US ramping up its digital dollar efforts drives case for Bitcoin
With works on a potential digital dollar gaining pace in the US, the case for Bitcoin becomes significantly stronger.
The US Treasury Department’s undersecretary for domestic finance, Nellie Liang, stated that the federal government would begin talks in the “coming months” in regard to a Central Bank Digital Currency (CBDC).
During a speech made last week for the Atlantic Council, Ms Liang said officials in the USD are “actively evaluating whether a CBDC is in the national interest” and noted some of the possible benefits of a Federal Reserve-backed digital currency, saying it “could help preserve the dollar’s global role” and potentially reduce issues with cross-border transactions.
As I was quoted by Newsmax, Pound Sterling Live, Finbold, Bitcoin Insider and Tech Telegraph, amongst other media, this is the clearest indication we’ve seen up to now that a digital dollar may soon become a reality, pending approval from Congress, of course.
So, if the US economy – the largest in the world – is stepping up its efforts, then the global race to CBDCs is certainly escalating.
As it stands, it’s estimated that over 80% of the world’s central banks are looking into launching a CBDC or have already done so. This latest development shows the US doesn’t want to be left behind.
It appears to have become all about global leadership, as China is the most powerful nation to head up the implementation of a CBDC.
CBDC advocates state that digital payments can be processed more quickly than traditional payment methods, thereby reducing transaction times and increasing the pace of commerce.
Furthermore, transaction costs could be less expensive to process than traditional payments, therefore likely lowering costs for consumers and businesses. In addition, a digital system could lead to greater access to financial services for people who perhaps don’t have access to traditional banking services.
However, although CBDCs boast the benefits of efficiency, transparency and convenience, one thing they don’t have is privacy.
Basically, the digital dollar is akin to Big Brother-style surveillance technology.
They will give governments more oversight into real-time transactions, possibly resulting in the collection of sensitive personal information.
This may include info such as income, spending habits and other financial activities. This has fuelled concerns about governments potentially abusing this data to monitor and control individuals’ behaviour, providing an extra level of control they’ve not had previously.
It’s for this reason that Bitcoin and other cryptocurrencies will become more and more appealing.
This is predominantly because they have all the benefits of being digital, namely efficiency, speed and convenience. Yet they are profoundly different as they operate on an open, immutable blockchain. They are global, decentralised – with no one authority able to control them – borderless, tamper-proof and censorship-resistant.
Even though the US Treasury looks set to get ready for the digital dollar’s launch, the move is not without its opposition.
Representative Tom Emmer has unveiled legislation in the House of Representatives that could limit the Federal Reserve from issuing a CBDC.
In February, Emmer said he had introduced the “CBDC Anti-Surveillance State Act” to protect Americans’ right to financial privacy.
The bill would stop the Fed from issuing a digital dollar “directly to anyone,” bar the central bank from implementing monetary policy based on a CBDC, and full transparency would be required for actions in relation to a digital dollar.
The US ramping up its CBDC efforts further emphasises that digital is the inevitable future of money.
It’s becoming more and more clear that we’ll have a multi-faceted system of currencies, including fiat, CBDCs, and crypto, in the not-too-distant future.
Naturally, everything has pros and cons; CBDCs will be unattractive for many people because of privacy and government monitoring fears.
What we need, as a matter of urgency, is informed public conversation.