CBDCs and The Precedent They Set

One of the big conspiracy theories that's abound is the idea of a completely digital currency controlled directly by the banks; where cash has been taken out of circulation completely and with no other alternative to transact other than with digital dollars. Other countries have rolled out their version of a "digital dollar" and limiting cash withdrawals for whatever reason they will toot through their horn.

Nigeria rolled out their eNaira, yet very few people used it due to the use of Bitcoin as an alternative. This alone should tell the centralized powers of the world that people do not wish to use CBDCs due to the "programmability" of said currencies, which would make anyone using them subject to complete control under such central powers.

To go over in brief of what CBDCs actually are, Central Bank Digital Currencies (CBDCs) are digital forms of fiat currencies, issued and regulated by a country's central bank. CBDCs aim to modernize the financial system by integrating digital currency technology, offering an official alternative to cryptocurrencies and enhancing the efficiency of transactions. What's alluring about said currencies is that they have a central authority presiding over the programmability of the currencies. With this in mind, it gives a large amount of power to those that are presiding over the governed.

For example, if you were to be investigating the dominating political party and their behind the scenes whereabouts, and what you say goes against the narrative, your digital money can be locked up or zeroed out in seconds, rendering you broke and without any means of attaining the basic necessities. This draconian aspect of CBDCs is the main reason that a lot of people are both concerned and skeptical. The fact that privacy is infringed upon, especially if connected to a digital ID, and that your activity would determine your access to your money, it would not be an attractive option whereas decentralized currencies such as Bitcoin would be the better option anyway.

Even the United States, along with many other countries, are looking into the implementation of CBDCs for transitioning towards a cashless society. This would signal to many that governments and central banks are wanting more control over the lives of the people they are governing by controlling their money. This is something that many people would oppose, hence why there are countries like Nigeria that has failed with their rollout. So long as people have access to alternative digital currencies, CBDCs would never work. It would take a high level event for such an implementation to take place.

Nevertheless, countries will attempt to instill the use of a CBDC regardless of public opinion or potential outcry. With this, there are also other challenges that these countries will have to navigate if they truly do want to utilize a CBDC.

1. Technical Challenges: Implementing a robust, secure digital currency system that can handle large volumes of transactions without failure is complex and technically demanding.

2. Privacy Concerns: There's a delicate balance between ensuring user privacy and meeting regulatory requirements such as anti-money laundering (AML) and combating the financing of terrorism (CFT). Citizens and advocacy groups are often concerned about the potential for government surveillance.

3. Economic Impact: There are uncertainties about how CBDCs would impact traditional banking systems. For example, if people shift large amounts of money from regular bank deposits to CBDCs, it could affect banks' ability to lend and could destabilize the financial system.

4. Public Acceptance: Gaining trust from the public that digital currencies are safe and reliable is a significant hurdle, especially in regions with less advanced technological infrastructure or lower digital literacy.

5. International Coordination: For global acceptance, there needs to be some level of international agreement on how CBDCs operate across borders, which is a complex diplomatic and technical challenge.

Since there are plenty of cryptocurrencies that operate in a manner similar to what CBDCs are being argued for, like XRP, XLM, Monero, and stablecoins, there wouldn't be a need for a CBDC to attempt to replace the aforementioned currencies. At the very least, a stablecoin would become a de-facto CBDC before a government CBDC would be able to take off.

When CBDCs do become more mainstream, it will set a precedent for the possibility of governments using them for control over the population, which is what a lot of power hungry politicians would aspire to have. Until then, the decentralized ecosystem will be sure to provide in the case that such visions come to fruition.

The dangers of CBDCs, like increased surveillance, "green" initiatives preventing individuals from buying specific products, or the integration of smart cities that would prevent the spending of such currencies outside of a "designated" zone, would be factors to take into consideration as the groundwork is laid out for the future. This may come off as a crock pot conspiracy theory but this kind of reality can very much manifest. Due diligence and paying attention to government action will be necessary for preventing such a future to come into fruition, especially with rollouts of different kinds of technology that would bear capability of imposing strict rule that CBDCs would complement.

If such a future is on the horizon, SPARK Nation will be ready with the platform necessary to provide sanctuary from the powers that be wishing to rule with an iron fist.