During the recent pandemic, sovereign nations “air dropped” stimulus checks to their citizens to support their economies. The effect of these checks was not as impactful as they had hoped as most of the funds were spent to pay off debt, put in savings or to purchase gold, silver and bitcoin.
To ensure future stimulus efforts meet their target goals, several governments have come up with their own CBDC. This system is completely digital and operates on a blockchain with a centralized ledger managed at the Central Bank.
This allows the Central Bank to air-drop funds directly to the wallets of its citizens based on any arbitrary rules they desire, eliminating the expense of mailing checks or processing bank transfers to millions of individuals.
While this may be a positive, on the flip side, this also allows the controlling body to approve or decline a point-of-sale transaction at the time of purchase. If the transaction does not result in stimulating the economy, chances are it will be declined.
If / when central banks eliminate paper money and physical coinage, their citizens would be at the mercy of having their CBDC transaction approved.
Privacy in commerce will be eliminated. Today, the “analog” version of fiat currency; reserve notes and coins, are spent anonymously*. There is no ledger that ties an individual with the serial number of the notes being spent and the coins have no link to their previous owner.
* Some cash transactions may require additional identification based on current anti-money laundering (AML) regulations.
Upon the transition to CBDCs, the Central Bank can trace funds throughout the economy and know exactly who is spending what and where.
In a previous article, I explained the importance of maintaining privacy in commerce.
Article Link: https://sanctuarydex.com/why-privacy-in-payments-is-important/
Restricting a citizen’s ability to transact in commerce puts restrictions on their freedom of assembly (First Amendment of the US Constitution). If they cannot travel due to restrictions of funds, their ability to peacefully gather is confined.
One could take this a step further and infer that purchases for self-defense could be declined. (Second Amendment)
Since 2009 and the introduction of bitcoin, we have another option for accessing and sending funds. Solutions by SANCTUARY DEX™ allow individuals, merchants, and non-profit organizations the ability to secure cryptocurrency funds safely and without the need for a third party like a bank. You can send funds 24/7 to anyone with a crypto wallet address in any amount you like. Most cryptocurrency transactions are validated and recorded to the blockchain ledger in less than 5 minutes!
