What is CBDC?

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Central Bank Digital Currencies (CBDCs) are digital tokens that central banks have issued and are comparable to cryptocurrencies. They are tied to the value of a country's fiat currency.

CBDCs are being developed by many countries, with some already being introduced (such as China's digital yuan). Given the widespread interest in transitioning to digital currencies, it is important to understand what CBDCs are and their implications for society.

Understanding CBDCs

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A form of currency known as "fiat money" is one that the government issues without any physical backing, such as gold or silver. It is recognized as a legal tender for the exchange of goods and services. Traditionally, fiat money existed in the form of notes and coins, but advancements in technology have allowed for the digital recording of balances and transactions.

While physical currency is still widely used, its usage has declined in certain developed countries, with this trend accelerating during the COVID-19 pandemic. Proponents of digital money and central banks have used this as an argument to phase out physical banknotes.

The emergence of cryptocurrencies and blockchain technology has further sparked interest in cashless societies and digital currencies. Governments and central banks worldwide are exploring the potential use of government-backed digital currencies. If implemented, these currencies would have the full support and trust of the issuing government, similar to unbacked money. However, a cashless society relying on digital, unbacked currencies comes with its own challenges.

Concerns about CBDCs

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One concern regarding the initial versions of CBDCs is that they will be highly centralized, operated, and issued solely by central banks. However, this may not always be the case. Just as the internet evolved from intranets over time, CBDCs could eventually allow for the adoption of decentralized currencies as market participants seek the most efficient systems. As a result, people may turn to cryptocurrencies as a reaction to unbacked fiat currencies, which have no limit on the issuance of new money. Therefore, it is important to note that CBDCs and cryptocurrencies are fundamentally different systems and cannot be directly compared.

The implications of a cashless society
Without physical banknotes, individuals would lose control over their currency and resources. CBDCs are designed to provide total control over all transactions, which raises concerns about increased surveillance (resembling Big Brother) and centralized control over people's savings by central bankers.

CBDC as a tool of ultimate power

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A centralized CBDC is likely to mirror the current monetary system but with enhanced tracking capabilities, enabling authorities to monitor every dollar spent. This raises significant issues, as it means governments could manipulate spending habits and even starve certain segments of the population by restricting access to money. It has the potential to become the most powerful tool for absolute totalitarian control in history.

CBDC and monetary slavery

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This level of control could extend to all aspects of people's lives, allowing governments to know what individuals are purchasing and where. This opens the door to imposing spending limits, such as on fuel consumption, as a fully digitized system offers complete oversight and control at the push of a button. In contrast, blockchain and cryptocurrencies are designed to oppose such a system. It wouldn't be surprising if efforts were made to restrict or ban the use of cryptocurrencies as a response.

Many prominent individuals and economists view digital money entirely controlled by central banks as a significant threat to individual freedom and, by extension, national sovereignty. It is a valid concern that should be closely monitored, with the general public made aware of the potential risks it poses.

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