Could CBDCs defeat crypto in the long term?

[Wexnident]

They'd probably not conflict much imo. I mean, CBDC should solely be used for local transactions after all, and global transactions that could use local currency would probably require coordination between every country out there which is probably close to impossible to happen due to a lot of problems that may or may not occur. Additionally, it's not like a digital currency has any difference with fiat currency, it's just made digital and tbh, the concept of using payments using money from bank accounts is already as such. Besides, it's not like a Centralized currency could defeat crypto, especially bitcoin since they aren't even on the same page. One is Centralized and the other is Decentralized. How would one defeat the other if at the very start, their very notion of what they are is already opposites right?

But at the end of the day, it is still people that will choose what currency are they going to use in their own way.

This is basically it. The government can't shut down Bitcoin cause it's a decentralized system, and the community can't shutdown fiat or CBDC cause it's controlled by the government which is a huge power, so why bother making them fight? Just let people use what they want to use.

[Lucius]

A really tough question, can crypto issued by governments in any way win the competition with a decentralized cryptocurrency such as Bitcoin? I don't think that will be the case, because as others have already said, there is a huge difference between something that is completely centralized and something that can be considered people's money, in this case Bitcoin.

However, if we look at the crypto user base today, estimates say that there are less than 100 million people who are in some way involved with crypto, while at the same time we all use fiat. Therefore, it will be quite normal that one day everyone will be forced to use CBDC, and BTC will continue to be an alternative for those who think a little differently than most.

CBDC is already a reality in China where it is being tested in several provinces/cities (Shenzhen, Xiong’an, Chengdu and Suzhou) and it will probably be the first country to fully switch to digital money. Needless to say, such money means 100% control and perhaps the final strike to privacy of citizens. Maybe it is also an opportunity for BTC, although we know that the supervision over it is bigger and more extensive every day.


https://www.ledgerinsights.com/china-digital-currency-wallet-dcep-cbdc/

[Febo]

Now that there have been talks among central banks in launching their own CBDCs, the fate of crypto could be at stake. Governments wouldn't allow anyone to use alternative currencies in order to enforce the use of national digital currencies (CBDCs). They might believe that decentralized crypto is the threat to the existence of the world's monetary system. Such events haven’t happened yet because central banks are still attached to physical cash. Once they're able to "be in par" with crypto, they might do anything at their disposal to prevent people in the mainstream world from using cryptocurrencies like Bitcoin and Ethereum.

What are thoughts? Do you believe that at some point in the future, CBDCs could defeat crypto? Or will CBDCs co-exist with decentralized cryptocurrencies for the foreseeable future?

It all depends what they will build. If they will fork Bitcoin or better Monero, teen why not?  Originals will have more network synergy, but a strong central bank like FED can advertise their coins more.   But as yourself why would they want to make that? Those that made Bitcoin or Monero did not gained anything, since they were fair launched. There is no incentive for any central bank to make a permissionless decentralised cryptocurrency.

They will make a centralised digital coin. Something like tether or other stable coins.

[exstasie]

However, I don't see it happening in foreseeable future. While a lot of countries are discussing to implement CBDCs, only one country has started their trial run. So it's easier said than done!

Yep, lots of unrealistic expectations about this. Upon analyzing the plans of Euro area central banks, Deutsche Bank speculates we could see CBDCs circulating 3 years from now and honestly that seems optimistic: https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/from-hygiene-to-aid-covid-19-strengthens-case-for-central-bank-digital-money-58321056

It's a much bigger endeavor than most people realize. They are trying to create account systems that will eventually embody the entire currency economy. Think of all retail and commercial banks combined and then add the informal cash economy on top. That's the end user base they have in mind.

If CBDCs ever get established on that scale, it will have a much bigger effect on retail banks than on crypto. With widely used CBDCs, banks will become unnecessary middlemen for many, which central banks like because it gives them more direct control over the money supply and makes cash and liquidity injections much more effective.

CBDCs are no more competition for BTC than Apple Pay or Tether. Different purposes, different velocity of money, different pools of users. They are more so competitors for privately issued stablecoins.

[coinfinger]

So, who will be making use of these Central bank digital currency (CBDC), is it you? I won’t be interested in that if the government should go ahead with it. If the government create digital currencies, they will be regarded as an asset or property, and wouldn’t be a replacement.

It won’t change anything and you will still be able to make use of fiat if you want. From the ones I have seen you will buy them from the banks and I’m very sure you will have to pay a fee for buying those assets and will also pay for transaction, so what’s the need for it? I’d rather be making use of fiat and decentralized cryptocurrencies like I’m doing now.

[tvplus006]

The national digital currency and cryptocurrency have different tasks, so they cannot replace each other. The first task of the CBDC is to provide payments within the state while fully centralizing it. Cryptocurrency is decentralized and designed to provide payments anywhere in the world, without using the banking system.

[brotherwood12]

i think they are moving separatly with different way , and it will just cause minor effect to each other in my opinion about bitcoin and CBDCs

[Yaunfitda]

I was thinking that, if anything, CBCDs would only further legitimise Bitcoin.  All the people who say Bitcoin "isn't real" or that it's "just a bunch of ones and zeroes" won't have a leg to stand on when they unquestioningly accept CBDCs like a bunch of hypocrites.  Calling it now. 

True, it makes bitcoin's narrative more compelling specially the technology behind it. Government at the beginning are taking it hard against bitcoin, but look at today, they want to harness blockchain, what a hypocrites.

As far as I understand CBDC aim is for the society to go cashless, so I doubt that there could be any competition for bitcoin here. And I don't think that we are going to be affected by governments implementing their own coin, their very intention is somewhat opposite.

[DooMAD]

I was thinking that, if anything, CBCDs would only further legitimise Bitcoin.  All the people who say Bitcoin "isn't real" or that it's "just a bunch of ones and zeroes" won't have a leg to stand on when they unquestioningly accept CBDCs like a bunch of hypocrites.  Calling it now. 

True, it makes bitcoin's narrative more compelling specially the technology behind it. Government at the beginning are taking it hard against bitcoin, but look at today, they want to harness blockchain, what a hypocrites.

As far as I understand CBDC aim is for the society to go cashless, so I doubt that there could be any competition for bitcoin here. And I don't think that we are going to be affected by governments implementing their own coin, their very intention is somewhat opposite.

People refer to it as a "war on cash", but in practice it's a war on privacy.  There's no doubt that vast quantities of data about our spending habits is collated and sold.  I'll be using physical cash for as long as I possibly can.  It's still one of the best ways to protect your privacy.  And once the option to use cash is gone, it'll be time to start spending the non-government crypto. 

[Jating]

I think it spurs from the notion that countries with CBDC will obstruct their people to use cryptocurrencies. I don't think that is correct or not, But countries like China "may" have that in mind, so that they can control and monitor everyone, sort of spying on their people's transaction.

China's digital Yuan will be the big test case here, we're going to see if this is a success or not. And they are banking on the argument that Digital Yuan will strengthen their economy and can broaden their financial structure and cross border payments are going to more efficient.

[Wind_FURY]

Now that there have been talks among central banks in launching their own CBDCs, the fate of crypto could be at stake. Governments wouldn't allow anyone to use alternative currencies in order to enforce the use of national digital currencies (CBDCs). They might believe that decentralized crypto is the threat to the existence of the world's monetary system. Such events haven’t happened yet because central banks are still attached to physical cash. Once they're able to "be in par" with crypto, they might do anything at their disposal to prevent people in the mainstream world from using cryptocurrencies like Bitcoin and Ethereum.

What are thoughts? Do you believe that at some point in the future, CBDCs could defeat crypto? Or will CBDCs co-exist with decentralized cryptocurrencies for the foreseeable future?

Defeat crypto? I believe only a person with a poor understanding of how the Bitcoin/non-scam crypto protocol works would say that CBDCs could "defeat crypto".

OP, Bitcoin's value-proposition is censorship-resistance first. The Core developers have made a good design-decisions to make sure that it's maintained, and couldn't be censored/"defeated".

[oxgroth]

They can create own digital fiat and make other cryptos illigal, that would be a hard hit for btc

[SquallLeonhart]

China could do CBDC a lot better than any other nation because they want to be able to follow where peoples money go to. It is not easy to create a dictatorial regime with cash, people could spend that money on anything and you may not be able to follow as much as you want, but when it is all digital you will be capable of tracing that money however you want.

The thing about China is that they are a "free" nation if you can leave, sure it is hard for very poor to leave that nation and even when they do its hard to bring all your family with you, because if you leave China and criticize it you are going to get your family in trouble. With cash you can save up and leave eventually using that cash, but with digital they won't allow you. CBDC could be used for very bad reasons like that, so it should be looked with suspicion.

[Abiky]

There's no ways CBDCs can defeat cryptos in an ethical way. It can only happen if a government chooses to impose a ban on cryptos and creates legal provisions for severe punishment.

Technically government cannot curb the usage of cryptos and I believe, Russian central bank also admitted the same few months back. So the only way left for government is to create fear among the crypto users of their country.

However, I don't see it happening in foreseeable future. While a lot of countries are discussing to implement CBDCs, only one country has started their trial run. So it's easier said than done!

That's the point. If governments unanimously agree on banning crypto usage worldwide in order to force the use of CBDCs, then crypto will be doomed. While it will still be possible to use crypto "under the table", the average person will be quite skeptical dealing with something that's declared as "illegal" by the government. By then, it may no longer be possible to buy/sell crypto against Fiat. Only direct crypto transactions between peers will be the norm in the crypto/Blockchain space.

With so many cryptocurrencies being largely dependent on centralized infrastructure (mostly centralized exchanges), it becomes so easy for a government to crackdown on crypto. In authoritarian governments (like China, and Venezuela), CBDCs will be enforced across the region. Since CBDCs will be "living" on the Blockchain, governments can see every single transaction and do with accounts as they please. It'll be the end of privacy as we speak, as everything lives on the digital realm.

Nonetheless, I believe that there's still a long way to go before considering CBDCs a real contender against traditional cryptocurrencies like Bitcoin and Ethereum. We may have to wait until governments launch their own CBDCs next year, in order to see how well they're adopted in the mainstream world. If people choose to deal with CBDCs more than crypto itself, then the latter will become largely unpopular. After all, CBDCs will gain the "same" features as crypto. Who would want to deal in crypto when you've got a CBDC with stable prices and all the good stuff of Blockchain? Time will tell us what lies ahead with the future of both CBDCs and crypto. Just my opinion