Fear sells! CBDCs and the end of freedom!
Don't buy into the fear campaign against CBDCs
Hysteria over central bank digital currency (CBDCs ) is just beginning and isn’t anywhere near its peak as hard-core conservatives and crypto fans unite to spread fear and paranoia.
Not a day goes by where I don’t see articles proclaiming that CBDC will be: the end of freedom as we know it, the death of civil liberties, the beginning of communism, or, my favorite, the beginning of social credit scoring.
Fear sells! It gets eyeballs on an article, convinces people to buy crypto, gold, invest in DeFi or makes them nervous enough to sign up for a newsletter. It fills the dull days when magazine editors are looking for shock value because the news just isn’t that interesting.
If you like this article, sign-up for more! If you don’t it will be the end of freedom! Remember fear sells!
Interestingly, I find that the two biggest camps where fear-mongering over CBDCs is a way of life are hard-core conservative groups and crypto maximalists who believe in a world run by crypto. I find that the common thread between these two somewhat unlikely bedfellows is a fear of government. While I am sure that the far left may embrace crypto, they seem not to produce much anti-CBDC literature.
Distrust of government makes CBDC an easy target as it is government-issued and easy to paint as an example of “overreach” or “dystopia.” Yet, that government is behind your banknotes, bank transfers, and many other parts of your current financial life seem meaningless or conveniently ignored.
I can’t begin to refute all of these arguments made by the hundreds of articles I’ve read that sell hysteria about CBDC. I will take a stab at a few of them for fun while acknowledging that the following list is in no way complete. I consider it a DRAFT version and look forward to your help in extending it.
Three disclaimers up front as I am asked about these all the time:
All citizens should be engaged, aware, and knowledgeable about the CBDC project in their nation. “Blind faith” is not advised.
The best CBDCs will be designed in a collaborative process between gov’t and citizens.
I do not believe in the elimination of cash. Earthquakes, hurricanes, typhoons, blackouts, and network failures show why money needs to remain with us for many years.
Here are a few thoughts, and please note this is a “DRAFT” and not intended to be exhaustive. My idea was to flesh out some thoughts on CBDC that show what absolute nonsense these fear campaigns are.
We don’t know what the final design of the EU or digital dollar will be! So claiming it’s damaging to freedom before we know what it is is premature!
No, the government will not know your every payment. CBDCs exist where the government does not know who is paying. Crypto people know this better than anyone. It is factually incorrect to say that the gov’t will know your every transaction. That is not true, even in China.
CBDCs will likely mirror the current system where the gov’t needs a warrant to access your payment info from banks and card companies. Early designs from MIT confirm this as the most likely outcome for the digital dollar.
Most citizens don’t use cash above a few hundred dollars, so where are the complaints about tracking for the existing system where your data and with it your freedom are sold to data brokers?
The digital dollar will not have “superpowers” canceling your money already exists without CBDC. Ask Canadians whose bank and crypto accounts were frozen during the trucker strike. No CBDCs were required!
Crypto fans won’t dare admit that CBDC could use similar or better anonymity preservation techniques than crypto. However, those with even a cursory knowledge of crypto know full well that most transactions are “pseudonymous” and that users are subject to unmasking.
Crypto fans tout its anonymity which is simply not true. Ask the Manhattan couple busted with $3.6bn in crypto this year, and the infamous Silk Road founder who sits in jail. The US IRS has “operation hidden treasure” with big data company Palantir to find crypto tax cheats. The program so far reports 85,000 summonses for information from crypto exchanges, who are obliged to hand over user data, with $15 million in assessed liabilities.
Incompatible with freedom? Freedom is dear, no doubt, but claiming that it will vaporize due to CBDC is both disingenuous and unnecessarily alarmist. This all comes from a lack of trust in gov’t which spurs many to use crypto. How is it that the introduction of a digital currency will end freedom? If the gov’t believes you are a criminal, terrorist, or tax cheat, they already have ready access to your bank data. How will CBDCs with similar gov’t access restrictions end freedom?
Which version of freedom would be ending? The one where data from your every credit card swipe is sold to data brokers? The one where CBDC payments replace most but not all cash and taxes must be paid? I am increasingly skeptical of the motivations behind the freedom is ending narrative. For crypto fans, freedom means no KYC or AML and CBDC is the opposite of their belief system. Banks demonize CBDC because it will eliminate fees and cost them real revenue. Many who claim that freedom is ending have very specific versions of freedom that they profit from that CBDC will impact.
CBDCs are communism! Now that’s a good one as it sells hysteria in its most pure form! China has a CBDC and is marginally communist therefore, the US and EU will slide into communism as well. Are your government institutions so fragile that such a transition is inevitable? Really? If so, you should join me in China and get it over with now.
Social credit, this is, to me, the funniest of all of the claims. The US has the most onnerous credit rating system in the world! US, UK, and some EU citizens run around fixated on their credit scores. How many credit checking adverts do you see online every day? Social credit in China is really not a concern except for those who have a criminal record where it admittedly does impact life. Just as a criminal record in the West hangs over the head of a former convict.
Consumer credit isn’t social credit! Really? Most are unaware that China’s banks buy US credit tech from FICO and Experian, for its big data capabilities because it’s the best in the world! Claiming that the US does not have social credit when it has the most discriminatory and comprehensive system for analyzing financial credit leaves me in stitches. “Social credit can be used to determine what class of train service a person can buy in China.” Ok, in the US credit reports impact housing, employment, and even hospitalization. All of the major credit rating agencies have other services such as renter’s credit checks that most definitely contain “social scores.”
The hysteria is just beginning
I expect the hysteria surrounding CBDC will continue well beyond the launch of the digital dollar, euro, or pound. No doubt some people won’t want to use them, and I do believe that cash, stablecoins, crypto, and cards should all be available. That said, merchant acceptance is not guaranteed, except for CBDCs which are national currency.
That said when I read through a number of these articles I have to wonder what the author’s ulterior motives are. So much so that I have to wonder how some actually believe what they are writing or are simply supporting a cause like crypto, or are simply distraught about government. I can’t answer but hysteria sells and I think we’re just in the beginning and it will get far worse as we near the launch of a major Western CBDC.
The problem with this is that many citizens will see more articles and see CBDCs as something to be feared and not a public good that will make all of our lives easier, and cheaper. I can still remember the first time I used WeChat, it was an epiphany as I saw just how easy and cheap (free) payment could be. I hope others have that same experience and don’t get sidetracked by the hysteria.
One final headline, just for fun! Do you really think that the digital yuan is a threat to global freedom? It’s not even in use yet in China and the fear mongering has begun!
More of my writing, podcasts, and media appearances here on RichTurrin.com
Rich Turrin is the international best-selling author of "Cashless - China's Digital Currency Revolution" and "Innovation Lab Excellence." He is an Onalytica Top 100 Fintech Influencer and an award-winning executive previously heading fintech teams at IBM following a twenty-year career in investment banking. Living in Shanghai for the last decade, Rich experienced China going cashless first-hand. Rich is an independent consultant whose views on China's astounding fintech developments are widely sought by international media and private clients.
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