Charles Hoskinson, the founder of Cardano, shared his perspective on CBDC development throughout the world in a tweet on his Facebook page. He tweets a link to one of Joe Rogan's videos, titled "Why CBDC are a Bad Idea?" This indicates that the well-known founder, who was formerly a member of the Ethereum project's founding team, is not very enthusiastic about the new digital currencies.
Why CBDCs are a really bad idea https://t.co/llJZ3zgvyQ
— Charles Hoskinson (@IOHK_Charles) April 3, 2022
Charles Hoskinson shares his dissatisfaction with the blockchain industry with a large number of other enthusiasts and professionals. For them, the introduction and development of CBDC is a threat to the freedoms and decentralization engendered by cryptomonnaies.
The fundamental concept
The Monnaie Numérique de Banque Centrale (or Central Bank Digital Currency in English, CBDC) is a digital version of fiduciary currency that will be issued by central banks to represent physical fiduciary currencies. Countries such as Nigeria and China have also launched their virtual currencies, the eNaira and the e-yuan, respectively. It's not about crypto currencies like Bitcoin, Ethereum, or Cardano, but rather basic dematérializations of government-controlled currencies.
Are CBDCs a good or bad idea?
The founder made a public statement via the social media platform Twitter to provide his perspective on the issue surrounding the creation of CBDC. He shows a video of Joe Rogan in which the invité of the famous American podcaster has the same point of view.
The CBDC, or Central Bank Numerical Monnaie, would be a tool for states to monitor citizens. If these currencies see the light of day, they may, for example, be programmed to only be used for specific purchases. Another disadvantage is that employers might easily restrict its use in the case of an employee who does not do his or her job correctly. The risk is that governments will only allow cryptomonnaies to be used for government-approved purposes. The primary goal of the creation of cryptomonnaies was to free people from the oppressive control of their governments and governments through fiduciary currencies. In this case, the creation of state-backed digital currencies would be a step backward for the cryptocurrency industry.
Why are people speaking out against the CBDC?
Concerns about excessive controls are resurfacing. In fact, many cryptocurrency experts believe that CBDC may be more risky than current fiduciary currencies. With the introduction of decentralized electronic currencies, governments will want to reclaim lost time.
Although they are based on cryptocurrency technology, specifically Bitcoin, the CBDC operate differently. The central banks will have the ability to create currency in the same way that the current system does. Commercial banks lose their ability to create money through credit issuance and other financial activities, which are now reserved for the central bank. The Banque Centrale will directly host all of the accounts necessary to record transactions relating to assets, liabilities, income, and expenditures carried out by individuals, businesses, and households.
In such a system, all financial power is delegated to central banks, which in turn delegate it to governments. The term "centralized registry" would then come to mind. Cryptomonnaies, on the other hand, use a decentralized registry that gives users control over their funds' management.
The centralization vs. the decentralization debate.
The centralized registry gives the holders of centralized power complete control over transactions. In this case, the government and the states would be in charge of the authority. Detractors of the CBDC believe that concentrating such power in the hands of states is dangerous. They, like Charles Hoskinson, believe that governors may be useful in bringing the populace together.
On the other hand, a decentralized register is nothing more than a data store that keeps track of transaction history. By voting among blockchain participants, the participants choose the method of operation. No one centralized source has an influence on all of the participants' transactions.
Several voices have been raised against the CBDC, even at the political level, to prevent its creation. While the president of the United States has requested the development of these digital banknotes, certain elus are opposed to it. Tom Emmers, a member of the Minnesota legislature, and Ted Cruz, a senator, show their dissatisfaction. The CBDC are not cryptomonnaies, but rather a government monitoring tool. They are destroying freedom at the same time as cryptomonnaies are attempting to create it. Is this the start of a battle between Bitcoin and the many CBDCs?
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