Digital Currency Dilemma: Exploring CBDC's Potential, Government Surveillance, and US Developments in the World of Cryptocurrencies

This article is about the Federal Reserve's CBDC, Central Bank Digital Currency. Now, this is a story about the potential future of banking, the preservation of the dollar's reserve status, and increased government surveillance and control.None of this discussion will be based on conspiracy theory or scare tactics. I am here to give you a legitimate update on the CBDC situation here in the US.

What is a CBDC ?

So, let's start at the very basics. A CBDC is a central bank digital currency. So, it's a virtual currency that is backed and issued by a central bank. So, in this discussion, it's the Federal Reserve. So, it is backed by the full faith and credit of the US government. So, I want you to know that CBDCs are not the same thing as stablecoins. So, the most popular, the more popular ones, USDT, USDC, those are cryptocurrencies that are issued by private enterprise and they're pegged to something else. And of course, a CBDC is nothing like Bitcoin because Bitcoin is decentralized. A CBDC is, I mean, that's as centralized as you can get. That is, a CBDC is state issued and operated.

Why would the US government consider creating a CBDC?

Now, an important question arises: Why would the US government and the Federal Reserve be interested in developing a CBDC? There are several reasons to consider. Firstly, the US does not want to lag behind other countries. Currently, there is significant global interest in CBDCs, with 87 countries expressing their interest. Out of these 87 countries, 65 are already in advanced stages of CBDC development, and among them, 20 central banks have even initiated pilot programs.

Digital Currency Developments: China Takes the Lead, US in the Research Phase

Let's discuss the current state of Central Bank Digital Currency (CBDC) in China and the United States. China made a significant move by showcasing its CBDC during the 2022 Beijing Olympic Games, where athletes and visitors utilized it for transactions in the Olympic Village. Since then, China's pilot program has expanded to 25 cities, with active experimentation and learning taking place. In these selected cities, CBDC has already been adopted for various purposes, including salary payments to government employees in sectors such as education, healthcare, and media, as well as utility bills, transportation, tuition fees, and tax payments. China boasts the largest-scale CBDC pilot program globally, with over 260 million digital wallets currently in use.

On the other hand, the United States embarked on CBDC research only a few years ago and is currently in the exploratory phase. Considering the US dollar's status as the world's reserve currency, the United States faces the crucial decision of whether to proceed with the implementation of a CBDC. The Federal Reserve has clarified that it would only issue a CBDC with the support of Congress and the executive branch, as the Federal Reserve operates as a private organization separate from the government.

Thus, while China actively progresses in the development and implementation of CBDC, with its expansive pilot program, the United States is still in the process of studying this technology and must determine its future adoption, taking into account the significance of the US dollar as the global reserve currency.

Perspectives

Here are a few quotes from government representatives in support of the implementation of CBDC in the United States:

Treasury Secretary Janet Yellen:

"We recognize the potential benefits of CBDCs and are actively exploring the possibilities. A digital currency issued by the Federal Reserve could improve the efficiency, resilience, and inclusiveness of the financial system."

Federal Reserve Chairman Jerome Powell:

"A CBDC could provide important advantages such as faster, more secure payments and increased financial inclusion. We are committed to thoroughly studying the benefits and risks associated with CBDC and engaging with stakeholders to ensure we make informed decisions."

Launching Instant Payment Network and Implications for CBDC

This summer, the Federal Reserve will unveil its instant payment network, the result of ongoing work since 2019. Financial institutions will gain the ability to send and receive payments round the clock, marking a significant modernization effort in the United States. However, the implementation of this real-time payment system may diminish the advantages of CBDC.

The government sees potential in CBDC's programmable money and improved financial transaction transparency. But it raises the question: do we want the government to have access to the details of our purchases? While transparency can aid in detecting tax evasion, preventing money laundering, and combatting illegal activities, concerns arise regarding the intrusion into the privacy of ordinary Americans.

In contrast to decentralized digital currencies such as Bitcoin, CBDCs are issued and supported by a government entity and operate on a centralized, permissioned blockchain. This centralized nature of CBDCs raises concerns about the concentration of Americans' financial information, making it potentially more susceptible to security breaches. Moreover, there are apprehensions regarding the potential use of CBDCs as a means of direct surveillance into the private transactions of individuals.

Here are representatives from the opposing side, expressing their concerns regarding the introduction of CBDC.

Sen. Cruz said:

“The federal government has no authority to unilaterally establish a central bank currency. This bill goes a long way in making sure big government doesn’t attempt to centralize or control cryptocurrency and instead, allows it to thrive in the United States. We should be empowering entrepreneurs, enabling innovation, and increasing individual freedom—not stifling it."

Conclusion

As we explore the fascinating world of Central Bank Digital Currencies (CBDCs), we are faced with a digital currency dilemma that carries profound implications for the future of finance, the preservation of the dollar's reserve status, and the balance between government surveillance and individual control. It is evident that CBDCs are gaining significant attention and interest worldwide, with China taking the lead in their implementation and the United States still in the research phase.

In this rapidly evolving landscape, it becomes increasingly important for individuals to familiarize themselves with the world of cryptocurrencies. It is within our power to ensure our financial independence and security. Whether you are intrigued by the potential benefits of CBDCs or concerned about increased surveillance, we are here to guide and assist you. Our expertise can help you navigate this industry and select the right path for your exploration. Additionally, we offer a range of equipment for those seeking to actively engage in the world of digital currencies.

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