0 sats \ 0 replies \ @TwoLargePizzas 29 Apr \ on: Bitcoin in a CBDC World bitcoin
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.