Rumors of Government Coins and Central Bank Digital Currencies (CBDCs) have been around for a while. Last week in the Economist, an article was published titled, The digital currencies that matter, featuring the image of a Govcoin. It looks similar to the Bitcoin image we’re all familiar with – except this coin has a sinister agenda behind it.
CBDCs threaten the freedom and future of DeFi. Central bank digital currencies also could put an end to the existence of many other types of cryptocurrencies. This is all hypothetical. But based on the thoughts Jaimie Dimon relayed about Bitcoin and other cryptocurrencies in his annual letter to shareholders, banks are very afraid. According to the CEO of JP Morgan Chase, cryptocurrency is a “threat virtually from every angle.”
CBDCs will remove privacy from finance
So, people should be weary of these CBDCs and what they mean for the future of not only cryptocurrency but finance in general. With cash one has the freedom to trade anonymously and conduct financial activity without your bank or any institution knowing. But CBDCs will change all of that.
And until cryptocurrency, cash was the only way to conduct financial transactions with total anonymity. Now, banks want to centralize and regulate crypto as well give us “digital” cash as you can see in the Tweet above. But digital cash is really a misnomer because it’s not cash if it’s digital. Dominic Frisby, reporter and financial writer said:
“You’re free to do as you like with cash but CBDCs will have rules coded into them. And the effect will be that the money you thought was nominally yours – you won’t have power over. Pretty much anything can be coded into a CBDC. And the institutions are going to love it. Take expiry dates for example, you have to spend the money before a certain time or it expires. Andd if the central plan is that they want to boost the economy and they say ‘saving money is not the patriotic thing to do, then they can shorten the expiry date. And expiry dates will eat away the value of your money even more dramatically than inflation.”Dominc Frisby – Money Week
This sounds like a nightmarish scenerio compared to what many in crypto hope for the future of finance to be.
The direction that banks and governments want finance to go into is the opposite of what many in crypto dream for the future. The dream of many in crypto is a world away from the central control of banks and the ability to control your own wealth by staking and earning rewards. Think of how banks currently loan out money in your bank account if you weren’t aware. They earn juicy interest of loaning out your own money while you earn nothing. Now, they’re coming after crypto too it seems – and if these CBDCs turn out to be successful, the future of everyone’s financial freedom is at stake.
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Aaron is passionate about blockchain and has been an investor in cryptocurrencies for the past years. He enjoys engaging with other people in the cryptocurrency community online, particularly on Telegram, and learning from experts.