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Edward Snowden believes that CBDC is not so much an innovation as it is “closer to the metamorphosis of cryptocurrency.”
Original title: “Snowden: Your Money and Your Life”
Written by: Edward Snowden (Edward Snowden), Privacy Protection and Cryptocurrency Advocate Translation: Block unicorn
This week’s “news” about the ability and willingness of the U.S. Department of the Treasury, or just a tentative balloon troll’s proposal to mint 1 trillion U.S. dollars (1,000,000,000,000 US dollars) platinum coins to extend the country’s debt limit, reminds me of something I’m sultry Other currency readings encountered in the summer, when many people first clearly saw that the biggest obstacle to any new US infrastructure bill is not the debt ceiling, but the House of Congress.
The reading I completed with my favorite infrastructure (ie electricity) while preparing lunch was a speech by Christopher J. Waller, who is the new appointment of the 51st and most powerful state in the United States. Governor, Federal Reserve.
The topic of this speech? CBDCs—unfortunately, they are not some new form of cannabinoids you might have missed, but the acronym for central bank digital currencies—this is the latest danger in the public eye.
Now, before we discuss further, let me say that it is difficult for me to determine exactly what this speech is-whether it is a minority report or just to cater to his host, the American Enterprise Institute.
But considering that the term Waller, a member of the Federal Reserve appointed by economists and Trump at the last minute, will last until January 2030, our lunchtime readers may see efforts to influence future policies, especially those that affect the Federal Reserve Respect and still-the forthcoming “discussion paper”-a collectively written text-on the topic of the costs and benefits of creating a CBDC.
In other words, regarding the costs and benefits of creating a US CBDC, China has already announced one, and more than a dozen other countries, including Nigeria recently, have also announced that the country will launch eNaira in early October.
At this point, readers who have not subscribed to this particular Substack may ask themselves, what exactly is a central bank digital currency?
Reader, let me tell you.
Instead, I will tell you what CBDC is not—it is not, as Wikipedia might tell you, a digital dollar. After all, most U.S. dollars are already digitized, not as things folded in your wallet, but as an entry in the bank’s database, faithfully requested and presented under the glass of your mobile phone.
In every case, money cannot exist outside the knowledge of the central bank
The central bank digital currency is not a national embrace of cryptocurrency-at least not cryptocurrency, because almost everyone who uses it in the world knows it.
On the contrary, CBDC is closer to the metamorphosis of cryptocurrency, or at least the metamorphosis of cryptocurrency’s founding principles and protocols-a crypto-fascist currency, an evil twin that enters the ledger, explicitly designed to reject the basics of its users Information about the ownership of their money and put the state in the mediation center of every transaction.
In the thousands of years before the advent of CBDC, currency—the conceptual unit of account represented by the general physical and tangible objects we call money—was mainly embodied in the form of coins minted by precious metals. The adjective “precious”—refers to the basic limitation on usability, because of how painful it is to find and dig underground goods that are scarce in nature—is important because everyone is cheating: buyers are in the market Scrape off his metal coins and save the leftovers. The sellers in the market use dishonest scales to weigh the metal coins. The miners of the coins are usually the regent or the country. They use less material to dilute the precious metal of the coin, let alone Say other methods.
The history of the banking industry is a history of this dilution in many ways—because the government soon discovered that just by passing legislation, they can declare that everyone in their territory must accept that this year’s coin is equal to last year’s coin, even if the new coin Less silver and more lead. In many countries, there are doubts about this system, and even pointed out that the punishment for adulteration is confiscation of assets at best, and at worst: hanging, beheading, and being burned to death.
In the Roman Empire, this currency devaluation, which today may be described as “financial innovation”, will continue to fund previously unaffordable policies and eternal wars, eventually leading to the third-century crisis and Diocletian’s highest price decree. An appropriately memorable way to live longer than the collapse of the Roman economy and the empire itself:
After the 3rd century, merchants, especially the traveling merchants of the late 3rd century, tired of carrying heavy dinars and dinars, created more symbolic forms of currency, and thus created commercial banking—the populist of the royal treasury Doctrine version-the most important thing is that the early tool is the institutional promissory note, which has no intrinsic value of its own, but is supported by a commodity: they are parchment and paper, which represent a certain amount of exchange that has more or less intrinsic value The value of the coin is right.
The regime that emerged from the Great Fire of Rome extended this concept to the establishment of its own convertible currency. A small piece of rags and their symbolic value but a coin equivalent with a different intrinsic value circulated in the economy. Starting with the increase in printed paper money, it continued. The cancellation of the right to convert paper money into coins eventually led to the devaluation of the zinc and copper of the coin itself, and the city-states and later enterprising nation-states finally achieved our goal. Old friend Waller and his cronies at the Federal Reserve would generously describe it as a “sovereign currency”: a beautiful napkin.
Once currency is understood in this way, it is a small step from napkin to the web. The principle is the same: new digital tokens circulate with fewer and fewer old physical tokens. first.
Just as old paper silver coupons in the United States can be exchanged for a shiny one-ounce silver dollar, the digital dollar balance displayed on your mobile banking application can still be exchanged for a printed green napkin at a commercial bank today, as long as the bank still has it. Solvency or keep its deposit insurance.
If this redemption promise seems to be a cold comfort, you’d better remember that the napkin in your wallet is still better than what you have exchanged: just a requirement for the napkin in your wallet. In addition, once the napkin is safely stored in your wallet or purse, the bank can no longer decide or even know how and where you use it. In addition, when the power grid fails, the napkins can still work.
The perfect companion for any reader’s lunch.
Proponents of CBDC believe that these strictly centralized currencies are the realization of a bold new standard—not a gold standard, silver standard, or even a blockchain standard, but something similar to a spreadsheet standard. Bank-issued U.S. dollars are held in accounts managed by the central bank, recorded in a huge national ledger, which can be reviewed and permanently revised.
Proponents of CBDC claim that this will make daily transactions safer (by eliminating counterparty risk) and easier to tax (by making concealment of funds from the government almost impossible).
However, opponents of CBDC cited the same claims of “safety” and “ease of use” to argue that, for example, the electronic dollar is just an extension of the constantly encroaching monitoring status or financial performance. For these critics, the proposal’s method of eliminating the consequences of bankruptcy and tax evaders draws a bright red line under its fatal flaw: the price of these methods is to place the countries that have recently mastered the use and custody of every dollar in currency interaction. center of. Looking at some countries, wiping tears with napkins, new Bitcoin bans, and the release of digital renminbi, it is clear that they are meant to increase the country’s ability to “intermediate”—imposing itself in the middle—every transaction.
“Intermediary” and its opposite “disintermediation” constitute the core of the problem. It is worth noting how Waller’s speech relies on these terms. Their origin is not capitalist policy, but Marxist critique. They mean: who or what is between your money and your intentions.
What some economists have recently called “decentralized cryptocurrencies”-that is, Bitcoin, Ethereum, etc.-are viewed by central banks and commercial banks as dangerous disintermediators; precisely because they are designed to ensure that all Users provide equal protection without granting special privileges to the state.
This kind of “cryptocurrency”-whose technology was created primarily to correct the centralization that now threatens it-is usually and should not be constitutionally concerned with who owns it and for what purpose. However, for traditional banks, let alone countries with sovereign currencies, this is unacceptable: these upstart cryptocurrency competitors represent epoch-making subversion, promising the possibility of storing and moving verifiable without state approval. The value of their users so that their users go beyond reaching Rome. The opposition to this kind of free trade is often hidden under the appearance of paternalistic worries. The state claims that without its own loving intermediary, the market will inevitably degenerate into illegal gambling dens and flooded with tax fraud, drug dealing and gun operations.
It is difficult to support this claim. However, according to the Office of Terrorism Financing and Financial Crimes of the U.S. Department of the Treasury, “although virtual currency is used for illegal transactions, it is not related to carrying out illegal activities through traditional financial services.”
Of course, traditional financial services are the true face and definition of “intermediaries”-services that seek to extract part of our transactions for ourselves.
This brings us back to Waller, who may be called an anti-intermediary, a defender of the commercial banking system and its services, which store and invest (and often lose) the funds that the U.S. Central Banking System the Federal Reserve decides to print ( Usually in the middle of the night).
You will be surprised how many critics are willing to publicly pretend that they can’t tell the difference between accounting skills and money printing.
However, I admit that I still find his remarks convincing-mainly because I rejected his reasons, but agreed with his conclusions.
This is Waller’s opinion and my own. The United States does not need to develop its own CBDC. However, although Waller believes that the U.S. does not need CBDC because of its already strong commercial banking industry, I believe that the U.S. does not need CBDC. Although there are banks, in my opinion, their activities are almost better. The strong, diverse and sustainable ecosystem of the national cryptocurrency fairly achieves this goal (translation: conventional encryption).
Dare to assert to readers that the commercial banking industry is not the solution Waller thinks, but its real problem-a parasite-like and completely inefficient industry that plunders customers with impunity and can Get help from the Federal Reserve on a regular basis, thanks to suspenseful novels that are “too big to fail.”
But even as the banking-industrial complex has become larger, its utility has dried up—especially when compared to encryption. Commercial banks used to uniquely protect other risky transactions to ensure custody and reversibility. Similarly, it is impossible to obtain without credit and investment, and it may even be impossible to imagine. Today, you can enjoy any of them in just three clicks.
Nevertheless, the role of banks is older. Since the birth of commercial banks, or at least since it was capitalized by the central bank, the most important function of this industry has been to move it, fulfilling the promises of old promissory notes by allowing them to be fulfilled in different cities or different countries, and allowing these The holder and the redeemer of the bill make payments across similar distances on behalf of them and others.
For most of history, transferring funds in this manner required large amounts of storage-requiring the obvious security of vaults and guards. However, this situation has changed as the intrinsically valuable money gave way to our small napkins, and the napkins gave way to the intangible digital equivalent.
However, there is not much in the vault today. If you walk into a bank, even if you don’t wear a mask on your face and try to withdraw large sums of money, you will almost always be told to come back next Wednesday, because the physical currency you ask for must be from a rare branch or reserve that actually owns it. At the same time, the fabulous guard in his mind like the granite and marble he paced was just an old man with tired feet, who paid too little to use the gun he was carrying.
These commercial banks are simplified to: “intermediary” money order services, profit from fines and fees-protected by your grandfather.
In short, in an increasingly digital society, banks can hardly provide asset access and protection that algorithms cannot replicate and improve.
On the other hand, when Christmas comes, cryptocurrency will not distribute those little desk calendars. But let’s go back to the bank’s security issue. After helping to close the bank for a day, he might go to a second job to make ends meet—for example, at a gas station.
Will CBDC help him? Will the electronic dollar improve his life instead of a dollar of cash, or a dollar equivalent of Bitcoin, or some stablecoins, or even FDIC-insured stablecoins?
Suppose his doctor tells him that his sedentary or just standing nature of his bank job has affected his health and caused dangerous weight gain. Our guards must reduce sugar, and his private insurance company (he has been publicly authorized to deal with him) is now tracking his pre-diabetes condition and passing data about that condition to the system that controls his CBDC wallet for download The next time he went to the deli to buy sweets, he was refused-he couldn’t-his wallet was refused to pay, even though he was going to buy sweets for his granddaughter.
Or, suppose that one of the electronic dollars he received while working at a gas station happened to be later registered by the central authority as being used by his former holder to execute suspicious transactions, whether it was a drug deal or a donation to a completely innocent and actual It is a charity that is fully affirmed on life. The charity is operating in a foreign country that is regarded as hostile to the foreign policy of the United States, so it was frozen and even had to be “civilized” confiscated. How will our troubled guard get it back? Can he prove that the electronic dollar legally belongs to him and re-own it, and how much the proof will ultimately cost him?
Our guard earns a living by working-living on his body, but when his body inevitably collapses, has he accumulated enough food to retire comfortably? If not, can he expect to rely on the benevolent, or even sufficient, welfare, care and treatment of the state?
This is the question I hope Waller, I hope the Federal Reserve, the Treasury Department, and other departments of the US government will answer: Of all the things that may be concentrated and nationalized in this poor man’s life, should it really be his money?
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