What’s In Your Wallet? If CBDC Supporters Have Their Way, Nothing Reliable

In December, Reuters reports,  India’s “digital rupee” crossed the milestone of more than one million transactions per day. Meanwhile, in early January,  the European Union’s central bank published a rulebook for, and Spain’s central bank  selected “partners” in a pilot/test program for, their own central bank digital currencies (CBDCs). In the US, CBDCs remain at the debate stage.

Governments around the world don’t like “cryptocurrency” very much, but they do like two things about it.

First, they like that Bitcoin, Ether, and other cryptocurrencies have popularized the “next step” of taking money into a completely digital paradigm … not just debit cards linked to bank accounts, in turn linked to theoretical dollars, euros, etc., but doing away with “cash money” (paper bills and metal coins) entirely.

Secondly, they like the idea that the average Joe may assume that CBDCs are just another kind of cryptocurrency, tied to secure/immutable blockchains and with at least some privacy baked into transactions.

To put it as succinctly as possible, no, CBDCs aren’t cryptocurrencies. They’re the digital opposite of cryptocurrencies in important respects. In fact, their main function is to serve as instruments of control over you, your activities, and your finances.

Less succinctly:

If you hold Bitcoin in a “non-custodial wallet” — that is, a wallet that you and no one else holds the cryptographic keys to — your account balance is secure, the transactions you enter into are irreversible, and anyone wanting to know who owns that wallet has to have more than the wallet address to find out. Bitcoin is not inherently anonymous in commerce (if you buy something that has to be delivered with your Bitcoin, for example, SOMEONE will know who you are and where you live), but it’s not immediately transparent to any centralized/authoritative third party.

A CBDC will be operated by a government or government proxy, and every last red cent you receive or spend will be instantly traceable to you … and, more importantly, instantly takeable FROM you.

Suppose, for example, that you’re a mechanic and accept CBDC “dollars” to work on someone’s Corvette. If the government decides that your customer is a drug dealer and resolves to confiscate everything he’s ever touched in an “asset forfeiture” action, the money you received can be instantly seized from your account.

Or suppose you say something in public that the government dislikes and it decides to “freeze your assets” while it investigates you for (to grab a current news hook) “material support of Hamas.” It’s a lot easier to “freeze” CBDC funds — with, pretty much literally, a computer keystroke — than to get hold of the coffee can full of gold Krugerrands you buried at your secret spot in Mark Twain National Forest.

Central banks are not your friends and their CBDC schemes are intended to increase their power over you, not enhance yourability to earn, save, and spend money.  At the political level, register your resistance as best you can. At the financial level, consider moving your finances into areas beyond their control.