Imagine that the state knows everything about your income and expenses and controls your purchases and movements:you can only spend money on those productsthat you are allowed to buy, your cards are inactive at night, and you can only fly on vacation more than once a year. This is not a dystopia, but quite possible consequences of integrating CBDC into the economy - digital currencies of central banks. We figured out why CBDC is an ideal tool for totalitarian control over society.
The bright side of CBDC
CBDC (Central Bank Digital Currency) isfiat currencies in digital form issued by the central bank. Unlike simple electronic money, which is currently used in cashless trade, each digital currency will represent a separate digital asset.
Now financial regulators of dozens of largecountries are competing in the race to lead the launch of a CBDC. Last year, national digital currencies were already launched in Nigeria, the Caribbean and Jamaica. Since April 2020, the Chinese authorities have been testing the digital yuan (DCEP), and next year the Bank of Russia is going to issue a digital ruble.
We have already written that with mass distribution, CBDC can significantly change the financial system. Among the upcoming changes there are many positive ones.
For example, CBDC will reduce the numberfinancial intermediaries, which will lead to transfers becoming faster and cheaper. These currencies will also simplify the process of making budget payments: pensions, benefits and tax deductions can be targeted to any citizen. To do this, you will only need to create a special CBDC wallet.
At the same time, CBDCs will increase payment transparency.and increase the authorities' control over the spending of budgetary funds, because any transaction with these digital assets can be tracked. The authorities will be able to finance state projects using smart contracts, which will allow spending money only for its intended purpose. As a result, officials and contractors will no longer be able to "lose" billions from the state budget - everything will be in a centralized blockchain, and money can only be spent on pre-approved articles.
The volume of the shadow economy will decrease. It will become impossible to work under the table, illegal transactions will become easier to track, and money laundering will be reduced.
Most importantly, CBDC will significantly enhance the role ofcentral banks: financial regulators will be able to see all transactions, freeze any user transaction, and their ability to conduct monetary policy will also increase.
The dark side of CBDC
But the widespread adoption of CBDC carries not only benefits, but also huge risks associated primarily with the tightening of government control over society.
CBDC is the ideal tool for totalstate control over most aspects of citizens' lives. Humanity is lucky that the totalitarian regimes of the last century did not have such technologies: otherwise our past could have been even more cruel. A CBDC will give financial regulators and governments more control than they have ever had before. Therefore, the race to launch national digital currencies is understandable.
Imagine a world without cash andelectronic money, and everyone uses only CBDC. In such a world, people will actually lose control over their own money. Now you can keep all your savings in cash and do whatever you want with them. But with CBDC, you can no longer dispose of them as you see fit. The authorities will be able to program them for limited use.
How it might look
Complete financial transparency
The state will see not only all incomeperson, but also his expenses. And the problem is not only that it will no longer be possible to work in menial jobs. Authorities will be able to compare whether your expenses match your income, and automatically write off taxes on each income. And, of course, the user’s CBDC wallet can be blocked at any time.
Consumption rationing
CBDCs allow you to control and regulatelevel and quality of consumption. Smart contracts can be configured in such a way that people simply cannot buy what they are not supposed to, or they will automatically be taxed for over consumption.
You can prohibit the purchase of alcohol:the system simply will not accept payment when a person tries to buy another bottle. Such a restriction can also be used as a punishment: for example, by a court decision, a hooligan will be prohibited from buying anything other than food and medicine for a whole year.
But such restrictions are suitable not only foras a punishment, but also as a regulation of consumption. For example, to combat global warming, you can limit the amount of gasoline or meat that a person can buy (for example, no more than 100 liters of gasoline per month), and then the CBDC card will simply block all payments at the gas station. If digital currencies had existed during the Soviet era, a card system would not have been needed - CBDCs would have replaced them perfectly.
Movement control
CBDC allow you to restrict the movement of citizenswithout any QR codes, residence permits, residence permits and document checks. It is enough to simply limit the territory or duration of digital currencies. For example, you can only spend money within the city. Or for those who do not have a Moscow residence permit, a spending limit in the capital will be set - no more than a week a year.
It is very easy to regulate passenger flow and traffic using CBDC. For example, you can only pay for the metro from 7 to 9, and your neighbor can pay for the metro from 9 to 11.
If CBDC were in effect now, the authorities would notIt would even be necessary to introduce lockdowns to combat the spread of COVID-19. It would be possible to simply prohibit payments in transport, limit the validity of CBDC cards to convenience stores or block them at night, when going to restaurants and for people over 60 years old. If you can’t buy anything and you can’t go anywhere, then why leave the house?
CBDC is an excellent assistant in the fight against globalwarming. Digital currencies help limit the carbon footprint of citizens. For example, we will be able to use a personal car only twice a week, travel by train only on weekdays, and fly on vacation no more than once a year. It is enough to simply program the appropriate restrictions for the CBDC wallet, and we simply will not be able to buy an additional ticket or charge our electric car again. And if we still really need to go somewhere, we will have to pay for it at an increased price.
Support for the social rating system
Let’s say a country has introduced a system of sociala rating in which some categories of the population receive more privileges and opportunities than others as a reward for certain services to society. An analogue of such a system is already in operation in China, and the current epic with QR codes is, in fact, an implementation of the same idea. CBDCs fit perfectly into this concept. People with a high rating can be given complete freedom to manage their money, while those with a low status, on the contrary, can limit the use of money: for example, prohibiting visits to establishments for citizens with a high rating or limiting consumption to the necessary minimum.
How possible is a CBDC dystopia
Now the examples of CBDC use given above may seem dystopian, but some of them may well become a reality, even in the near future.
For example, in Russia the position of the authorities regardingThe national digital currency is transparent: officials openly talk about how much easier it would be to control everything with a digital ruble. And the Federal Tax Service has been developing tax regimes for several years that make it possible to collect taxes automatically. The head of the Bank of Russia, Elvira Nabiullina, in her story about the purpose of the digital ruble openly admits that it “allows you to program its use.” On December 9, Russian Prosecutor General Igor Krasnov said that the introduction of a digital ruble will reduce the risks of corruption and money laundering, as it will significantly increase the transparency of payments.
Interestingly, 26% of Russians are ready for controlauthorities over their expenses. This is exactly how many citizens of the Russian Federation, according to VTsIOM, positively evaluate the initiative to ban the use of cash. 49% of respondents are in principle ready for non-cash payments to be accepted everywhere. And although the majority are against giving up cash, society is definitely ready for a complete transition to digital analogues of money.
In the West, which is less socially inclinedcontrol, the likelihood of using CBDC to limit consumption and movement is even higher than in developing countries. There is an ethical justification for such restrictions: the fight against global warming and the need to limit unsustainable consumption and minimize the carbon footprint. In the coming decades, there will likely be limits on how much energy each of us will be able to consume, or how many energy-intensive services will be available to us at all. Of course, you could just raise airfare prices to astronomical levels. But this is not very democratic. Another way is to simply introduce limits on long-distance flights.
There will be much more in the Beautiful World of the Futureprohibitions and controls than now. And all of them will be introduced for our benefit. For example, President Biden's infrastructure law requires all vehicles in the United States to be equipped with a remote shutdown feature starting in 2026. This is supposed to be to prevent drunk driving. But it’s only a matter of time before the authorities decide to turn off a car for debts or too large a carbon footprint. This is the same trend as with money in the form of CBDC: such a car no longer belongs entirely to the owner.
Cryptocurrencies as an alternative to total control
As you can see, CBDCs are the exact opposite of cryptocurrencies. Decentralized digital assets are designed to provide people with financial freedom, and digital currencies are the center.
We hope most of the gloomy forecastsabove will not come true. And if this does happen, then cryptocurrencies will become one of the alternatives for those who want to have complete control over their funds and over their lives.
Where is it more profitable to buy cryptocurrency? TOP-5 exchanges
For a safe and convenient purchase of cryptocurrencies with a minimum commission, we have prepared a rating of the most reliable and popular cryptocurrency exchanges that support deposits and withdrawals of funds inrubles, hryvnias, dollars and euros.
The reliability of the site is primarily determinedtrading volume and number of users. By all key metrics, the largest cryptocurrency exchange in the world is Binance. Binance is also the most popular crypto exchange in Russia and the CIS, since it has the largest cash turnover and supports transfers in rubles from bank cardsVisa / MasterCardand payment systemsQIWI, Advcash, Payeer.
Especially for beginners, we have prepared a detailed guide: How to buy bitcoin on a crypto exchange for rubles?
Rating of cryptocurrency exchanges:
| # | Exchange: | Website: | Rating: |
|---|---|---|---|
| 1 | Binance (Editor's Choice) | https://binance.com | 9.7 |
| 2 | Huobi | https://huobi.com | 7.4 |
| 3 | Exmo | https://exmo.me | 6.9 |
| 4 | OKEx | https://okex.com | 6.5 |
| 5 | Bybit | https://bybit.com | 6.3 |
The criteria by which the rating is set in our rating of crypto-exchanges:
- Work reliability— stability of access to all functions of the platform, including uninterrupted trading, deposits and withdrawals of funds, as well as the duration of the market and daily trading volume.
- Commissions– the amount of commission for trading operations within the platform and withdrawal of assets.
- Additional features and services— futures, options, staking, NFT marketplace.
- Feedback and support– we analyze user reviews and the quality of technical support.
- Convenience of the interface– we evaluate the functionality and intuitiveness of the interface, possible errors and failures when working with the exchange.
- final grade– the average number of points for all indicators determines the place in the ranking.
Read this:
CEX.IO company blog | Cryptocurrencies are integrated into our lives, starting from the premium segment
Charlie Shrem: “Only 5-10 bitcoins will change your life in 20 years”
The launch of CBDC will increase the popularity of bitcoin in the world market.
UK Central Bank plans to launch digital currency (CBDC)
Visa spokesman calls CBDC major trend in the payment industry
Opinion: CBDC will provide the future for bitcoin