial system can come only from outside the banking system. This means a corporate attempt at usurping the role of banks or a decentralized grass-roots revolution such as Bitcoin. We have seen what happens when corporations try to revolutionize the financial system -- they are either assimilated by the banking Borg, as in the case of Paypal, or they are beaten down by government lackeys, as in the case of Facebook. Only Bitcoin can stand up to the banking system and its government minions.

[RealMalatesta]

Absolutely zero effect. Digital dollar has existed for decades, doing transactions via the Internet, ATMs, payment cards is exactly that. From a fundamental perspective, there's nothing revolutionary about creating another digital fiat payment method, even if it "runs on blockchain" or is a central bank digital currency. It's not competing with Bitcoin in any new way.

There is a difference between the fiat money that you hold in your hands that you could put into your bank account and call it a digital money versus the money that you end up with a blockchain and crypto relevance.

I believe that the reality right now should be finding out what we could do with crypto exchanges, because that would be the biggest difference for sure. If big exchanges like binance, coinbase, kraken, gate and so forth all start to accept the new "digital dollar", then it will be a huge thing, it could be even bigger than all the stablecoins we have because this time around it will be based on the government and not just some company.

[livingfree]

There's really no need for them to do that, they've got digital dollars for so long and that's through the credit cards and other payment processors that have been existing.

So if they plan to have a CBDC, that's okay. It's part of the progress, adoption and innovation that they're looking at. But at the end of the day, it'll still give bitcoin a boost on its market because it will contribute to its growth.

[Vaskiy]

Digital dollar, the term itself indicates it to be a digital version. Paper currencies are into inflation, and how does a digital form can rescue it. There will be similar value of physical currency in circulation. The users won't have the benefit, when people start using digital dollar it give governments the easy access on taxation and having control over people's money in a better way than using physical cash.

People who are using bitcoin will never think of digital dollar just for the reason it is digitally tied to the physical currency printed by the government.

[jrrsparkles]

Again we have to trust the central banks? This is the same paper bill is going to be in the digital form but transaction will happen on the blockchain which is not actually going to bring any changes but if the government is seriously trying to bring their CBDC then they will try to stop the decentralized cryptocurrencies as much as possible.

[gantez]

People who are using bitcoin will never think of digital dollar just for the reason it is digitally tied to the physical currency printed by the government.

It has to be used in the area that dollar is used that way paper dollar was used and bitcoin is different as decentralised cryptocurrency that is locked in blockchain as open ledger source. Bitcoin is not the same with digital currency and dollar being in digital space doesn't change it not being dollar and fiat just with the digital version.

[uneng]

Without any doubts regulations are going to be heavily imposed to crypto investors and crypto platforms as cryptocurrency becomes more popular.

I expect taxes and fees are going to increase for adopters, while the difficult and bureaucracy are going to increase for businesses' owners (crypto casinos, investment platforms, exchanges...) to set up their operations in a regulated manner.

Moreover, the digital dollar thing won't have a positive impact for bitcoin or any other decentralized altcoins. It's going to be negative, since the government will try to endorse the usage of their own currency that is exactly a copy of fiat currency.