You’ve probably recently come across images of a supposed digital currency wallet from China. However, this subject is not new, and rumors have been circulating since April 2020. CBDC is money issued by Central Banks using a centralized database.
In practice, add up the benefits of predictable issuance and the impossibility of reversing transactions. However, for governments, full control of currency circulation makes it possible to implement negative interest rates and even limit where money is spent.
For example, blocking 50% of the salary for spending on food, health and housing, or placing a monthly fee of 2% for those who have more than R$ 100,000 in deposit. Anyway, the sky is the limit for the rulers to have even more power over the people.
The CBDC’s centralized system allows governments to restrict access to certain countries or companies. If Apple does not pay the “application tax” in Brazil, the government can ban the use of your digital currency in this store. Similarly, the credit card-type intermediary who continues to provide such a service can easily be cut off from the financial system.
CBDC is a Trojan horse, which uses the guise of “open banking” to place the Central Bank at the center of all financial transactions using local currency. The citizen will be angry when he realizes that he can no longer buy the drink or play the girl who sells farts on OnlyFans.
This rhetoric is as old as “Blockchain yes, Bitcoin no”. Thirteen years have passed since the invention, and to this day there is no single case use of the technology outside of cryptocurrencies. Microsoft and IBM have already fired the teams that worked on it, but, of course, there are still a lot of scam artists selling dreams.
El Salvador, a country in South America, adopted Bitcoin as one of the official currencies in September 2021. There, it is mandatory to accept payments in cryptocurrency, whether at McDonalds or when renting a property. For this, the second layer technology of Bitcoin, Lightning Network, was adopted.
Undoubtedly, one way to escape the clutches of governments is to resort to stablecoins, the dollar-matched currencies. Even if you opt for a decentralized model, such as Terra USDT (UST) or DAI, it will be almost impossible to convert them into an equivalent CBDC.
It is very simple for the digital currency issuer to monitor who is acting from exchange or p2p broker, blocking these addresses and values. Therefore, the tendency is for people to abandon the fiduciary system altogether, guaranteed to a decentralized model. In this way, Bitcoin will be with open arms to receive these refugees.