CBDC vs. Bitcoin and Decentralization
A couple of weeks ago I read an article on Seeking Alpha, a crowd-sourced content service for financial markets and one of the most prominent and visited investment sites in the world, that “Bitcoin and its clones will fall hard and fast.” The author predicted that these decentralized cryptocurrencies will be obsolete in less than 10 years. His argument is that there are several benefits to Central Bank Digital currency “CBDC” that range from avoiding tax evasion, managing monetary policy, enforcing tax compliance, and inhibiting criminal activity.
I agree with that most central banks will inevitably issue CBDC. And that it's only a matter of time.
But disagree that “Even beyond those obvious advantages of Central Bank Digital currencies, it is simply foolish to treat Bitcoin and its clones as a reliable store of value or a means of commercial exchange.”
Lets dig a little bit: This month, China launched the first experiment with the digital Yuan by allowing 100k users to download an app that lets them trade and store digital Yuans, This real-world trial for the digital currency started in a number of cities including Shenzhen, Chengdu and Suzhou.
Lets remember that a few centuries ago when coins where the main form of currency China was the first nation to adopt paper money. Now, after witnessing the rise of Bitcoin and other altcoins, China is the first country to officially roll out a government issued digital coin which stores transactions in a blockchain ledger. This is revolutionary because its goal is to become independent of the almighty dollar as much as possible, a task which, if accomplished, will carry a colossal global financial alteration. Specially, because as we know, the almighty dollar has reign supreme in world markets since World War II.
The e-RMB uses technology that allows "controllable anonymity," meaning buyer and seller can be anonymous, but government authorities can readily track suspicious transactions.
Payments are made via phone numbers using QR code’s, without SWIFT, and require only electricity to be present in disaster or underdeveloped areas, thus turbocharging CCP China's ability to project soft power abroad.
The 2022 Beijing Olympic Games provides CCP China with a global platform to highlight the e-RMB, giving it a tremendous first-mover advantage in CBDCs.
e-RMB threatens the the entire global financial payment system and, particularly, the "exorbitant privilege," economic and geopolitical, of the USD being the world's reserve currency.
This experiment will permit all other nations to improve upon the results that the e-rmb gets. And we will soon get used to reading on the news about new central bank issued cryptocurrencies in circulation.
This is a great shift in the way we use and perceive money. Global financial situations are about to get big shake that will re-accommodate money and wealth as we know it. But I do believe that fiat and all the different types of currencies that are being brought to life will be able to co-exist.
For a financial expert to say that “Bitcoin and its clones will be obsolete in less than 10 years” tells me that a lot of us do not fully understand what decentralized, immutable, democratic cryptocurrencies mean. De-centralized currencies are a way to vote for sovereignty. Saying that decentralized cryptos will not exist much longer is saying that you are comfortable with a small group of authoritarian individuals governing over much of what you do and don’t. It means that you have not understood that human beings should be, and are totally able to, trade with whom we want under the terms that we choose. It means that we are tired of authoritarian governments and powerful institutions taking our financial power away for their personal enrichment while they still hold the power to create money (i.e. print money, quantitative easing) if they desire and will put you away in a government ran institution if you don’t comply with laws they have created to protect them.
As a matter of fact, I think that; the more central bank digital currencies we see in circulation, the more value decentralize crypto will have. Bitcoin and decentralized cryptocurrencies are a voting system for sovereignty and I do not see them going away any time soon. Au contraire!