The Central Bank Digital Currencies (CBDC) may be pure evil, but from whose perspective? What is evil to some is pure goodness to others. - by CryptoHayes cryptohayes cryptocurrency
Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.
The orgy of money printing benefited financial asset prices, which in turn drove a drastic widening of global income inequality – but that kind of inflation isn’t what destabilizes a government. That kind of inflation just makes a condo on 57th Street parallel to Central Park worth hundreds of millions of dollars. That kind of inflation makes your avo smash $25 at the Aussie cafes in any international financial center.
The other big difference between CBDC’s and current electronic cash is that, due to the innovations afforded by blockchain technology, the government can program their CBDCs to be 100% under their control. It’s this additional level of control that will enable them to solve their two-pronged inflation problem.
Imagine you are the “other”. The others in any society are those who are economically exploited, either by virtue of their ethnicity, their immigration status, their religious beliefs, and/or their accent. Their exploitation is allowed to continue by the majority because the majority are led to believe the others deserve their lowly station due to their supposedly deficient qualities.
At this stage of the CBDC-verse, all economic activity between citizens occurs using digital money, and no other former currency is accepted or even exists. The protestors and those who support them are thus unable to fill their cars up with gas, unable to purchase a bus, train, or plane ticket, unable to dine at a restaurant, unable to purchase food and water at the grocery store, and ultimately unable to organize effectively– so the march on the capital never materializes.
Because of their importance to the overall financial system, even when banks have fucked up and caused financial crises, the government has always had to step in, print money, and rescue the banking system, without being able to impose any real consequences for the havoc the banks wreaked. Create a network where there is only one node, the central bank. Every citizen has an account directly with the central bank. I will call this the Direct Model.produced this nice infographic that categorizes the various types of CBDCs:
The Federal Reserve is not a for-profit entity and therefore doesn’t charge JPM or BOC a fee for running a node. However, from time to time the Federal Reserve may ask for details on who did what on the network, and the banks must comply and furnish the requested data. The Federal Reserve may also direct the banks to lend at attractive rates to certain demographics, and/or conduct direct handouts by sending FEDs to JPM and BOC and instructing them to give them out to certain customers.
The banks would obviously prefer this model. They still get to charge whatever they like as gatekeepers to the financial system, and they also get to remove a key competitor – physical cash.The Federal Reserve builds its own app, which every citizen downloads. This app is the only means through which FEDs can be stored and transferred. The commercial banks can still obtain licenses to take deposits and lend, but they compete directly with the Federal Reserve.
Given that every country that has at least reached the “choosing a CBDC model” stage has opted for the Wholesale Model, it’s clear that no central bank wants to bankrupt their domestic commercial banks. Not even in China, where the biggest banks are all directly owned by the government. That tells you how much political power the banks have inside of the government.
A bank must pay billions of dollars to build, secure, and maintain physical infrastructure that secures various forms of money like cash, coins, and precious metals. A stablecoin pays nothing for security. In fact, the user covers the security cost by paying a transaction fee to the network each time they wish to send value. On the Ethereum network, for example, you pay a gas fee in Ether each time you send a transaction on the network.
The reason why stablecoins exist and are popular is because there is no competing CBDC. Should the Federal Reserve roll out FedCoin, there will be very little reason to use any of these solutions, as the FedCoin will be backed by the government and can never go bankrupt.
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