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Yo, Let’s do this!
My content here is going to focus primarily on Bitcoin, and the developments in and around Bitcoin to help keep you up to date on what is going on and to offer my honest perspective as opposed to just blindly believing the circulating narratives. Ya know, because sCieNcE..
I believe bitcoin is the most important innovation of our lives. I do not think there is anything more meaningful I can do with my time, that to empower you and as many people as possible with the knowledge to understand money, and thus bitcoin and working to create a more free and open society.
This quote below comes to mind in times like this..
“It is impossible for a man to learn what he thinks he already knows.”
- Epictetus
The talk around CBDCs globally continues to increase with Australia’s treasurer yesterday mentioning in a local media interview that they are going to be working with the RBA to look into the feasibility of a CBDC in Australia, which he says would be a world leading initiative.
CBDC or Central Bank Digital Currency is something that we in the bitcoin community have seen from a long distance away on the horizon looming closer with each passing day. China have made their intentions clear to roll out a CBDC along with many other nations including Singapore, Malaysia and of course the US.
The questions that come to my mind are:
Aren’t most currencies already digital? Why are governments wanting to roll out CBDCs? How does a CBDC differ from what we already have? What are the advantages of using a CBDC? Who benefits? What are the incentives?
First lets cover off what a central bank digital currency is.
A central bank digital currency is a centralized database or ledger containing all account information including account name, holdings, transactions to and from, maintained and controlled directly by a central bank.
Currently a number of seperate banks and/or institutions hold this information and share it with a select and mostly unknown to us, group of institutions. So a CBDC is more of a marketing exercise than anything else as we currently already have a digital currency for the most part. Most estimates I’ve found indicate 90/10 split between digital and physical cash. It likely means the system becomes even more centralized with a central bank holding this information.
So why the ongoing circulating narratives relating to CBDCs? Governments around the world realise their monopoly on money is under threat, and they are undertaking a marketing campaign to attempt to remain relevant. This is only my opinion of course. But it’s important to realise that this is more of a technological update as opposed to any significant type of innovation or architectural change.
The most obvious positive a CBDC could offer is the ability to directly transfer stimulus to individuals as opposed to legacy methods like cheques. This would be handy if governments moved to some kind of a UBI system to combat automation for example. During the pandemic here in Australia, this has already happened with the current system however so from a user experience perspective it’s no noticeable change.
The negative effects seem fairly clear. Increasing financial surveillance, the ongoing erosion of privacy, and an increased ability for financial censorship if you haven’t been behaving, or scanning the QR code before you go to the toilet, or wish to send money to someone ‘we’ do not like.
The best way to view a CBDC is to compare against the critical elements of an open and public protocol like bitcoin. Best popularized by Andreas Antonopolous, the 5 core pillars are: Open, public, borderless, neutral, censorship resistant.
Basically a CBDC has none of these properties. It is closed, private, bordered, potentially combative/weaponised and willing to censor as needed.
Ultimately my view is that bitcoin is inevitable regardless of what any government does at this point. The network effect is too strong, and once you really swallow the orange pill and wash it down with some water to help it dissolve, it is impossible to see the world through the same lens ever again.
CBDCs are just a refreshing on the current broken system.
This offers no significant step change improvement to the current broken fiat monetary system that continues to fuel an ever growing wealth divide between the rich and the poor as a result of the cantillon effect, whereby those closest to the money supply benefit disproportionately.
I choose to opt out of this madness with Bitcoin.
My best advice, is get educated. Understand what is taking place, and how it impacts you and your family. The government are not going to do that, and are not here to save you, or I. We must help each other and save ourselves.
Wishing you all the best, and hope you have a great day.
AK
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No transcript available for this episode.