Central Banks BEGGING in Distress for CBDCs

By September 14, 2021Layer2
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The banks went one step further this time and tested the waters within the DeFi sector, finding it only to be a threat to their traditional centralized businesses. EU and US financial think-tanks analyzed the results and once again promote the CBDCs as a solution to keep banking relevant in finance.

When there is a valid threat to a business, certain measures are taken. Logic suggests that businesses (in this case, the banks) will try to create better services. However, will these services be able to match the existing decentralized finance? And will centralized traditional banking be able to compete with the higher yields and automated system of smart contracts in DeFi?

Bitcoin was recognized as a potential threat in 2010, at a time when the banks had not even updated their old UNIX-based networks. Although there are still valid reasons to keep using networks that have proven to be reliable, still, within 30 years, there had to be some progress made.

Lately, we observe the banks changing, creating better infrastructure and services, and innovating. But this wasn’t until 2010 when Bitcoin became a payments option outside of their reach.

Crypto has grown as a valid threat not just for the banks, but also for the dollar hegemony. And ten years later, with DeFi, this threat is now an intimidating message, that finance will change so rapidly that nothing can stop what’s coming. Yet, bankers still believe that they have a solution: CBDCs.

Central Bank Digital Currencies (a.k.a. CBDCs)

Source: Flickr

Crypto is a financial disruptor.

Decentralized and autonomous cryptocurrencies can’t be controlled, shut down, or tamed.

Banks see danger in DeFi and governments in Crypto as a payments method.
The response is about the same each time. Severely regulating cryptocurrencies and heavily taxing trades, while also advancing the development of Digital Fiat or CBDCs as a competitor.

China has one out there already (a CBDC), it is testing it and trying to increase its practice. The Chinese CBDC is also part of the Road and Belt initiative, a government plan that is expected to help the Chinese Economy double its GDP in roughly 20 years. At least this is the plan of the Chinese government.

China also bans Crypto every once in a while.

Yet, did any of the above stops the use of cryptocurrencies inside China? Are the Chinese not interested in crypto, when the entire world is rapidly getting into it? I’ve met already many Chinese, behind VPN and proxies, bypassing the “Great Firewall” and trying to grab their rightful share of “financial freedom”.

It is a freedom that separates money and state, giving absolute power of finance to the people.

Τhis freedom doesn’t threaten only a Communist regime like China. It disrupts democratically elected governments and autocratic forms of governance that have been entrusted with the control of the money supply.

They indoctrinate us with this notion that governments must control money, but are we sure this is the only way it will ever be?

Still, times are changing, and we have all suffered the failures of Central Bank policies. Ask anyone that lived the events of the economic collapse of 2008 if they will ever blindly trust banks again. Ask if the thought that one day, their bank will become the next Lehman Brothers, doesn’t cross their mind. And if there is no fear at all that governments won’t just confiscate our accounts (as with the example of Cyprus).

The value of our money is now at risk of rising inflation and zero (even negative) interest rates. An endless printing of Euro and USD has started a monetary competition between three sides and those that are suffering are sovereign nations that will have to commit.

We watch today top financial organizations like the IMF, ECB, and lately BIS, rushing the creation of CBDCs (like Digital Euro, Digital Yen, etc.), while also demanding rapid changes to counter the cryptocurrency expansion.

How is that going to happen, though? Are CBDCs going to be decentralized? Are there going to be miners around the world mining transactions and following agreed protocols? Who will be in control?

Most cryptocurrencies are driven by consensus. This is the decision-making process based on following the overwhelming support for any rules’ changes.
Is the government going to create a decentralized currency? Who will control inflation levels then and the money supply?

CBDCs are just a Tether.

What backs USDT is not its reserves. There is nobody that believes Tether actually holds liquid assets at the size of $70 Billion.

It is backed by everyone using it under the condition that one day it could implode, and collapse on its unstable foundation. Although, as long as it works and there is this mechanism of stabilizing, all involved parties agree on its price. Tether is similar to fiat in this sense and CBDCs are nothing but digital fiat.

In Conclusion

I am still trying to understand what is the strategy Central Banks are trying to employ for this situation. The top executives of every private or government organization seem to be in confusion and distress.

CBDCs will not be any different from fiat and probably those informing the Central Bank directors are doing a lousy job. Someone now may be skeptical, and ask: “Why are you trying to wake them up? Just let them make more mistakes”.

The financial changes we are witnessing are inevitable. CBDCs or not, what is coming is the greatest transfer of value in human history.

Even in the case bankers (both private and government-controlled) completely understand the position they are in today, they will not be able to contain a decentralized financial future that empowers the individual.

Cryptocurrencies are decentralized networks, backed by code, but also base their success on one more aspect: “The will of the people”. Mass adoption which is not over-rated as some inside the BTC community wanted to be.

There are no laws, and no regulations required for cryptocurrencies. They provide better features and better efficiency than other money equivalents, CBDCs included.

A CBDC will only be a waste of resources and time.

BTC LN (or LN Coin) is the CBDC of El Salvador

Source

A test phase of a CBDC is currently happening in El Salvador. Since this is not even BTC that is used, but a digital LN-Coin version of BTC that offers near complete control to the government of Bukele.

And it has already failed. 90% of the population dismisses it and protests against it. Crypto doesn’t get adopted by force and a CBDC is not going to be voluntarily adopted either, but forcefully imposed.

If El Salvador wanted to have a currency that would be non-custodial and enable the financial will to the population of this nation, then it would have gone with Bitcoin Cash instead. If Dorsey understood Bitcoin and wanted to use his influence for the welfare of everyone, he would also have gone with Bitcoin Cash instead.

El Salvador is not going against the grain in this case, it instead becomes a test field for CBDCs in Central America. With the use of custodial wallets, Strike and Chivo, the man in charge will have the ability to reject transactions.

Financial censorship is not a blockchain feature. Therefore, banks thought of third-party wallets running on layer-2 scaling “solutions”, which was their last futile attempt of stalling financial innovation.

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Originally published at https://read.cash.

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