If you care about freedom, watch out for CBDCs

In recent years, the concept of Central Bank Digital Currencies (CBDCs) has gained more and more traction around the world, with proponents extolling the potential benefits of a digitized monetary system.

However, when we examine the real implications of CBDCs, it becomes increasingly clear that the rush to digital currencies controlled by central banks poses a significant threat to individual freedom.

CBDCs mean the end of financial privacy

Privacy is a fundamental right that should extend to our financial transactions. CBDCs, by design, raise serious concerns about the erosion of financial privacy. The ability of central banks to monitor and track every transaction in real time threatens to create a surveillance state where our every financial move is scrutinized.

Recent protests in Nigeria against the introduction of the e-naira, a state-owned digital currency, serve as a stark reminder of the public’s resistance to an invasion of their financial privacy. Citizens rightly fear the potential misuse of this data and the implications for personal freedom.

An open door to unprecedented government violations

CBDCs offer governments unprecedented control over financial transactions, opening the door to full government oversight of how individuals choose to spend their money.

Governments have a strong penchant for data collection, and pairing CBDCs with a social credit scoring system would immediately plunge us into a dystopian nightmare. Imagine a scenario where every purchase decision affects your social credit score, which determines everything from your ability to buy train tickets to getting a government job.

China’s reality, where citizen counts affect important aspects of life, serves as a stark warning against the possible misuse of CBDCs for intrusive surveillance.

The dangers of centralization

The appeal of CBDCs depends on their perceived ability to centralize power within the economic system. Proponents argue that this centralized control can streamline monetary policy, improve efficiency and provide a quick response to economic challenges. However, beneath this promise lies a dangerous reality.

Governments, known for their bureaucratic complexity and lapses in accountability, pose a significant risk to the integrity of CBDCs. The main vulnerability stems from the potential for government errors, ranging from poorly executed updates to the susceptibility of the centralized ledger to data breaches.

Unlike Bitcoin, a decentralized cryptocurrency that has weathered a decade of challenges to establish a robust and tamper-proof structure, CBDCs place unnecessary reliance on less resilient mechanisms.

The decentralized nature of Bitcoin, achieved through a distributed network of miners validating transactions through a proof-of-work consensus mechanism, has proven to be resistant to manipulation and external interference.

In contrast, CBDCs are linked to centralized databases, making them susceptible to the pitfalls inherent in centralized systems. A single software error, a careless update or a data leak can have profound consequences for the entire economic framework governed by CBDCs.

For further reading, check out our piece on ‘What makes Bitcoin such a revolutionary concept.’

CBDCs mean financial exclusion

Globally, more than 60 percent of jobs are in the informal economy, which provides livelihoods and efficiency. However, CBDCs pose a significant threat to this sector, jeopardizing activities such as neighborhood deals or employing a teenager for yard work.

The government’s ledger tracking every transaction could sound the death knell for the informal economy, affecting millions of jobs and disrupting the efficiency and cost-effectiveness it brings.

Retaining the option to use physical cash is crucial to maintaining individual autonomy and choice in financial transactions.

Closure

Finally, within the dynamic terrain of digital currencies, the rise of Bitcoin over CBDCs is clearly evident.

Just like fiat currency, CBDCs, subject to the discretion of central authorities, will be prone to over-issuance, diluting their value. Conversely, Bitcoin’s fixed supply of 21 BTC, embedded in its protocol, stands as a bulwark against inflationary pressures.

Ultimately, in the field of digital currencies, only a decentralized, peer-to-peer currency can offer privacy, global accessibility, scarcity and immutable transactions.

As we navigate this complicated landscape of monetary evolution, understanding the nuances and potential implications becomes paramount. The journey to a decentralized and peer-to-peer financial system is not only about the pitfalls of traditional currencies, but also about adopting alternatives that protect individual autonomy and choice.

Given the critical discourse surrounding the threats CBDCs pose to privacy, financial inclusiveness and economic freedom, staying informed is more a matter of necessity than choice.

Students For Liberty’s upcoming LibertyCon International to be held February 2-4, 2024 in Washington, DC is an excellent opportunity to connect with top experts, scholars and entrepreneurs who share a concern about the future of money and the threats it poses. the central bank holds digital currencies.

The main stage will host a panel discussion on CBDCs, titled ‘Central Bank Digital Currencies: Financial Convenience or Orwellian Nightmare?’, with Robert Breedlove, Stephan Livera and Peter St. Onge, moderated by Students For Liberty’s CEO, dr. Wolf von Laer.

Click the button below to sign up for updates and secure your place at this exciting event. We can’t wait to see you there!

This piece expresses only the opinion of the author and not necessarily the organization as a whole. Students For Liberty is committed to facilitating a broad dialogue for liberty, representing a diversity of opinions.