Bitcoin is on an exponential adoption curve, which is great. However, the curve has no time to blanket the entire population before CBDCs arrive. Our best efforts can only make the curve steeper but not vertical, so we need to plan for CBDC arrival into a world that looks very much like today but with more Bitcoin adoption.
Two cases must be considered separately:
  1. ("soft") CBDC is pegged to fiat as planned, cash is phased out slowly (see Nigeria's ATM withdrawal limit)
  2. ("hard") CBDCs arrive as the saviour from hyperinflation (USD = Reichsmark, CBDC = Rentenmark), old cash is worthless and new cash doesn't exist
I'm worried that people significantly underestimate the probability of the hard scenario.
What's funny is I feel like a lot of people unconsciously anticipate or even desire such a "hard" scenario because it could be "bullish" for Bitcoin. Fed keeps printing and inflation exponentially increases. Fiat price for BTC goes up, and now your bags have doubled, tripled, etc (in fiat amounts of course).
The problem really sets in when (hypothetically) it's mandated by law that each POS system in every store is required by law to only operate to settle transactions with the CBDC or surveilled digital credit equivalent. The state doesn't need to go into every store to do this—they just target the POS hardware + software companies, banks, and fintech companies to comply with new regulation. In one fell swoop, the entire medium of exchange in a society shifts. Just like what Modi did in India with a regulatory switch that withdrew the Rs 1,000 and Rs 500 cash notes from the market, other governments can make similar switches and the people comply.
How much is your Bitcoin worth if you can't actually use it as money to settle transactions? How will you convince your merchant to purchase goods with your electronic cash when all they accept is electronic credit? If most merchants are wary of Bitcoin in its present state, how difficult would it be to get them to use Bitcoin if the government says its illegal do to so? Worst case scenario you have an Executive Order 6102 where all the KYC'd Bitcoiners need to fork over their coins in exchange for CBDC credits or else the police escorts you to another quarantine camp.
Although it sounds hyperbolic, we've seen anything is possible in the last few years. Best for us would be to anticipate the attacks and prevent them before they even occur. We can't get everyone on board with Bitcoin before the CBDC rollouts, as you said, so we definitely need to be able to make plans on how to counter their strategy in advance.
reply
I totally agree. And my plan to counter their strategy is to move somewhere more 3rd-worldy. Another plan would be great.
reply