Central bankers are refusing to acknowledge the potential impact of Bitcoin and CBDCs
The European Central Bank has stated that Bitcoin has not lived up to its promise as a global decentralized digital currency and is rarely used for legitimate transactions. The assertion is seen as nonsensical, but it highlights the delusions that central bankers can have, leading to potential mistakes.
CBDCs, or central bank digital currencies, are seen as a tool for central banks to exert excessive control. Unlike Bitcoin, CBDCs are fiat money under the direct control of a central bank. This gives central banks unprecedented power, including the ability to impose negative interest rates and potentially cancel electronic wallets.
While some central bankers see the risks associated with CBDCs and fear they may destabilize the fiat money system, governments are moving ahead with plans to implement them. The House of Lords in the UK has also raised concerns about the risks associated with CBDCs, such as state surveillance and financial instability.
The presence of cryptocurrencies, like Bitcoin, poses a challenge to central banks attempting to maintain their money monopoly in a digital world. Regulation may be possible for exchanges and derivative products, but taking control of Bitcoin itself would require extreme measures that could restrict internet access.
Ultimately, the debate over money in the digital age comes down to a social contract between society and the state. Anonymity, through cash, has been a crucial part of this contract. If central banks take control with CBDCs, this contract may be broken, leading to the potential downfall of fiat money systems.
Central bankers who underestimate the significance of cryptocurrencies may take risks that could lead to the demise of fiat money, as people may opt for alternative currencies that offer more freedom and security.
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