If you read my previous post you will learn what problem bitcoin is trying to solve. But there is another thing that governments love to talk about when anyone mentions bitcoin or cryptocurrencies. To be clear on the difference between bitcoin and cryptocurrencies read this. The thing Governments love to bring up is a Central Bank Digital Currency or a CBDC for short.
What is a CBDC and what benefit does it have? The most important thing to know about a CBDC is it is 100% Government controlled, just like money today. It has no limit on how much of it there can be. Because of this they can create more new CBDC everyday and reduce the value of the ones you own. This is inflation and that is the problem that bitcoin solves by having a limit that is 21 million bitcoin ever. The fact that CBDC does not have a limit, means it is not a substitute for bitcoin and you should not be fooled by anyone on tv, or anywhere, saying a CBDC can replace bitcoin and now we don’t need bitcoin.
One thing a CBDC may do is either make settlements at the store faster or international settlements faster. Today international settlements usually go through a company like Western Union. It is very expensive to send money out of the country. Visa and Mastercard process most payments via their credit system and charge between 1.5%-4% to the businesses using their network. A CBDC could remove the need for Visa and Mastercard and for Western Union. Basically it could remove any intermediaries as a CBDC would be infinitely and immediately traceable. While to me all our money seems digital and traceable anyway, a CBDC would make it even more easily so. There may be a push from a government to use it as a form of punishment or denial of purchase for certain things which would be another option that opens up even more with the abilities of a CBDC. For example the government could say that buying meat is bad or buying more than 1000g/ month of meat is illegal and could limit your CBDC credit card to purchases of meat, or anything they wanted.
The main point I wanted to help people understand with that post is that a CBDC certainly does not do anything that would replace bitcoin or reduce inflation and could even potentially be used to control purchases by individuals.
MyWheelLife.com 