From bartering to the birth of Bitcoin (BTC), money has been a faithful reflection of the values, needs and structures of the societies that create it. However, with the arrival of the Central Bank digital currencies (CBDC), the world faces a historical crossroads: while citizens value, more and more, privacy and individual freedom as fundamental pillars, the uncomfortable question of If governments and their central banks share that same priority.
Bitcoin, thrown into the world in 2009, has played a significant role in the impulse towards the digitalization of money. And, at the same time, he aroused interest in how its technology could be regulated by entities, such as central banks. In that sense, Bitcoin It emerged as a catalyst for innovation in the traditional financial sector, including the development of CBDC.
However, unlike Bitcoin, which operates in a decentralized network without central control, LAS CBDC allow central banks to maintain control about monetary policy and financial stability. This is a crucial aspect for central governments and banks that wish to maintain power over their monetary system, in an increasingly digital world.
In this scenario, with the passing of the years already measured that more and more central banks have announced their interest in developing their CBDC, it has also been clear that there is an intense debate between enthusiasts and detractors, Awakening both love and hate for digital currencies that governments drive. What is behind this polarization?
The debate between CBDC and Bitcoin
Love and hate for CBDC is inverse to love and hate for Bitcoin. This is because Bitcoiners value decentralization, privacy and financial autonomy offered by the legacy left to Humanity by Satoshi Nakamoto. For them, Digital currencies of central banks represent a threat because they are centralized and could increase government control over personal finances.
On the other hand, those who criticize Bitcoin for their volatility, use in illegal activities and lack of regulation, see in the CBDC a safer and more controlled solution, aligned with the traditional financial system, promising stability and compliance with the law.
Several Bitcoiners have been warnings about the digital currencies of Central Bank, and one of them is the Spanish economist Marc Vidal, who believes that «banks prepare a trap that you will only escape with Bitcoin.» «CBDC are the last missile that governments have left. Although unfortunately it is a weapon that people do not perceive and that will be full of hooks so that we all pike, ”explained the economist.
Love for CBDC: efficiency, modernization and control
More than 130 central banks around the world see the future of money in CBDC, offering stability and confidence being backed by financial institutions, unlike Bitcoin and its decentralized network.
Among the advantages that central banks recognize from their digital currencies are included:
- The efficiency in transactions, allowing instant payments.
- The promotion of financial inclusion, since millions of people can access the formal system with only a mobile phone.
- Transparency to combat financial crime, when registering transactions.
- Adaptation to an increasingly digital world, responding to the decrease in the use of cash and the growing demand for modern monetary solutions.
CBDC have also developed in response to specific challenges of each country or region. For example, China with its Yuan Digital seeks to modernize its payment system and promote its currency in international trade; However, its adoption It has not been effective, to the point that some qualify it as «a failure.»
There is also the case of other countries that launched or experienced with their CBDC, demonstrating that, so far, none has achieved a successful implementation. To name a few examples, Jamaica presented his Jam-Dex in 2022, with the expectation that 70% of the population use it by 2027, but the adoption remains low. Russia, with its digital ruble, began the tests in mid -2023 and foresee a greater adoption by 2025, but its first results were somewhat problematic. While, in India, although they launched two versions of their CBDC in 2022, they are still solving technological and privacy challenges.
I hate for CBDC: Threat to privacy, greater control and risks
As mentioned earlier in this article, CBDC have received strong criticism.
Detractors argue that these Central Bank digital currencies have disadvantages because:
- They could become mass control tools.
- They can compromise privacy and personal freedom.
- Possible financial exclusion, since people without access to technology or digital knowledge could be marginalized.
- Other concerns include the possible financial exclusion of those without access to technology or without digital knowledge, which could particularly affect rural or low -income communities.
- Risk for traditional banking, since if citizens prefer to deposit their money directly in the Central Bank, commercial banks could face a liquidity crisis.
Due to the disadvantages detected in the CBDC, Canada dismissed its project, as Cryptonoticia reported last year. In that country, 9 out of 10 Canadians distrust their government for the issuance of a CBDC, in a country in which one in seven citizens has Bitcoin.
As well as Canada and the United States, other countries have dismissed or leisurely their digital currency projects for various reasons. For example, Philippines and Denmark explored the idea, but did not advance, arguing lack of clear need. Iran considered a CBDC to evade sanctions, but has not progressed significantly. Switzerland, Norway and Australia, although they have conducted studies or tests, maintain a cautious position, citing concerns about privacy, public adoption and economic viability. These cases reflect technical challenges and lack of public interest.
Argentine President Javier Milei stressed the importance of governments not to get into the development of digital currencies. «Do not let the states take over and carry out cryptocurrencies,» he said. «Let them remain in the private sector,» he added. In this sense, he implied that he is against digital currencies issued by central banks.
CBDC An uncertain future?
Cryptootics in September reflected that, currently, only 15% of financial institutions consider the use of CBDC viable, compared to 52% who thought about 2022. This decrease in valuation responds, in large part, to the difficulties inherent in development of these projects, as well as concerns about their impact on financial balance. Therefore, it is clear that The love for the Central Banco Digital Coins has little chances of strengthening as long as concerns that affect the general public are not attended.
Additionally, there is the recent fact that, by a decree issued by Donald Trump’s new government, the Central Bank digital currencies were prohibited in US territory. This to «take measures to protect Americans from the risks of the digital currencies of the central banks, which threaten the stability of the financial system, individual privacy and the sovereignty of the United States.»
It remains to be seen what will be the consequences of this decision of the United States government. It could be that other countries take this as a guide and decide to dismiss their own CBDC projects, seeing in the US prohibition a warning signal about the potential dangers of these currencies.
However, it is also possible that this position reinforces the determination of other nations, such as Europe, to advance with its CBDC initiatives. Europe, for example, has made it clear that it is necessary In this area.