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Crypto: CBDCs do not address the needs of the people

Sun 12 May 2024 ▪ 4 min of reading ▪ by Evans S.
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Central bank digital currencies, or CBDCs, are often touted as the inevitable future of finance. Yet, despite their promise of modernization and increased efficiency, these currencies raise profound concerns about their true utility and the impact on individual freedom.

Crypto CBDC

The Broken Promise of Transparency

Transparency is generally cited as one of the main advantages of CBDCs. In theory, making the source code of CBDC projects available for public inspection should enhance citizens’ trust (Somewhat like crypto). However, experience shows that transparency alone is insufficient to ensure the ethics and fairness of financial systems.

Take Brazil for example, where the rapid discovery of integrated surveillance mechanisms in the code of the CBDC reveals potential abuse of power. Despite the code being published, the inherent centralization of CBDCs places control firmly in the hands of authorities, leaving little room for genuine citizen intervention. This highlights the relevance of Bitcoin and a few other cryptocurrencies.

The centralized nature of CBDCs is a major concern. Unlike decentralized cryptocurrencies like Bitcoin, where users have direct control over the network and can influence its development, CBDCs remain under the strict control of central banks.

Even with an open source code, users have no real ability to modify or fork the network if they disagree with the direction taken.

This is illustrated by the case of Norway, where despite an initial open project, no guarantee secures the openness’s future. Thus, power remains centralized, and the promise of democratic participation quickly dissolves in the face of the reality of unilateral institutional decisions.

Transparency Without Power in CBDCs

The final nail in the coffin of the alleged effectiveness of CBDCs in terms of transparency is the illusion of control it creates.

In the United States, for example, the Hamilton project was indeed an open collaboration, but there is no indication that the results will influence the Federal Reserve’s policies in the long term.

Transparency, without the power to act on the disclosed information, is superficial. Citizens can see the flaws and issues, but without a real means of pressure, this openness only exposes faults without offering solutions.

CBDCs represent a significant technological advancement, but their implementation raises serious doubts about their ability to truly serve the public interest.

Their centralized nature and the inherent limitations of transparency as a tool of democratic control cast doubt on their role in a society that values individual freedom and citizen participation.

For digital currencies to meet the needs of the people, they must offer more than mere transparency; they must guarantee a real capacity for action and control in the hands of all citizens. Without this ability, CBDCs risk becoming another tool of centralized power, distant from the ideals of freedom and transparency they claim to embody. Meanwhile, North Korea considers embracing the BRICS.

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Evans S. avatar
Evans S.

Fasciné par le bitcoin depuis 2017, Evariste n'a cessé de se documenter sur le sujet. Si son premier intérêt s'est porté sur le trading, il essaie désormais activement d’appréhender toutes les avancées centrées sur les cryptomonnaies. En tant que rédacteur, il aspire à fournir en permanence un travail de haute qualité qui reflète l'état du secteur dans son ensemble.

DISCLAIMER

The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.