CBDCs and cryptocurrencies are two very different things. A public that is uneducated on the matter could well misunderstand the two types of currencies, leading to what may be quite far-reaching consequences.
Around 90 countries across the globe are researching and looking to implement their own central bank digital currencies. China is already quite far down this path, and has done trials in several regions of the country.
The US was believed to only be thinking about such a move, but just recently, the Federal Reserve Bank of Boston, and the Massachusetts Institute of Technology released research findings on a CBDC that would be capable of 1.7 million transactions per second.
In an interview on CNBC on Tuesday, Emily Parker, the executive director of Coindesk, gave her views on why she thought it was important to distinguish between the two assets, and why she felt there was a need for private assets such as crypto.
She said that CBDCs and crypto are “fundamentally different animals”.
“The whole point of Bitcoin is that it was created to be independent of government control. No government can shut down the bitcoin network. No government can stop Bitcoin.
Central bank digital currencies like China’s on the other hand, are literally issued by central banks. They are issued by government. So they are completely different things.”
She continued by saying that such potential widespread implementations of CBDCs makes the necessity of a private “people’s” currency even greater. She cites the fact that central banks would have total control over citizens, turning their wallets off if they didn’t like their politics or for a variety of other reasons.”
It would surely be imagined that people around the world might well be wary about their governments having such total control over their money and how they spend it. However, the mainstream media has done a pretty good job of besmirching cryptocurrencies and lauding the potential of CBDCs.
Up to now, the history of fiat currencies has been absolutely disastrous. All fiat currencies being used today have had their purchasing power sucked out of them by the policy of allowing banks to manage them, enacting such policies as quantitative easing, which has led to the massive spike in inflation we have seen today.
It is obvious to see that governments are worried about losing their control over money. It can certainly be argued that this is a very understandable reaction. Having their sovereign currencies replaced to some extent by private currencies must be a huge fear for them.
However, if governments continue to leave monetary policy in the hands of bankers who have their own axe to grind, then what is best for the people is likely to be put to one side in favour of those banks being able to maintain their profits.
A future where private currencies can operate alongside fiat is certainly not out of the question, and the people going to haven-like currencies such as bitcoin when the banks overreach their powers, would act like a deterrent that might prevent the banks from doing so.