Alright everybody listen up this is extremely important! Governments like the US considering issuing a central bank digital currency, or CBDC, might not be the best idea. Let me break it down for you:
1. First, CBDCs could potentially compromise the privacy of individuals who value their financial information being kept confidential.
2. Secondly, introducing a new form of currency could destabilize the existing financial system, leading to financial instability.
3. Thirdly, digital currencies are vulnerable to cyber attacks, and the security of the CBDC would be critical. Any breach in security could result in the loss of funds, leading to significant financial losses.
4. developing and implementing a CBDC would require a significant investment of time and resources, which could be quite costly.
5. Lastly, introducing a CBDC could potentially compete with the private sector and stifle innovation in the financial industry. It may also exclude certain groups who do not have access to the necessary technology or infrastructure to use the digital currency.
I will also state the obvious here. While I am a supporter of Bitcoin, this does not hold true for just any cryptocurrency. Bitcoin is decentralized, with a 21 million total cap which makes it deflationary. There is too much room for control with a government issued digital dollar. Who's to say the equivalent of an 'Account Suspension' would take place for 'Inappropriate Actions and Behavior'. Over-reach is always the temptation of government.
As a developer, I find it troubling that this is under consideration honestly. Pulling that many skilled developers and engineers from the private sector is bad for business as far as innovation. But a job that size, of that magnitude would most certainly call for skill and foresight. Or at least, that is what my hope would be. Either way, not a good situation in my opinion.
The reason I have more faith in Bitcoin is centered around the idea that it operates outside of the direct manipulation of the Federal Government and the Banks -- which after watching the 3 gigantic banking bailouts recently, has left me with very little in the way of respect for the media for not covering the seriousness of it, and for the disregard of common sense. Bailing out failing businesses is a bad practice and builds distrust.
So, while the idea of a CBDC may sound attractive to some it's essential to consider the potential risks and challenges associated with it. Governments must weigh the potential impact on privacy, financial stability, cybersecurity, administrative costs, and competition with the private sector before implementing a CBDC. Regardless of what your political thoughts may be, this seems like it will end bad for everyone except the few at the top.
'But who will watch the watchers?'