Introduction

The world as we know it is in flux. This is very true of the financial system. It’s inertia has led it to point where it has to change or collapse.

Leaders of the financial world are scrambling right now for a way to salvage the system. Furthermore, you’ve got potential competitors to the current financial system in the form of cryptocurrencies.

Since the financial system has no adequate response to the threat cryptocurrencies pose, they’ve wisened up a little, and are attempting to make their own cryptocurrencies. These are the Central Bank Digital Currencies.

The positive potential for CBDCs is massive, but ultimately it will spur on even more development in the crypto space, especially with the privacy coins.

The CBDC Plan

Reserve bank monetary policy works through increasing or decreasing interest rates, or the rate at which people borrow. National banks would borrow money from the reserve bank, up the interest rate and then in turn lend money out to citizens and businesses. All this gets the economy accelerating or decelerating.

That was the plan – but national banks decided with rates being at record lows(effectively zero) they were going to keep the money for them selves and perform non-economy growing stuff like speculation and asset investment. This leads to asset inflation and the real economy stagnating. The barbers, shop keepers and fruit stores don’t grow because they don’t get loans that was intended for them.

The national banks are hogging the cash, and the real people who drive the economy don’t get the assistance they need as intended.

Reserve banks are on now on path to cut the national banks out of the loop, and go directly to the people with CBDCs.

Basically people will get national crypto wallets, and the citizens will get the CBDC in those wallets via various mechanisms. This is cool, because they can then directly stimulate specific parts of the economy. If you’re a business in the solar sector, you’ll get lower interest rates. If you’re in animal agriculture you’ll get higher interest rates for promoting pandemics, etc.

CBDCs are a scalpel, whereas using the national banks was a bludgeon. CBDCs provide exciting possibilities for governments trying to govern.

The Problem

The problem is that bureaucrats will be bureaucrats.

The tax authority will want to tax you directly. The national security department will want to lock your funds if you do something silly. The traffic department will limit what car you can buy based on your license. Health and safety will stop you from buying weed. And some idiot bureaucrat will decide to prevent you from twerking based on religious grounds and lock your wallet.

You’ve got the right to do whatever you want as long as you don’t cause suffering.

Authority does like you doing want you want to be doing – and that’s where CBDCs break down; and in fact they will implement the CBDC technology very inefficiently to the point of being useless.

Government and corporations cannot help themselves putting in place idiot rules and regulations that gum up the system. They’re always going to want to impinge where they’re not wanted, and they’re always going to neglect the things they’re supposed to be doing. Along with that they’ll try to curtail existing cryptocurrencies to hinder the competition.

Privacy coins will Boom

I recognize CBDCs for what they are – they’re golden shackles.

Telling you what to do and when to do it. They going to inadvertently force proper cryptocurrencies to become more private and secure – which is good thing.

Bitcoin is pseudo-anonymous which has been good, but the crypto-anarchist spirit that initiated Bitcoin will re-emerge once more to strength those principles of privacy, sovereignty and anonymity. Hence privacy focused coins like Monero, Pivx, etc will see massive adoption because of the utility.

The upcoming improvements to the Bitcoin protocol like Taproot and Schnorr signatures will also go a far way in promoting better privacy and security, which will increase it’s value.

Of course governments will try to ban privacy coins being listed on exchanges in some countries, but in other countries I think we’ll see a big uptake in privacy coins.

Conclusion

Governments and Corporations don’t have the ability to think five steps ahead of themselves and see the ramifications of their decisions. They’re motivated by control, profit and ego. This mindset always has the flaw of its own destruction – their demise is baked in.

We the people now live in a time where options are available to us. We can read, watch and see the mechanics of the world unfold before as clear as day – and this gives us that ability to make better choices.

We can choose to use CBDCs, or we can choose to to double down the progeny of the Internet i.e. cryptocurrencies which offer true freedom.

Crypto was birthed from the minds of crypto anarchists who believed in freedom and sovereignty. That idea is hard coded into cryptocurrencies. And as much as the noise from the speculators, institutional investors and governments rise, that cacophony will never drown out the voice of crypto that speaks one word “Freedom”.

Photo by Jason Dent on Unsplash