The Only Potential Benefit Of Central Bank Digital Currencies: Bitcoin Adoption

This is an opinion editorial by Pierre Gildenhuys, the co-founder of a Hong Kong based social environment tech startup.

Central bank digital currencies (CBDCs) are being actively developed and discussed in many major nations in the world including 19 of the G20 countries, and around 105 others worldwide, as shown by Atlantic Council statistics in 2022. They are being advanced rapidly and it is expected that some nations such as Australia, South Korea and the U.S. will start implementing CBDCs in the near future, following the lead of China, who recently began launching theirs in early 2022.

This is not recent news, but it is something which should be periodically mentioned, as it should scare all of us or at least be of some concern to anyone that utilizes any form of money in their daily lives. There is only one potential benefit to CBDCs: Essentially, governments causing the collapse of their own currencies by removing as many properties of money as they can before people realize that it is no longer salable to anyone else in their nation or around the world.

CBDCs are said to be inspired by bitcoin — of course, these countries that are rolling these out are likely building them to be the perfect antithesis to the beautifully built bitcoin — with the only potential similarity being a distributed public ledger. However, I postulate that in many governments’ eyes, “a public ledger” denotes being owned, and therefore only accessible by the State because they are the voice of the people (in theory).

The expected horrors of CBDCs are discussed at length by many Bitcoiners on Twitter and elsewhere, but very few that I have found have had anything good to say, which I would like to change.

CBDCs will most likely implement primarily Keynesian principles, as it seems to be the prevailing school of economics in most of the western world. Whichever principles a United States CBDC adopts will likely serve as the blueprint for all others. Some of these principles could be money that can expire, be automatically taxed, only be spent in certain sectors and be a fully permission-based form of transaction, meaning that people will be forced to make specific transactions that they may not want, forcing a heightened time preference or being forced to forego investments in sectors of their choosing. Purchases of bitcoin using CBDCs will very likely become impossible or at least increasingly difficult, as no government wants a money competing with the one that they control.

This is a terrifying prospect. How will Bitcoiners and new adopters acquire more bitcoin before the fiat system inflates itself into collapse? Well, this will possibly create a more circular economy, as fewer people will want to hold their transactional power in the form of a fully centralized and supervised system. They will very likely make the decision to start paying and accepting bitcoin for each and every transaction. This way, they are not forced to spend their money to attempt to “stimulate economic growth” by spending their expiring CBDCs that they would have otherwise saved for a rainy day, or to avoid additional unjust taxes. This is very similar to the exceedingly common practice of many businesses around the world providing their services at a discount for cash payments to avoid paying taxes on those services.