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Thread: Central Bank Digital Money (CBDC) is not "crypto"

  1. #1

    Central Bank Digital Money (CBDC) is not "crypto"

    As a tangent to an RPF crypto thread, I commented that CBDCs <> crypto. I spent some time this morning writing an article on the subject to explore it in a little bit more depth. This issue is a fundamental battleground for financial liberty. I hope it helps clarify the issue for people:

    CBDCs = TOFO (Tools of Financial Oppression)
    Last edited by Bern; 01-25-2024 at 07:33 AM.



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  3. #2
    Exactly right.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  4. #3
    Quote Originally Posted by Bern View Post
    As a tangent to an RPF crypto thread, I commented that CBDCs <> crypto. I spent some time this morning writing an article on the subject to explore it in a little bit more depth. This issue is a fundamental battleground for financial liberty. I hope it helps clarify the issue for people:

    https://www.pmbug.com/threads/cbdcs-...pression.7022/
    CBDC is just government crypto.

  5. #4
    Cryptocurrency versus CBDC
    https://www.dbs.com/blockchain/crypt...y-vs-cbdc.html


    The key difference between cryptocurrency and CBDCs is that CBDCs are regulated and issued by the central bank, while cryptocurrencies are decentralised and unregulated. CBDCs, essentially digital fiat money on a centralised blockchain, therefore hold the same value as physical fiat money.
    The John Birch Society is a grassroots education and action organization to return the Republic to the principles found in the Declaration of Independence and the Constitution. -- Join the Fight!

  6. #5
    Quote Originally Posted by WisconsinLiberty View Post
    CBDCs, essentially digital fiat money on a centralised blockchain, therefore hold the same value as physical fiat money.
    Yes, the FRN is currently more digital than physical. They didn't print all those billions the last seven years. Probably couldn't have.

    In practice, it feels like a distinction without a difference. In reality, there's a big difference between banks making money the new old fashioned way, by typing it into existence on a keyboard, and governments being privy to every single transaction, and the stuff that's earned by mining and transacted in a less centralized way.

  7. #6
    Quote Originally Posted by Madison320 View Post
    CBDC is just government crypto.
    If it's government, it isn't crypto.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  8. #7
    Quote Originally Posted by Swordsmyth View Post
    If it's government, it isn't crypto.
    You think government can't encrypt things?

  9. #8
    So glad everyone bothered to read the article this thread is presumably about. Pithy statements like "CBDC is just government crypto." gloss over huge and important distinctions. Folks who think that way are the intended audience for the article that I wrote. Understanding this issue is important.

    ...
    Most central banks publish press releases and papers on their CBDC projects. They are working hard to develop systems that do the same thing that existing crypto systems are doing. The big difference though is that CBDC systems are closed systems (wallet creation is tightly controlled) designed for centralized control whereas cryptos are open systems (wallet creation is free and available to anyone) designed for decentralized control (with democratic systems for governance of network development and management).

    Centralized control means that the central bank controls the creation and ownership of wallets. For wholesale CBDCs (aka wCBDC), this means the central bank controls the dissemination of wallets to participating banks. For retail CBDCs (aka rCBDC), they control the dissemination of wallets to the general public. That's a huge task and in order to do it, governments are preparing to roll out digital IDs that will be integrated with CBDC wallets.

    In addition to the opportunity for total financial surveillance, CBDCs can be smart technologies. They can be programmed to reject transactions with specific wallets. The central bank can shut off access to anyone, anywhere, any time. That's total financial control. If you think operation choke point or algorithmic debanking are odious today, just imagine how central bank owned AI systems in the future will decide if you are allowed to buy a loaf of bread. Better keep your social credit in the green comrade!
    ...



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  11. #9
    Quote Originally Posted by acptulsa View Post
    You think government can't encrypt things?
    A cryptocurrency, crypto-currency, or crypto[a] is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it.[2] It is a decentralized system for verifying that the parties to a transaction have the money they claim to have, eliminating the need for traditional intermediaries, such as banks, when funds are being transferred between two entities.[3]

    Cryptocurrency does not exist in physical form (like paper money) and is typically not issued by a central authority. Cryptocurrencies typically use decentralized control as opposed to a central bank digital currency (CBDC).[11]

    https://en.wikipedia.org/wiki/Cryptocurrency

    Government currency is not crypto.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  12. #10
    Bern is making a solid case for that. He doesn't need anyone trying to "help" by quoting a useless piece of Wikipedia propaganda (that hedges the snot out of itself by using the word "typically" twice) like it's gospel.

    He really doesn't.

  13. #11
    Quote Originally Posted by Madison320 View Post
    CBDC is just government crypto.
    FTFY
    Jer. 11:18-20. "The Kingdom of God has come upon you." -- Matthew 12:28

  14. #12
    Quote Originally Posted by acptulsa View Post
    You think government can't encrypt things?
    Irrelevant. The point is that there is zero privacy in a CBDC. The "crypto" part of it is just a gimmick. "Hey I encrypted the Constitution. Now it's the crypto-Constitution!" This makes as much sense as CBDC. It is not crypto at all, it's just government.
    Jer. 11:18-20. "The Kingdom of God has come upon you." -- Matthew 12:28

  15. #13
    ClaytonB and OB both did good jobs expounding on the intrinsic value issue. Thank you. [see split thread here: [SPLIT] "intrinsic" value - OB]

    Quote Originally Posted by ClaytonB View Post
    ... what makes PMs different from paper cash or Bitcoin ...
    With respect to their use as money, I already posted a link to an article I wrote specifically on that very topic:

    The Seventh Characteristic of Money

    Feedback would be appreciated - as always.

    ~~~

    This thread has drifted a bit off topic.
    Quote Originally Posted by Bern View Post
    ...
    I care a great deal about this subject however, and I will take every opportunity to try and educate folks about it. There are a lot of people (especially gold/silver bugs) that have deeply held negative opinions about (decentralized) crypto and they tend to conflate it with CBDCs without understanding what is happening in the big picture. Whether you like crypto or not, it is the battleground right now in fighting against a CBDC world.
    The issue is not gold vs crypto. You are welcome to your value judgements on crypto's worth and let free market competition reign.

    The issue *is* CBDCs. Even though I am a self professed goldbug, I am also honest enough to recognize that the War on Crypto is part of the plan for (eliminating competition and) forcing CBDCs on the world. Even if you don't "like" decentralized crypto, you should be supporting it. Financial/economic freedom hangs in the balance. No big deal.
    Last edited by Occam's Banana; 01-27-2024 at 06:29 PM. Reason: added link to split thread

  16. #14
    Quote Originally Posted by Bern View Post
    Even if you don't "like" decentralized crypto, you should be supporting it.
    Jer. 11:18-20. "The Kingdom of God has come upon you." -- Matthew 12:28

  17. #15
    Quote Originally Posted by Bern View Post
    Even if you don't "like" decentralized crypto, you should be supporting it. Financial/economic freedom hangs in the balance. No big deal.
    I support the right of anyone to buy and sell crypto. I'm just predicting it's not going to work and therefore it's not going to help in the fight against cbdc.

  18. #16
    Quote Originally Posted by Bern View Post
    ClaytonB and OB both did good jobs expounding on the intrinsic value issue. Thank you.

    [...]

    This thread has drifted a bit off topic.
    I have split all the off-topic posts to a new thread (here: [SPLIT] "intrinsic" value). [1]

    Any future posts on that topic should be made to that thread instead of this one.



    [1] I've also moved similarly off-topic posts on the same subject from the FTX thread to the split thread. The moved posts from this thread start with this post.
    Last edited by Occam's Banana; 01-27-2024 at 06:33 PM.



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  20. #17

  21. #18
    Jer. 11:18-20. "The Kingdom of God has come upon you." -- Matthew 12:28

  22. #19
    Innovations in the decentralized crypto space continue. Solana (SOL) recently announced a new tech called token extensions:

    https://www.youtube.com/watch?v=CEuKahqOYbs



    It is the advances like this in a free market with crypto innovation that will make it difficult for CBDCs to compete (or justify an existence).

  23. #20
    Morgan Stanley has warned about the risk of the U.S. dollar losing its dominance, fueled by growing interest in digital assets, including bitcoin. Emphasizing that the U.S. dollar’s dominance “is being increasingly scrutinized,” the investment bank stated: “A clear shift towards reducing dollar-dependency is evident, simultaneously fueling interest in digital currencies such as bitcoin, stablecoins, and CBDCs.”
    ...
    https://news.bitcoin.com/morgan-stan...ncy-landscape/

    He was partially right. Consumers are interested in crypto. I don't see anyone interested in CBDCs. And this is the point of this thread. Crypto is the free market competitor to authoritarian CBDCs.

  24. #21
    The number of U.S. politicians supporting cryptocurrencies continues to increase, as does the number of lawmakers that oppose central bank digital currencies, highlighting the growing understanding of blockchain technology and the importance of decentralization.
    ...
    https://www.kitco.com/news/article/2...timent-spreads

    Still a *long* way to go, but at least progress is being made.

  25. #22
    Quote Originally Posted by Nick Giambruno - International Man
    ...
    It’s crucial to understand that CBDCs are a reaction to Bitcoin.

    Central banks took notice of Bitcoin’s disruptive potential and realized they had better do something before Bitcoin ate their lunch. CBDCs are their response; ...
    https://www.zerohedge.com/crypto/glo...-surprise-them

    Nick reiterates nearly everything I have been saying about CBDCs and crypto.

  26. #23
    FWIW:
    U.S. Sen. Ted Cruz (R-Texas), joined by Sens. Bill Hagerty (R-Tenn.), Rick Scott (R-Fla.), Ted Budd (R-N.C.), and Mike Braun (R-Ind.), today filed legislation to halt efforts by the Biden administration to issue a central bank digital currency (CBDC):

    About the bill, Sen. Cruz said, “The Biden administration salivates at the thought of infringing on our freedom and intruding on the privacy of citizens to surveil their personal spending habits, which is why Congress must clarify that the Federal Reserve has no authority to implement a CBDC. I’m proud to lead the fight in the Senate to restrict the Federal Reserve’s exploration of and attempt to introduce a CBDC to the American economy.”

    Sen. Hagerty said, “From Operation Chokepoint to recent reports of political and religious profiling by FinCEN, it is clear that government bureaucrats have been far too willing to exploit the financial system to advance political agendas and target Americans. This bill blocks the issuance of a central bank digital currency, preventing CBDC from being used as a tool to surveil and violate Americans’ privacy.”

    Sen. Rick Scott said, “Big government has no business spying on Americans to control their personal finances and track their transactions. It is a massive overreach and a non-starter for me. That is why I am proud to join Senator Ted Cruz to introduce the CBDC Anti-Surveillance State Act to stand up against this invasive practice and keep Big Brother out of your bank account.”

    Sen. Budd said, “As Americans face the prospect of an increasingly weaponized government, ensuring financial privacy is pivotal. A CBDC would open the door for the federal government to surveil and control the spending habits of all Americans. Any push to establish a CBDC must be confronted and stopped, and that’s why I’m proud to join Senator Cruz’s effort to do just that.”

    A CBDC is government-controlled programmable money that, if not designed to emulate cash, could give the federal government not only significant transaction-level data down to the individual user, but also the ability to program the CBDC to choke out politically unpopular activity.

    The CBDC Anti-Surveillance State Act would prohibit the Federal Reserve from issuing a CBDC directly to anyone, ensuring the Federal Reserve can’t mobilize itself into a retail bank. It would also bar the Federal Reserve from issuing a CBDC indirectly to individuals through financial institutions or other third parties, as well as prevent the Federal Reserve from using a CBDC as a tool to implement monetary policy and control the economy. Finally, the bill would require authorizing legislation from Congress for the issuance of any CBDC.
    ...
    The legislation is endorsed by Heritage Action for America (HAFA), the Blockchain Association, the American Bankers Association (ABA), the Independent Community Bankers Association (ICBA), and Club for Growth (CFG).

    Heritage Action for America said, “While Americans across the country are being punished for thinking, speaking, and voting the ‘wrong’ way, the last thing we need is the government surveilling personal finances. A Central Bank Digital Currency (CBDC) is a fixed-value, government-run cryptocurrency that replaces the dollars in your bank and wallet. Anti-CBDC legislation is necessary to safeguard Americans' financial privacy in the face of potential surveillance, control, and political intimidation. Heritage Action and our two million grassroots activists nationwide encourage congressional action on this issue. We will be issuing a Key Vote Cosponsorship to encourage support for Senator Cruz and Whip Emmer’s bill—the Anti-Surveillance State Act—and will include cosponsorship on our legislative scorecard.”

    The Blockchain Association said, “CBDCs present major privacy concerns for everyday Americans, including granting the government the ability to collect intimate personal details on U.S. citizens, and potentially track and freeze funds for any reason. We applaud the introduction of the CBDC Anti-Surveillance State Act in the Senate – legislation aimed at preventing a CBDC from being issued in the United States.”

    ABA President and CEO Rob Nichols said, “ABA has long believed that a CBDC would pose significant risks to our financial system that would outweigh any potential benefits, including undermining the critical role that banks play in extending credit and powering the economy. We applaud Sen. Cruz and his cosponsors for introducing this important legislation that will help protect consumers and our financial system.”

    ICBA President & CEO Rebeca Romero Rainey said, “ICBA and the nation’s community banks strongly oppose the creation of a U.S. central bank digital currency, which would disintermediate community banks, reduce credit availability, and undermine consumer privacy. By barring the Federal Reserve from issuing a U.S. CBDC to consumers, the CBDC Anti-Surveillance State Act would avoid the unnecessary risks to consumers and small businesses that a U.S. CBDC would pose. We encourage Congress to continue advancing this important legislation.”

    David McIntosh, the President of Club for Growth said, “The creation of a U.S. CBDC would threaten the financial health of the country and the constitutional rights of law-abiding Americans. It would subject Americans to financial surveillance and discrimination should they hold the ‘wrong’ beliefs, hurt economic growth by crowding out private sector investment, and create significant financial volatility by incentivizing Americans to pull their capital from private banks. Club for Growth applauds Senator Cruz’s introduction of this critical legislation to protect Americans from the dangers of a CBDC.”
    ...
    https://www.cruz.senate.gov/newsroom...urce=pmbug.com

  27. #24
    Bold is mine:
    Politico is reporting that a group of House conservatives are trying to tie a vote on Rep. Tom Emmer’s (R-MN) central bank digital currency bill to a deal on broader cryptocurrency legislation. According to the article, the main reason to avoid this strategy is that it risks “isolating the few Democrats” who support Rep. McHenry’s (R-NC) broader legislation.

    Setting aside which members support broader crypto bills, stopping the Fed from issuing a CBDC should not be the partisan issue it is becoming. A CBDC gives the government untold economic power—irrespective of which party is in charge.

    Launching a CBDC has nothing to do with losing a technology race, spurring faster payments, or protecting the U.S. dollar’s status as the world’s reserve currency. Regardless of what Rep. Stephen Lynch (D-MA) thinks, stopping the Fed from launching a CBDC does not equate to “sticking our head in the sand.”

    CBDCs are a desperate reaction by governments to prevent decentralized currencies from threatening the monopoly of national currencies. They enable maximum government control over people’s lives through the direct provisioning of money and financial services.
    ...
    https://www.forbes.com/sites/digital...ning-momentum/

    That's what I've been saying...



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