The Only Potential Benefit Of Central Bank Digital Currencies: Bitcoin Adoption

Central Bank Digital Currencies, a dystopian way to make money, will only be beneficial to society by encouraging people adopt bitcoin.

This opinion editorial is by Pierre Gildenhuys , co-founder of a Hong Kong-based startup that creates social environments.

Many major countries around the globe are actively discussing central bank digital currencies (CBDCs). This includes 19 G20 nations and approximately 105 other worldwide. According to statistics from the Atlantic Council in 2022, They are rapidly being developed and it is likely that some countries such as Australia, South Korea, and the U.S. will implement CBDCs in the near-term, following China's lead in 2022.

Although this is not new news, it is important to mention it as it can be frightening for anyone who uses money in their day. CBDCs have one benefit: They could cause the collapse of their currencies by taking as many properties out of money as possible before anyone realizes that it is not worth the price.

CBDCs were reportedly inspired by bitcoin. Of course, these countries are likely to build them to be the complete antithesis of bitcoin. The only possible similarity is a distributed public ledger. But, I believe that "a public ledger", in the eyes of many governments, denotes ownership and is therefore only accessible to the State as they are the voice for the people.

Many Bitcoiners discuss the expected horrors of CBDCs on Twitter, but I've found very few who have anything positive to share. This is something I would love to see change.

Because Keynesian economics seems to be the dominant school of economics worldwide, CBDCs will likely follow primarily Keynesian principles. The blueprint for all other CBDCs in the United States will likely be based on any of the principles adopted by them. These principles may include money that can be expired, be subject to automatic taxation, only be used in specific sectors, and be fully permission-based. This means that people could be forced to make transactions they do not want. It is likely that purchasing bitcoin with CBDCs will become difficult or impossible, since no government wants to compete with the money they have.

This is a frightening prospect. This is a frightening prospect. This will likely create a more circular economy as less people want to keep their transactional power in a centralized, supervised system. They will most likely decide to accept and pay bitcoin for every transaction. They aren't forced to spend their money in order to "stimulate growth economics" or use their expired CBDCs to save for a rainy-day or avoid unjust taxes. This is similar to the practice that many businesses worldwide use to offer their services at a discounted rate in cash payments, to avoid having to pay taxes.

This was especially prevalent in Greece, where it is believed that the practice began because Greeks didn't want to pay taxes the "foreign", Ottomans who ruled the area at the time. People feel that any additional tax on daily transactions by any power, local or international, is unfair and excessive. This is considered a form of corruption by some. However, it shouldn't be labelled as such as corruption because it implies that those who hide these transactions are in positions that they are exploiting rather than being the ones who are subject to unnecessary taxation by their government.

It is possible that CBDCs will eventually eliminate the paper currency that makes up a small portion of global economies today. These countries will be reliant on technology education and word-of-mouth explanations about how it works. This will lead to a rise of technological know-how in these countries, which should make it easier to accept other unwilling members of society to Bitcoin once they realize that they have a false currency instead of hard money.

CBDCs could be the perfect trigger for mass adoption and a new bitcoin circular economy. It doesn't matter how strongly one feels about their government, or how opposed they are to its existence. The inconvenience of having transactions restricted and moderated based on arbitrary metrics such as carbon emission scores, or nutritive values scores, is enough to drive anyone away from this monetary medium.

People will soon see how harmful Keynesian principles can be. With the potential for people's savings being taken away in order to encourage faster spending and greater overall spending — just as it has been done with inflationary practices over the past few decades — Many modern economists believe these principles to be true. These principles are used by the average person in modern times and they can use all their wealth to avoid being bankrupted due to inflation. However, there is the possibility of misinvestments. People would be more productive if they owned their businesses. They would also be happier overall if their wealth could be stored in hard money that increases in value with economic growth. The implementation of CBDCs would only make this worse.

CBDC adoption and implementation will not happen overnight. It would depend on the terrifying features that specific CBDCs have in order to make bitcoin adoption possible. These CBDCs can cause severe pain and suffering for the duration of their active use. They are simply an extension of existing practices. The pain they bring and the practices that they will use are not new. This will continue until people start using bitcoin to store their wealth, and completely abandon any fiat currency.

A vibrant and successful circular economy will increase bitcoin's adoption. A rapidly declining currency and a decrease in its salability are better incentives for adoption than hard money. Why should you keep your money if no one is interested in it? Today, Zimbabwean dollars are a collector's item that can be used for services and goods, but they have little value. This allowed other currencies, primarily the South African rand or the U.S. dollars, to replace it until the dollar won and Zimbabwe became dollarized. Due to inflation and a probable CBDC, bitcoin will replace the dollar.

Bitcoin must take many more steps to be accepted by the wider world. Lightning payments will be offered by more wallets and platforms. This includes the use of SMS transactions (text message), as well as Lightning payments. There are some positive signs regarding CBDCs and the potential to bring more people into Bitcoin.

Pierre Gildenhuys contributed this guest post. These opinions are not necessarily those of BTC Inc. and Bitcoin Magazine.

By: Pierre Gildenhuys
Title: The Only Potential Benefit Of Central Bank Digital Currencies: Bitcoin Adoption
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Published Date: Tue, 13 Sep 2022 03:00:00 GMT

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