CBDCs…Central Bank Digital Currencies.
They are coming and the digitization of fiat money will be the final nail in the coffin
for freedom.
We know what’s coming we’ve been covering this since 2020…which marked the beginning
of the end for financial freedom.
Well luckily this content will always stay free, in all senses and cost…because it’s
time for Chico Crypto!!
To Begin…Central Bank Digital Currencies, what are they exactly??
Well it’s a digital form of a country's fiat money usually issued by their central
bank.
And guess what??
These digital currencies are powered by Satoshi Nakamoto’s invention the blockchain.
But not in the decentralized sense.
Unlike Bitcoin where the distributed network of miners and nodes makes up the trust layer,
the government and central bank who issues the currency is the trust layer and consensus
layer.
They and large financial institutions will run and control the node or nodes which power
the network by validating and verifying transactions.
It’s a private and permissioned shared ledger.
Which means they will have financial power like never before.
Before we get into those powers.
How do we know CBDCs are about to deploy across the globe while rejecting Bitcoin.
Well the IMF, the International Monetary Fund, whose purpose is to ensure the stability of
the international monetary system just tweeted this last week.
A picture example of CBDC systems, and the words “How will central banks issue and
circulate digital currencies?
Our new fintech analysis looks at 3 models with a link that takes us to their newest
report: Behind the Scenes of Central Bank Digital Currency-Emerging Trends, Insights,
and Policy Lessons where they go through some of the deployed and planned CBDC in IMF partner
countries like the Bahamas, Canada, China, Eastern Caribbean Currency Union, Sweden and
Uruguay.
This is the same IMF who is going after El Salvador for them passing laws to make Bitcoin
their legal tender.
Bitcoin will be their CBDC, a distributed uncontrollable system and the powers that
be do not like it one bit.
So let’s examine one of the more robust CBDCs and most popular as it comes from the
world power China who is conveniently the IMFs second top member, with over 6 percent
of the group's voting power.
China all the way back in 2014 shocked the world when they launched their countries Social
Credit System which has taken a bpage right from the Netflix Series blackmirror.
In China citizens are now abiding by a moral ranking system for years that will monitor
the behavior of its enormous population — and rank them all based on their "social credit."
It’s a game of life, where each citizen is assigned 1000 social credit points, and
they can gain points or lose points based on their behaviors.
What the government deems good behavior like praising the government on social media can
gain you points, but if you criticize them online that is deemed bad and it will drop
your score.
Good scores above 1000 give you benefits in Chinese society, like priority to school admission
and employment, easier access to cash loans and lines of credit, cheaper public transport,
and even tax breaks.
But bad scores below 1000 have consequences.
You can be denied licenses, permits and access to social services.
You can be excluded from airlines and taking railways.
You can have your access to credit stomped out, and they even go as far as public shaming.
Although…this social credit system can’t be fully realized until a digital currency
fully controlled by the government was issued.
That’s why 5 years later, in 2019 China unveiled their DCEP system for a central bank
digital currency.
The digital Yuan which has been live within the country since the middle of last year,
and debuted to the international community at the Olympics this year.
DCEP stands for digital currency electronic payment.
DCEP “borrows” a distributed blockchain’s key concepts such as peer-to-peer payment,
traceability, and tamper-proofness from outsiders.
Although since the Peoples Bank of China is the issuer and provisioner of funds, they
are the gatekeeper, meaning tampering of accounts and funds can happen….through them.
This centralisation means that China’s government has the ability to freeze and close accounts,
on the flipside they government can rectify mistakes made when using or transferring digital
currency,..the government and the PBOC have the ability to tamper, and tamper where they
see fit.
As we can see from this article, the Digital Yuan is programmable…meaning smart contracts
can be implemented.
The first programmable function being initiated is an expiry date, meaning it will become
useless if not used within a certain time frame.
This forces consumption by the people who use it.
Expiry date to begin, yet the programmable functions will only grow and get more over-reaching
as time goes on.
Per example since the Chinese government is looking for their citizens to be healthy,
they already provide free gym membership for those with good social credit scores, they
could eventually implement a function which only allows citizens a certain allowance of
junk food for a month.
If a citizen goes over their digital yuan allowance for junk food, they would be forced
to only buy healthy meals allowed by rules of the program.
Government could control citizens even down to what they eat.
Just think about it.
The government will decide how money is to be spent by their citizens.
Clothes you wear, places you go, people you transact with, or even down to the people
you spend money with.
If one of your friends is on the social ‘bad” end of things, and you were on the good.
It’s possible the government could stop you two from enjoying a meal together, going
to see a movie together, or shopping at the mall together.
Sooo, we know China is already moving forward and has developed their CBDC system, large
world organizations like the IMF, and even the WEF are promoting them as the next wave
in the financial revolution…but what about the other world powers?
Like the United States and Russia??
Well let’s begin with Russia.
Back in June of 2021 they started their CBDC trial with a total of 12 of their banks announced
for the testing group.
Well earlier this month, that trial was a success as we can see from the Cointelegraph
article they say “Three banks out of 12 financial institutions in the digital ruble
pilot group have already integrated the CBDC platform, with two of them completing a “full
cycle of digital ruble transfers between clients using mobile banking applications”
Well I’m sure some of these banks taking part in this trial are some of the banks hit
with the heavy sanctions just announced 2 days ago.
President of the European commission, Ursula Von Der Leyen, announced they were removing
a large number of Russian banks from the international payment and messaging system SWIFT.
Effectively isolating them and stopping any and all financing through the traditional
system…including trade like imports and exports.
Although…CBDCs are not the traditional system and the governments who issue them are in
control of the messaging.
Could China and Russia still be able to trade through their CBDC systems?
Were they built to be interoperable?
Well I think so…back in December of last year this article came out after Putin’s
foreign policy advisor made statements in the media.
“China and Russia to establish independent financial systems” and the article states
“Russia and China have agreed to develop shared financial structures to deepen economic
ties in a way that will not be affected by pressure of third countries following talks
between the top leaders.
During the talks, the top leaders of the two countries called for increasing the share
of national currencies in mutual settlements and expanding cooperation to provide Russian
and Chinese investors with access to stock markets, said Yuri Ushakov, Putin's foreign
policy advisor.
Yuri also said “"particular attention was paid to the need to intensify efforts to form
an independent financial infrastructure to service trade operations between Russia and
China."
Sooo what if this happens, CBDCs are used to facilitate trade between these 2 countries
and it’s a rounding success.
CBDCs settle instantly, while SWIFT payments can take 2 to 5 working days to officially
settle.
Well it will force other world powers to move on the fastrack of developing their own CBDCs…like
the United States.
Remember back in January bloomberg reported that a crypto executive order would be released
in February, and the article said “The administration is also expected to weigh in on the possibility
of the U.S. issuing a government-backed coin, known as a central bank digital currency or
CBDC”
Although in February bloomberg released this article which said “President Joe Biden’s
cryptocurrency policy rollout was delayed by a dispute between White House officials
and Treasury Secretary Janet Yellen over the scope of a pending executive order that could
include a digital dollar, Senior administration officials have now completed a draft version
that is ready for Biden’s consideration, though further action could be delayed because
of the Ukraine crisis.
This was before Russia invaded Ukraine!!
They are delaying it…Now if we see alternatives to SWIFT being facilitated by Digital currencies
and CBDCs..from Russia, China or a combination of the two… the digital dollar aka a US
CBDC will be of the utmost importance.
It’s possible with the way the media covers it, they could even get citizens to be behind
the creation of one.
3 of the world’s most powerful countries, China, Russia and the US…all deploying CBDCs
within the year?
I don’t doubt it, it marks the end of freedom and the beginning of the fight.
Cheers I’ll see you next time!