Bitcoin in a CBDC World
74 sats \ 5 comments \ @SatsMate 28 Apr bitcoin
Hey All,
I just wanted to throw out thoughts on what you think would happen if CBDC's were rolled out across the country and how Bitcoin would work in this system. For example, couldn't they program the CBDC so you can't buy Bitcoin with it (or sell)?
If they closed the entrances and exits in the U.S. and Western world, wouldn't liquidity fail? Also, as someone that lives in the U.S, and in a state where nobody accepts bitcoin what options would there be (other than leaving)?
Since CBDCs are permissioned and programmable money, they can ban us from buying guns, alcohol, lottering, and of course bitcoin. If this were to happen, do you think liquidity on the buy side would dry up?
Just trying to brainstorm and ponder what ifs :) .
In the end, Bitcoin is my unit of account and store of value, but I think many people won't be able to get on board in the future due to a dystopian future of the CBDC digital prison.
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100 sats \ 0 replies \ @q 28 Apr
It depends on how far we would venture into a dystopian world. If CBDCs (Central Bank Digital Currencies) are implemented sensibly, they would not be linked to your identity or a score reflecting your status as a good citizen. However, I think we can agree that even if the intentions are for the greater good, there is a slippery slope here; over time, this system could be used for controlling and establishing totalitarian central control over all people, tying the necessity of having a job directly to putting food on the table.
In such a scenario, we could end up in multiple situations where people might consider Bitcoin as a solution:
  1. Some individuals might find themselves in a situation where all benefits of being a "good citizen" have disappeared for various reasons. The CBDCs might not be accessible to these groups, or they might not function in their favor. These individuals might be interested in acquiring some satoshis and could obtain them by offering something of value, whether it be labor or a tangible asset, in exchange for Bitcoin.
  2. There are those who want to transact with businesses not accepted in the CBDC-regulated world. For example, a vendor selling fruits may not be able to conduct transactions using CBDCs if their business is prohibited from selling certain products due to regulations, such as CO2 emissions or other politically driven narratives.
  3. There will always be those seeking the best store of value, which might lead them to bitcoin. It's common sense to seek this even if it's illegal. For instance, during the hyperinflation in Austria, it was illegal to possess foreign currency. Although you couldn't buy it from banks, there was a black market for it. In a CBDC world, you would need to offer some value in transactions that do not directly trace back to buying bitcoin, but people are creative and find ways around these restrictions.
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0 sats \ 0 replies \ @TwoLargePizzas 29 Apr
I think the first thing to understand is that the term CBDC is not well defined. The definition changes from country to country and it's pretty fluid over time. We don't really know right now what CBDC's will look like in a decade.
That said, from what I understand there's two distinct categories. If we take a look at the definitions as described by Investopedia.
  • Wholesale CBDCs function similarly to holding reserves in a central bank. The central bank grants an institution an account in which to deposit funds or to use to settle interbank transfers. Central banks can then use monetary policy tools, such as reserve requirements or interest on reserve balances, to set interest rates and influence lending.
  • Retail CBDCs are government-backed digital currencies used by consumers and businesses. Retail CBDCs eliminate intermediary risk - the risk that private digital currency issuers might become bankrupt and lose customers' assets.
Clearly these definitions don't take the dystopian viewpoint but they do give us an idea where it's heading. Both have potentially negative implications, some worse than others.
I remember listening to a podcast where Lyn Alden talked about how the United States is most likely to go down the Wholesale CBDC route. If that's the case the most likely outcome is that the money printer will go brrr and continue to accelerate. How long this will take and how much impact it'll have is still up for debate.
The Retail CBDC route is much more scary. We can all imagine the dystopian outcomes as you've already described and we can see from other countries like China that those fears are already a reality for some people.
Some people argue that a Retail CBDC is unlikely because it would cut out the middle man banks and they don't want that. On the flip side, some people have argued that we might not even know if it's happening. Banks aren't exactly transparent entities and they might already be implementing this stuff behind the scenes.
Will they try to block the exits? Most likely. Can they block all the exits at once? Probably not. I would say in this scenario Bitcoin becomes more valuable, not less. It doesn't take a lot of people rushing for the exit to push the price up.
But that's just my two sats. Take it with a grain of salt.
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0 sats \ 0 replies \ @davidw 29 Apr
The CBDC product is a symptom of the black hole financial system that exists today. No one wants it and yet it’s growing in influence, in order to continue surviving. Destroying everything in its path and creating massive distortions in order to ensure that existing wealth does not escape its grasp, with conditions of spend.
Bitcoin is its own system. To acquire bitcoin in a CBDC world will require providing PoW to either the network (mining) or to existing participants. It is expanding and emitting light, like a white hole as described in #360669.
Currently we are somewhat privileged that a bridge or portal exists, connecting both systems. I don’t believe it will always be so, for everyone everywhere.
So yes, liquidity may be reduced for several years, but would it be the end of the world, if you could buy 50% less freedom vs absolutely none at all?
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0 sats \ 0 replies \ @BitSapien 29 Apr
I have serious doubts about the acceptance of a CBDC in the US. Telling me what I can or can't use my own money for is just fucked up. I hope people will rise up and revolt.
Sadly people will comply when the govt has given them the only "solution" to a problem that they (the govt) have created in the first place.
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0 sats \ 0 replies \ @Coinsreporter 28 Apr
If they closed the entrances and exits in the U.S. and Western world, wouldn't liquidity fail? Also, as someone that lives in the U.S, and in a state where nobody accepts bitcoin what options would there be (other than leaving)?
The simple answer is 'they won't and they can't.'
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