CEX.IOmostTrusted2
Web 3

A Breakdown of CBDCs and One Idea That Could Make Them Slightly Less Scary

TL;DR

Full Story

Alright, look, talking about CBDCs is kind of like having that ‘birds and bees’ chat with your 13 year old son.

(It needs to be done, but you don’t exactly look forward to it).

CBDCs are essentially government run stablecoins – key words “government run.”

Typically with crypto projects (BTC, ETH, SOL etc.), no single group or entity can change or control where the crypto can be used, or how it functions – without being put to a vote and reaching consensus with its user base.

With CBDCs however, the power to change where the token can be used or how it functions is held by the government, which could lead to some issues…

Let’s ease into this, and dial up our tinfoil-hat-panic-levels slowly…

Level 1 = every single cent you spend can be tracked in real time (when, where, who, and for what) by the government.

Level 2 = governments could start dictating where/on what you spend your money (e.g. want to lower consumer spending in real time? Program in a cap on all non-essential purchases for a month).

Level 3 = your money can now be ‘switched off’ (doing something that isn’t government approved? The money in your account is now null and void).

Now…just because something sinister could be done, doesn’t mean it will (screw Murphy’s Law, we say!).

BUT! Here’s the head scratcher:

We already have non-government issued stablecoins, like USDT & USDC.

And the government-issued legal tender we use (for us, it’s USD) works just fine without all the spooky potentials for control, ya know?

See also  What's happening to the other culprits involved in the FTX collapse?

One thing that has been proposed is to make the code for CBDC’s open source so that everyone can see exactly what is/isn’t within a government’s control.

But so far, with Brazil’s pilot it was found that the Brazilian government would be able to freeze user funds and adjust their balances – at will.

So, while open sourcing the code that powers CBDC’s is absolutely a step in the right direction, it doesn’t stop the countries themselves from implementing some crazy opportunities for control over a citizen’s funds.

We get that this is scary, so here’s a different point of view on all of this:

Some see CBDCs as less of a power struggle between individual citizens & governments, and more of a reaction to the growth of privately controlled stablecoins (i.e. Tether and Circle).

Governments want to be in control of the creation/issuance of their own currencies, and CBDCs will give them that control in the crypto space.

What’s the truth of it all?

No idea. But we’ll let you know as soon as we find out.

Okay, wow, that was a lot.

Time for another coffee ☕️

Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button