Exploring the Future: Bitcoin as a Catalyst for Central Bank Digital Currency (CBDC) Payments

Is CBDC Bitcoin the next big thing? Blockchain technology has truly shaken up the financial landscape, paving the way for direct transactions between peers, and hence, no middlemen required. Now, the arrival of central bank digital currency (CBDC) gives an exciting twist into blockchain, promising a transformative impact on how businesses and individuals handle payments in the future.

Contrary to fears, Bitcoin won’t overthrow the US dollar or the GBP, for that matter. Instead, it might transform into a GBP equivalent, complete with the controls and restrictions that any CBDC issuer could envision. I can almost hear the protests but chuckle at the irony of profound ignorance parallel Bitcoin’s price surge.

Rethinking Bitcoin’s Potential

Well, here’s the deal – your take on Bitcoin might need a tweak. It’s not a one-size-fits-all kind of deal; it’s pretty much whatever we decide to make of it. It’s a tech marvel, much like the internet, which, let’s be pragmatic, we’ve turned into a super-efficient surveillance wizard. Crazy, right?

Now, here’s where it gets interesting. There’s this bunch of folks, let’s call them single-issue voters, diving headfirst into the Bitcoin world. They’re so laser-focused on their ideology that they might miss the bigger picture.

Let’s break it down! 

Bitcoin is like a digital creature thriving online. If there are new laws about how we communicate, they’ll also affect how we use Bitcoin. Some laws are straightforward, but others are way complex, often focusing on four major issues: terrorism, child pornography, drugs, and human trafficking.

Now, here’s the scoop – there’s this idea of “ban encryption to save the kids,” or “we need backdoors to stop al-Qaida.” When someone’s shouting about Bitcoin, especially in the style of recent UK political candidates, it’s wise to check where they stand on the tech-related issues. Trust me, it’s not as appealing as Stalin’s grandma in a nightdress, and you definitely wouldn’t want her snooping around your transaction history.

When governments start brewing up their own digital currencies, they often crave extensive surveillance and occasional censorship, just like eager folks in a trailer park looking for a fix. While we might easily brush off the key ingredients of these CBDCs, we tend to forget that there’s no clear blueprint on how they’ll function.

Imagine Bitcoin playing a role, not as a government-issued currency, but maybe backing the Sterling Pound in the HM Treasury or even becoming legal tender through Lightning-issued stablecoins to meet M1 supply. I can almost hear the protests, “No way! The UK government can’t issue Bitcoin!” And you’re right—it can’t. But that doesn’t mean it can’t find a new purpose.

Think of CBDCs like programmable money, just like Bitcoin. However, there’s a crucial difference: CBDCs focus on features such as controlled purchases, location-based restrictions, expiring transactions, and holding limits. Interestingly, all these features can be applied to Bitcoin-anchored stablecoins. Yet, most of these features become possible at the base layer when mining is centralized enough.

Privacy Paradox

By default, Bitcoin lacks privacy. Every transaction is recorded, tracked, and scrutinized, making it the most potent tool for financial surveillance in history. Still, access to our financial transactions is far more efficient than any surveillance camera outside our door. 

Simply put, as Burrows v. Superior Court 1974 says, “Indeed, the totality of bank records provides a virtual current biography.” 

Access to financial records can reveal everything from habits and opinions to political views and medical histories. While a surveillance camera captures a snapshot of our lives at a specific moment, financial surveillance exposes our entire lives, unrestricted by time and space and without constitutional protections.

In the right conditions, Bitcoin can actually serve as a solid alternative to CBDCs. Imagine opening your wallet app, and voila! There’s the stablecoin creature riding on the back of Bitcoin. Fantastic, right? Well, it’s freedom money, but with a twist – it’s fully censorable. We might have pumped our market cap, but it’s like dressing up an authoritarian dream in the guise of transaction freedom.

Can Bitcoin Survive CBDC? 

Well, it’s uncertain, but feasible. To prevent Bitcoin from becoming a CBDC alternative, a somewhat unpopular opinion would voting presidential candidates who aren’t exactly Bitcoin enthusiasts. An example is Elizabeth Warren, would certainly put brakes on Bitcoin in the U.S. As a result, there’s a better chance for the network to spread out globally and become more resistant to censorship. So, what’s your call? Digital gold or permissionless money? For what could be a historic moment, the choice is yours. 

Image Source: Adobe Stock

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.