Can Central Bank Digital Currencies Kill Cryptocurrencies ?

[Oluwa-btc]

https://news.bitcoin.com/rbi-official-central-bank-digital-currencies-could-kill-cryptocurrencies/


Reserve Bank of India (RBI) Deputy Governor T. Rabi Sankar says central bank digital currencies could “kill whatever little case there could be” for cryptocurrencies, like bitcoin and ether.

RBI Deputy Governor T. Rabi Sankar talked about the potential impact of central bank digital currencies (CBDCs) on cryptocurrencies, like bitcoin and ether, at a webinar organized by the International Monetary Fund (IMF), local media reported Friday. By “private cryptocurrencies,” the Indian government and the central bank refer to all non-government-issued cryptocurrencies, including bitcoin and ether.


I know IMF are huge critics of Bitcoin and any country that adopts Bitcoin as a legal tender, they're also involved one way or the other innit . As I don't blame RBI much, only scared of dollarization https://news.bitcoin.com/indias-central-bank-rbi-warns-crypto-could-lead-to-dollarization-of-economy/ which they say are not of them countries interest. Asides that, drug abuse and money laundering has been a norm over there.

IMF are chiefly responsible and Championing the move against Crypto Currencies and Bitcoin all for them selfish interest... But do you see any possibility of Central Bank's Cryptocurrencies killing Bitcoin, Crypto Currencies ?, although China imposed huges bans of any other digital currencies except there's and are doing quite well ( Economy ) correct me if I'm not!

What you think?!

[Upgrade00]

The claims in the article would apply to majority of the coins available, but not to Bitcoin, so making the headline about Bitcoin is a bit wrong and misleading.

Sankar detailed: “A currency needs an issuer or it needs intrinsic value. Many cryptocurrencies which have neither are still being accepted at face value – not just by gullible investors but also by expert policymakers and academicians.” The official elaborated:

Fiat can be arbitrarily printed and have no intrinsic value, but is yet accepted at face value, the government does not want users to come to this realization, hence they try to talk down on alternative currencies.

Can CBDCs kill Bitcoin? No.
A blockchain version of a centralized system would not undermine a decentralized one. Of anything, imitating cryptocurrencies would give them more legitimacy.

[hatshepsut93]

So, Bitcoin is a currency that was created to not be controlled by the government, and the government plans it to kill it with a currency controlled by the government? They really don't understand what crypto is about. People with a basic understand of it (which sadly is not everyone in crypto community) know that blockchain alone doesn't make a coin fundamentally valuable. It's the decentralization, robustness, security against potential attacks. Bitcoin is miles ahead of both altcoins and CBDC here, and those things can't become better than Bitcoin due to their fundamental flaws.

[PrimeNumber7]

CBDC is more likely to kill banks than it is to kill cryptocurrencies. A CBDC is going to be centralized, and more importantly, can be trivially reversed by the issuer (the central bank). The appeal of bitcoin, and other cryptocurrencies is that transactions are “final” once confirmed on the blockchain, and only those with the private key has the ability to spend your coin.

A CBDC would act very similar to a bank account, but without any counter-party risk, however minimal, that is associated with a bank account. 

[mk4]

Simply put — if you think CBDCs will kill Bitcoin/crypto, then you simply don't understand Bitcoin/crypto. Both might have some similarities on how they technically work in the back-end, but both are fundamentally very different.

[adaseb]

I think there is very little difference between government cash and government digital currencies. One is digit and the other is paper money. However it is centralized like today. It has infinite supply and can be confiscated anytime. Bitcoin is completely different.

The reason why they are releasing this is because these days nobody pays with cash anymore. It’s easier to just pay people digitally like with credit cards. So the use case for this is practicality however it’s not in competition with crypto currencies like Bitcoin and Ethereum.

[cabron]

CBDC will be adopted faster by Indians.
When government suggest which app to install, most of the people will eventually try it and will use it too. They're willing to submit to it if they airdrop thousands of rupee to each.

Eventually though, someone will always figure how to use CBDC to buy Bitcoin or any cryptocurrencies. Its all gonna work out and CBDC rupees are going to crypto market.

[Rruchi man]

IMF are chiefly responsible and Championing the move against Crypto Currencies and Bitcoin all for them selfish interest

Crypto can limit the power of the IMF, and the people behind the IMF are afraid of that.

This context suggests why the IMF is so aggressively anti-crypto: Because at the highest level, its reason for existence is not to boost developing economies or help the individuals who live within them. The IMF is not a neutral aid organization, but the economic arm of a vast power structure that frequently hides itself behind the language of uplift and reform. It seeks to draw peripheral or developing nations – African and Latin American countries being a current high priority – into the postwar neoliberal consensus.

For all we know, the creation of CBDC's may be an idea or one of the conditions that they have propagated and imposed on all countries that have sought financial aid from them as one of the many conditions they have to agree with before the finance they need can be approved. Some of these known conditions to me have the motive to pedal any country backwards.

Those conditions can include wage cuts for public sector workers, the reduction of public pensions, the cutting of social programs, policies that favour privatization of public services, the abandonment of industrial policy and the opening of capital markets.

source

CBDC's regardless IMO cannot kill crypto, it may only temporarily reduce the adoption of crypto, but it will also increase the popularity of crypto in a long run, as many will get to find out that CBDC's were created to discourage the use of crypto which the government fears because they have little country over it.

[Despairo]

Bitcoin is decentralized and will never get killed with any restrictions from any third party including government, it's different with Ethereum where it's centralized and controlled by Vitalik Buterin, also with other shitcoins.

If all governments and banks doesn't allow Bitcoin anymore, they still can't stop Bitcoin since we can trade in decentralized exchange. We all know both India and China are against Bitcoin, so don't surprised if the bad news are mostly come from these countries.

[Kakmakr]

This coming from one of the countries with a very high corruption rate ==> In 2021 their Corruption Perceptions Index ranked the country in 85th place out of 180, on a scale where the lowest-ranked countries are perceived to have the most honest public sector. Various factors contribute to corruption, including officials siphoning money from government social welfare schemes . Source : https://en.wikipedia.org/wiki/Corruption_in_India

Can you imagine trusting a government with your wealth, if they are stealing money from a social welfare scheme? Remember these government officials will have full control over the "digital" currency, so they can change the supply and they can track all tokens on their database. (They might even be able to taint coins, so that it cannot be used or block people's access to their wallets)  

[Smartprofit]

Simply put — if you think CBDCs will kill Bitcoin/crypto, then you simply don't understand Bitcoin/crypto. Both might have some similarities on how they technically work in the back-end, but both are fundamentally very different.

In my opinion, CBDC is a very big threat to cryptocurrencies (including Bitcoin and Ethereum). 

CBDC is the centralized currency of the Central Bank.  The government says the CBDC has no plans to displace cash from circulation.  But it's not. 

Of course, governments are planning to eventually phase out cash entirely and replace it with CBDCs... 

It is very difficult to ban Bitcoin if there is cash in the country.  After all, the circulation of cash is very difficult to control (this is demonstrated in numerous films about the life of gangsters). 

Another thing is CBDC.  CBDC is full control over citizens' cash flows. 

At the same time, Bitcoin may be banned under the far-fetched pretext that it contributes to the sponsorship of terrorism and the growth of cybercrime.

[crwth]

This would not kill or stop cryptocurrencies. It's impossible. Imagine those companies who have already invested a lot in cryptocurrencies and have been able to get more from their investment in them because they believe in them. It's just too much to stop.

People don't get to stop BTC itself. Regulators wanting to wouldn't be able to because of its structure. I believe people need to be educated about cryptocurrencies to understand how important they can be for anyone.

[bittraffic]

Even China was not successful in controlling BTC in their country, killing BTC will be impossible and up to today BTC is being mined in China and they do have CBDC as well.

But I have to agree that CBDC will make it comfortable for people in India to use. Its the closest wallet app they could use to serve as bank of their own especially the people who are not familiar with crypto.

[Dunamisx]

Reserve Bank of India (RBI) Deputy Governor T. Rabi Sankar says central bank digital currencies could “kill whatever little case there could be” for cryptocurrencies, like bitcoin and ether.

let's assume as this statement was made, do you personally have a conviction that this is possible? even though i can only say for bitcoin it's not possible,  and i believe you also understand how cryptocurrency is fast blooming in India and how the government hype the fees paid on tax and regulations surrounding crypto law in India, gone are the days people can be decieved by mere threat on regulations, this does not even work on bitcoin because the people clearly understand the difference between what bitcoin is and what CBDC is.

But do you see any possibility of Central Bank's Cryptocurrencies killing Bitcoin, Crypto Currencies ?

even though this aspect has been talked about several times on the forum, i will only like to make a reference to the number of countries that have introduced their CBDC and list them, check to see for yourself how many of them have been successful with it and how many have successfully eradicated bitcoin after their launch.

[witcher_sense]

There is arguably only one possible approach that governments could take to destroy bitcoin completely or at least greatly slow down its worldwide adoption. Bitcoin is a product of a free market: it was born in a free market, the free market dictates the price of bitcoin, the free market determines competitors of bitcoin, etc. If you want to fight bitcoin, you should do it by means of the free market. In short, create a worthy competitor, a new cryptocurrency that will be better than bitcoin in literally all aspects. Many have tried this, and many have failed, but it was just enthusiastic individuals not powerful governments willing to change the status quo. If some economically and politically strong government decides it no longer wants to be a part of "traditional" financial system based on debt, it can switch back to something even more "traditional", namely a  financial system based on hard money, such as a shiny commodity which everyone likes - gold. Or on cryptocurrency that is backed by gold and over which no government (including the one that created it) will have control.

[mk4]

In my opinion, CBDC is a very big threat to cryptocurrencies (including Bitcoin and Ethereum). 

CBDC is the centralized currency of the Central Bank.  The government says the CBDC has no plans to displace cash from circulation.  But it's not. 

Of course, governments are planning to eventually phase out cash entirely and replace it with CBDCs... 

It is very difficult to ban Bitcoin if there is cash in the country.  After all, the circulation of cash is very difficult to control (this is demonstrated in numerous films about the life of gangsters). 

Another thing is CBDC.  CBDC is full control over citizens' cash flows. 

At the same time, Bitcoin may be banned under the far-fetched pretext that it contributes to the sponsorship of terrorism and the growth of cybercrime.

Sure they can banoutlaw BTC, but that fact is true regardless if we have CBDCs or not. CBDCs doesn't limit Bitcoin's use just because CBDC is digital, as digitization isn't necessarily the purpose of Bitcoin — it's decentralization and censorship-resistance, which CBDCs obviously doesn't have.

[Flexystar]

It can't kill it because that's not how it works. When we say centralisation then it's centralisation, no matter what it is, whether gold or digital coin or fait notes. In short they are controlled, they are traced, you have to abide the terms of usage.

What do you expect from the Digital Currency of RBI? Do you think they will allow you to send it overseas without any limits, without any documentation and to any person / country around the world?

The answer is simply no. It is just so called upgrade to the current fiat system and in digital format. It mean nothing to the crypto currency and it will never be able to work like crypto currency - decentralised.

[Leviathan.007]

I don't think they are able to do it ever. firstly there is a big difference between these two and bank digital currencies are digital currencies while cryptocurrencies are based on encryption and the privacy you can see in cryptocurrencies and especially bitcoin, is unique. While the bank digital currencies are centralized and are controlled by the governments and banks and in the end, the nature of bank digital currencies is pretty much the same as the normal currecnues. I guess one good reason to say cryptocurrencies are much more popular among people is the decentraliztion of cryptocurrencies while the bank digital currencies are made to be centralized.

[sunsilk]

So that's the target of CBDCs? If it's the target and they're all eyes on bitcoin, they can't but if it's the other existing cryptos and altcoins, they can have at least a chance of eliminating a lot of them which mostly at par with stable coins.

Before, we've thought that bitcoin is going to replace fiat/cash but eventually we have accepted the fact that they'll just co-exist and we can live with both of them. As for the CBDCs, if this is just going to be a digital fiat then there's no need for them to think about eliminating bitcoin because they'll never be able to do that.

[avikz]

You have to understand that the current RBI governor is a political hire to act as a puppet for the government. If the Indian government really cared about experience, they wouldn't let Dr. Rajan resign.

CBDCs can't put a dent on cryptos. Killing is out of question. Cryptocurrencies work in a different way and CBDCs are just a digital representation of fiat currency. It won't be much different than the ways we are using UPI nowadays. Don't worry!