Do governments need a Blockchain?

[Abiky]

Governments are keen on launching digital currencies of their own (aka CBDCs) in an effort to undermine Bitcoin. There's a lot of "buzz" surrounding Blockchain tech these days. But due to the centralized (permissioned) design of CBDCs, there might be no need for a Blockchain after all. Governments can just use an ordinary database system that would serve as the "ledger" for their very own digital currency. Or they can make a partnership with existing payment companies (eg: VISA and Mastercard) to help deploy CBDCs. All without the need for a Blockchain.

I mean, what use would a private Blockchain network have? The real security benefits exist on permission-less blockchain networks. Not the other way around. Why not build their CBDCs on top of Bitcoin instead (like a sidechain)?

Thoughts?

[EarnOnVictor]

The government could continue using standard SQL database and do whatever they like with it, but in the end, this is a consideration between the old way that's easily manipulated and a new way that is more transparent and better auditable.

Even as the central banks are delaying, big players like JP Morgan, CBDC, etc are already "testing the waters." They have transitioned many of their activities into blockchain network.

I believe the government is rather looking at what impact it would have on the financial institutions, especially the fintech, which is why they are delaying. But when it comes to more benefits, transparency, accountability and protection, the the blockchain digital style has it.

[Spaceman1000$]

Governments are keen on launching digital currencies of their own (aka CBDCs) in an effort to undermine Bitcoin. There's a lot of "buzz" surrounding Blockchain tech these days. But due to the centralized (permissioned) design of CBDCs, there might be no need for a Blockchain after all. Governments can just use an ordinary database system that would serve as the "ledger" for their very own digital currency. Or they can make a partnership with existing payment companies (eg: VISA and Mastercard) to help deploy CBDCs. All without the need for a Blockchain.

I mean, what use would a private Blockchain network have? The real security benefits exist on permission-less blockchain networks. Not the other way around. Why not build their CBDCs on top of Bitcoin instead (like a sidechain)?

Thoughts?

Government will not want to use Blockchain, hence is not something they can influence, they won't bother investing, not only that, Blockchain will expose their dirty lining, hence they would just avoid such technology. at best CBDCs would be their best option, and if you notice the antecedent of various government, you see that they all want to tow towards CBDCs. So in answering your question, government do need Blockchain, especially to trace the transactions of government finances and for public scrutiny.

[Karl_3000]

Governments are keen on launching digital currencies of their own (aka CBDCs) in an effort to undermine Bitcoin.

CBDCs are not cryptocurrencies and they lack transparency, unlike how bitcoin is. In all the countries CBDCs have been created, they said they are not cryptocurrencies but they are built with the blockchain technology.

What I am seeing some countries looking for now are stable coins. Some countries prefer blockchain like BSC which I have read in the past. Maybe such countries will have their own blockchain in the future.

[Nathrixxx]

I mean, what use would a private Blockchain network have? The real security benefits exist on permission-less blockchain networks. Not the other way around. Why not build their CBDCs on top of Bitcoin instead (like a sidechain)?

The government already have every other means of storage over the time that are being centralized already, the only means they can have something different from what they are used to is by embracing this blockchain technology, not because they don't have an alternative to it to use for themselves, but they also have to realize the fact that using a decentralized network that engenders for transparency and accountability is mostly needed in government, just to prove that they are being accountable and does things in fair manner and the people can see what they do.

[viljy]

It makes sense for the authorities to use blockchain. First of all, what is government? It is a heterogeneous organization with interest groups and lobbyists. The blockchain allows for full control over transactions. Among other things, monitor the transactions of your own officials and authorities, stop theft, misuse of money, etc. In addition, I believe a CBDC will be very different from cryptocurrency. The fact that the functionality will necessarily include the possibility of blocking and maybe even forced cancellation of transactions, as well as an adjustable emission function. That is, it will essentially be the same monetary system as it is now, but with enhanced transaction control.

[terrific]

Governments are keen on launching digital currencies of their own (aka CBDCs) in an effort to undermine Bitcoin. There's a lot of "buzz" surrounding Blockchain tech these days. But due to the centralized (permissioned) design of CBDCs, there might be no need for a Blockchain after all. Governments can just use an ordinary database system that would serve as the "ledger" for their very own digital currency. Or they can make a partnership with existing payment companies (eg: VISA and Mastercard) to help deploy CBDCs. All without the need for a Blockchain.

I mean, what use would a private Blockchain network have? The real security benefits exist on permission-less blockchain networks. Not the other way around. Why not build their CBDCs on top of Bitcoin instead (like a sidechain)?

Thoughts?

The idea from blockchain is all what they need for them to adopt into creating new systems that will show transparency to the government and its people.
They don't need blockchain as that what they will say. But fret not, they'll take the time to understand and study it.
So with that technology, they'll see how efficient it is specially for the transactions that can be displayed and shown publicly.
They'll just change it into some other names and just as CBDCs, they don't really need it but for the sake of new tech and such, they'd do it.

[Mhizlove]

Honestly the design choice isn't a mistake but priority matters alot because government isn't looking for resistance, censorship or trustless system like bitcoin what they after or want is monitoring, control and the ability to block or reverse transactions any time they wants to do, so in this kind of objective simple database can work more than Blockchain. So bitcoin and CBDC are not competitors in the same purpose, they share different purpose because one is a tool for freedom and the other a tool for control, and thats the real issue here the difference

[Fortify]

Governments are keen on launching digital currencies of their own (aka CBDCs) in an effort to undermine Bitcoin. There's a lot of "buzz" surrounding Blockchain tech these days. But due to the centralized (permissioned) design of CBDCs, there might be no need for a Blockchain after all. Governments can just use an ordinary database system that would serve as the "ledger" for their very own digital currency. Or they can make a partnership with existing payment companies (eg: VISA and Mastercard) to help deploy CBDCs. All without the need for a Blockchain.

I mean, what use would a private Blockchain network have? The real security benefits exist on permission-less blockchain networks. Not the other way around. Why not build their CBDCs on top of Bitcoin instead (like a sidechain)?

Thoughts?

To put it simply: bitcoin does not have the capacity to handle all the transactions that take place in a country with hundreds of millions of people, nevermind multiple of them that tally up to billions. There are way more efficient payment networks that are already completing that role. Central bank coins can at least replace some of the existing paper + coin currency in circulation if it's done correctly, because they will pick a network that can cope with the right volume of transactions. They are already trusted to print the correct amount of money into circulation so in theory it should not make much difference if they transform it into a digital version instead. They should definitely be using the most hardened version envisaged right now before launching.

[Bluedrem]

No matter how many governments launch their own digital currencies, they will never be able to defeat decentralized Bitcoin. Even if the government creates a digital currency using blockchain technology, people will still chase Bitcoin for financial freedom, and then Bitcoin will gain much more popularity. When the government launches a digital currency, the general public of the country will learn about digital currencies, even if only to accept it, and when they learn about digital currencies, the real benefits of Bitcoin will be revealed to them, and more people will express interest in accepting Bitcoin.

[YOSHIE]

Why not build their CBDCs on top of Bitcoin instead (like a sidechain)?

Your question reminds me of one of the sources I once read, with the title "Systemic Risk of Central Bank Digital Currency (CBDC)" there are several reasons for the fatal risk if CBDC is developed and commercial banks will become extinct.

Reasons I've read:

• Risk of Faster Bank Runs: In situations of economic crisis, individuals can easily and quickly move their funds from commercial banks to central (digital) banks, potentially triggering faster bank runs (mass cash withdrawals) compared to traditional systems.

• Systemic Banking Risk (Disintermediation): If people choose to deposit funds directly with central banks (via CBDC) rather than commercial banks, this could reduce bank deposits. As a result, the ability of commercial banks to provide credit to the public decreases.

• Cybersecurity Threats: Centralized storage of financial data puts CBDCs at risk of becoming prime targets for hacking. Data breaches in this centralized system risk massively endangering the financial data of all citizens.

• Technological Uncertainty and High Costs: Implementation of a CBDC requires a highly complex and secure technological infrastructure, which requires high costs and faces heavy internal bureaucratic challenges.

It is different if the government uses a blockchain network, if they use it of course security is more guaranteed because it is decentralized and can also increase data security, efficiency and transparency towards society.

[cxtreenal]

Governments are keen on launching digital currencies of their own (aka CBDCs) in an effort to undermine Bitcoin. There's a lot of "buzz" surrounding Blockchain tech these days. But due to the centralized (permissioned) design of CBDCs, there might be no need for a Blockchain after all. Governments can just use an ordinary database system that would serve as the "ledger" for their very own digital currency. Or they can make a partnership with existing payment companies (eg: VISA and Mastercard) to help deploy CBDCs. All without the need for a Blockchain.

I mean, what use would a private Blockchain network have? The real security benefits exist on permission-less blockchain networks. Not the other way around. Why not build their CBDCs on top of Bitcoin instead (like a sidechain)?

Thoughts?

CBDC is basically a digital version of the centralized fiat system. The monetary system introduced by the central bank has introduced a separate digital system in many countries without a visa or credit card through a bank account. Through a card issued by the bank and by using specific apps to receive digital services. Many countries have introduced services in the field of product services and money transactions through the CBDC system. You can generally get this service without the need to withdraw cash funds. You can get any service from home without waiting for a long time to get services at the bank. I think the government is making life easier by providing this digital service by taking the idea from cryptocurrency. It is a digital medium of the traditional monetary system. An alternative measure to prevent the erosion of fiat currency due to the effect of inflation would be to develop a Bitcoin financial system.

[dezoel]

The idea from blockchain is all what they need for them to adopt into creating new systems that will show transparency to the government and its people.
They don't need blockchain as that what they will say. But fret not, they'll take the time to understand and study it.
So with that technology, they'll see how efficient it is specially for the transactions that can be displayed and shown publicly.
They'll just change it into some other names and just as CBDCs, they don't really need it but for the sake of new tech and such, they'd do it.

They do not "need" blockchain, it would be great for us the citizens to be able to see exactly where our money goes, and the ability to see it exactly would make every government become defunct very easily because lets face it they are spending our money on things that are corrupt and shady and not to our benefit.

Sure the small part of our tax goes to things that we want, but if we knew and could follow exactly where all the money goes and it was public information, things would be wildly different.

[noorman0]

Government will not want to use Blockchain, hence is not something they can influence, they won't bother investing, not only that, Blockchain will expose their dirty lining, hence they would just avoid such technology.

Blockchains don't always have to be designed to be fully open ledger; banks have already implemented half of such technology, or the Monero blockchain, known for its privacy features. If governments want a more secure financial network, blockchain offers the best answer. With far more resources and access to unlimited infrastructure, governments should be able to operate more computing power independently, giving them complete control.

[Myleschetty]

There is no doubt that the primary reason governments and central banks are eager to introduce CBDCs is to develop a deeper strategy to encourage people to use their CBDCs rather than Bitcoin while maintaining some control in the digital currency space, where Bitcoin is the major player. I won't be shocked if every government imposes strict regulations on CEX operations regarding BTC and other cryptocurrencies, because governments never truly support BTC, and they launch CBDC as a defensive tactic.

[PX-Z]

For countries dealing with heavy corruption, blockchain can help improve transparency, especially when it comes to tracking public funds and making transactions easier to audit.

But the tech alone isn't enough. It needs strict implementation, clear policies, and real enforcement. If there are no consequences for wrongdoing, this kind of tool won't matter. And if it's just launched and later abandoned, it becomes another wasted effort instead of a solution.

[terrific]

The idea from blockchain is all what they need for them to adopt into creating new systems that will show transparency to the government and its people.
They don't need blockchain as that what they will say. But fret not, they'll take the time to understand and study it.
So with that technology, they'll see how efficient it is specially for the transactions that can be displayed and shown publicly.
They'll just change it into some other names and just as CBDCs, they don't really need it but for the sake of new tech and such, they'd do it.

They do not "need" blockchain, it would be great for us the citizens to be able to see exactly where our money goes, and the ability to see it exactly would make every government become defunct very easily because lets face it they are spending our money on things that are corrupt and shady and not to our benefit.

Sure the small part of our tax goes to things that we want, but if we knew and could follow exactly where all the money goes and it was public information, things would be wildly different.

It's the paper trail in other words but with the connection and accessibility that they can do for their citizens, it's a good work that they'll provide.
We all want to see how the budgets are spent on where it should be spent for. And many of the politicians aren't black and white in it.
Which means that some are not for transparency but if this technology provides it for them, that's way better than before.

[Zaguru12]

For countries dealing with heavy corruption, blockchain can help improve transparency, especially when it comes to tracking public funds and making transactions easier to audit.

The blockchain that the OP was emphasizing on was actually private blockchain, like those that most of the companies can have go their own self keeping like ledger book without Public access, if it’s this type of blockchain I think it’s still useless because it takes just the position of bank where the blockchain is completely centralized.

But if it’s actually the usual blockchain or the public like that of bitcoin where everyone is having access to it and can verify their informations there I would say it’s a great idea because the blockchain can give the citizens some beliefs that they can verify their informations there, it’s one of the most common advantages that drew some people to the bitcoin blockchain. A public ledger is decentralized and that’s what makes it very welcome and if that’s the type of blockchain that government wishes to have its digital currency on I think it’s better, but a private one will not be different from the traditional digital system we have already

[moneystery]

They used blockchain technology solely to create the impression that their CBDC was similar to Bitcoin, which is more transparent, secure, and unmanipulated. In fact, they didn't need blockchain technology because they had been using conventional databases to store their data, and no one questioned it. Only after Bitcoin had developed did they begin developing a CBDC with blockchain technology.
From this, we understand their goal, they weren't developing a CBDC with blockchain simply because it offered security and transparency. Specifically, the blockchain they used was a private blockchain, meaning it wasn't as open to the public. So what's the point of their blockchain if it's so private?

[TastyChillySauce00]

Maybe they want to adopt transparency style that blockchain have by exposing database to public, but whatever they will use to create their CBDC it will be centralized blockchain as centralized as it gets.

Their blockchain could be a faux blockchain imitating real blockchain with sql stack. Anything could happen with government and their centralized stack, so whatever comes up later I wouldn't be surprised.
They could've deployed their CBDC in existing public blockchain with some smart contract modification but I guess that's too easy for them.