Topic: Could CBDCs defeat crypto in the long term? (Read 330 times)

That's the point. If governments unanimously agree on banning crypto usage worldwide in order to force the use of CBDCs, then crypto will be doomed. While it will still be possible to use crypto "under the table", the average person will be quite skeptical dealing with something that's declared as "illegal" by the government. By then, it may no longer be possible to buy/sell crypto against Fiat. Only direct crypto transactions between peers will be the norm in the crypto/Blockchain space.

With so many cryptocurrencies being largely dependent on centralized infrastructure (mostly centralized exchanges), it becomes so easy for a government to crackdown on crypto. In authoritarian governments (like China, and Venezuela), CBDCs will be enforced across the region. Since CBDCs will be "living" on the Blockchain, governments can see every single transaction and do with accounts as they please. It'll be the end of privacy as we speak, as everything lives on the digital realm.

Nonetheless, I believe that there's still a long way to go before considering CBDCs a real contender against traditional cryptocurrencies like Bitcoin and Ethereum. We may have to wait until governments launch their own CBDCs next year, in order to see how well they're adopted in the mainstream world. If people choose to deal with CBDCs more than crypto itself, then the latter will become largely unpopular. After all, CBDCs will gain the "same" features as crypto. Who would want to deal in crypto when you've got a CBDC with stable prices and all the good stuff of Blockchain? Time will tell us what lies ahead with the future of both CBDCs and crypto. Just my opinion

China could do CBDC a lot better than any other nation because they want to be able to follow where peoples money go to. It is not easy to create a dictatorial regime with cash, people could spend that money on anything and you may not be able to follow as much as you want, but when it is all digital you will be capable of tracing that money however you want.

The thing about China is that they are a "free" nation if you can leave, sure it is hard for very poor to leave that nation and even when they do its hard to bring all your family with you, because if you leave China and criticize it you are going to get your family in trouble. With cash you can save up and leave eventually using that cash, but with digital they won't allow you. CBDC could be used for very bad reasons like that, so it should be looked with suspicion.

They can create own digital fiat and make other cryptos illigal, that would be a hard hit for btc

Defeat crypto? I believe only a person with a poor understanding of how the Bitcoin/non-scam crypto protocol works would say that CBDCs could "defeat crypto".

OP, Bitcoin's value-proposition is censorship-resistance first. The Core developers have made a good design-decisions to make sure that it's maintained, and couldn't be censored/"defeated".

I think it spurs from the notion that countries with CBDC will obstruct their people to use cryptocurrencies. I don't think that is correct or not, But countries like China "may" have that in mind, so that they can control and monitor everyone, sort of spying on their people's transaction.

China's digital Yuan will be the big test case here, we're going to see if this is a success or not. And they are banking on the argument that Digital Yuan will strengthen their economy and can broaden their financial structure and cross border payments are going to more efficient.

People refer to it as a "war on cash", but in practice it's a war on privacy.  There's no doubt that vast quantities of data about our spending habits is collated and sold.  I'll be using physical cash for as long as I possibly can.  It's still one of the best ways to protect your privacy.  And once the option to use cash is gone, it'll be time to start spending the non-government crypto. 

True, it makes bitcoin's narrative more compelling specially the technology behind it. Government at the beginning are taking it hard against bitcoin, but look at today, they want to harness blockchain, what a hypocrites.

As far as I understand CBDC aim is for the society to go cashless, so I doubt that there could be any competition for bitcoin here. And I don't think that we are going to be affected by governments implementing their own coin, their very intention is somewhat opposite.

i think they are moving separatly with different way , and it will just cause minor effect to each other in my opinion about bitcoin and CBDCs

The national digital currency and cryptocurrency have different tasks, so they cannot replace each other. The first task of the CBDC is to provide payments within the state while fully centralizing it. Cryptocurrency is decentralized and designed to provide payments anywhere in the world, without using the banking system.

So, who will be making use of these Central bank digital currency (CBDC), is it you? I won’t be interested in that if the government should go ahead with it. If the government create digital currencies, they will be regarded as an asset or property, and wouldn’t be a replacement.

It won’t change anything and you will still be able to make use of fiat if you want. From the ones I have seen you will buy them from the banks and I’m very sure you will have to pay a fee for buying those assets and will also pay for transaction, so what’s the need for it? I’d rather be making use of fiat and decentralized cryptocurrencies like I’m doing now.

Yep, lots of unrealistic expectations about this. Upon analyzing the plans of Euro area central banks, Deutsche Bank speculates we could see CBDCs circulating 3 years from now and honestly that seems optimistic: https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/from-hygiene-to-aid-covid-19-strengthens-case-for-central-bank-digital-money-58321056

It's a much bigger endeavor than most people realize. They are trying to create account systems that will eventually embody the entire currency economy. Think of all retail and commercial banks combined and then add the informal cash economy on top. That's the end user base they have in mind.

If CBDCs ever get established on that scale, it will have a much bigger effect on retail banks than on crypto. With widely used CBDCs, banks will become unnecessary middlemen for many, which central banks like because it gives them more direct control over the money supply and makes cash and liquidity injections much more effective.

CBDCs are no more competition for BTC than Apple Pay or Tether. Different purposes, different velocity of money, different pools of users. They are more so competitors for privately issued stablecoins.

It all depends what they will build. If they will fork Bitcoin or better Monero, teen why not?  Originals will have more network synergy, but a strong central bank like FED can advertise their coins more.   But as yourself why would they want to make that? Those that made Bitcoin or Monero did not gained anything, since they were fair launched. There is no incentive for any central bank to make a permissionless decentralised cryptocurrency.

They will make a centralised digital coin. Something like tether or other stable coins.

A really tough question, can crypto issued by governments in any way win the competition with a decentralized cryptocurrency such as Bitcoin? I don't think that will be the case, because as others have already said, there is a huge difference between something that is completely centralized and something that can be considered people's money, in this case Bitcoin.

However, if we look at the crypto user base today, estimates say that there are less than 100 million people who are in some way involved with crypto, while at the same time we all use fiat. Therefore, it will be quite normal that one day everyone will be forced to use CBDC, and BTC will continue to be an alternative for those who think a little differently than most.

CBDC is already a reality in China where it is being tested in several provinces/cities (Shenzhen, Xiong’an, Chengdu and Suzhou) and it will probably be the first country to fully switch to digital money. Needless to say, such money means 100% control and perhaps the final strike to privacy of citizens. Maybe it is also an opportunity for BTC, although we know that the supervision over it is bigger and more extensive every day.


https://www.ledgerinsights.com/china-digital-currency-wallet-dcep-cbdc/

They'd probably not conflict much imo. I mean, CBDC should solely be used for local transactions after all, and global transactions that could use local currency would probably require coordination between every country out there which is probably close to impossible to happen due to a lot of problems that may or may not occur. Additionally, it's not like a digital currency has any difference with fiat currency, it's just made digital and tbh, the concept of using payments using money from bank accounts is already as such. Besides, it's not like a Centralized currency could defeat crypto, especially bitcoin since they aren't even on the same page. One is Centralized and the other is Decentralized. How would one defeat the other if at the very start, their very notion of what they are is already opposites right?

This is basically it. The government can't shut down Bitcoin cause it's a decentralized system, and the community can't shutdown fiat or CBDC cause it's controlled by the government which is a huge power, so why bother making them fight? Just let people use what they want to use.

Lol, having the CBDC is quite unnecessary. From what I have understood you will have to make purchase of the CBDC  (Central bank digital currency) from your bank and then store it their app and you will use it for transaction which will possibly be for local transactions. So, what’s the need for it when I can make use of the bank app or internet banking? It’s really unnecessary and it’s a big waste of time.

Decentralized cryptocurrencies are the best, at least we can use them to make transactions to any place in the world to anyone wherever they are. So, I don’t believe that these CBDC will be replacing fiat at anytime, we will still have the decentralized cryptocurrency.

in my opinion the banks don't need to create something new to "defeat" cryptocurrencies or at least try to. they can do it right now with fiat that they already control.
from what i see, one thing that sometimes is forgotten is that "cryptocurrency" is not going to be successful because of "crypto" part or the "blockchain" part but it is successful because of the decentralized part of it. look at bitcoin and compare with all the altcoins that are mostly centralized. none of them have anything to say. of course banks can make things very hard, as they have done and as they have even prevented people from buying bitcoin (like in India for example)  but it will never stop them from buying bitcoin.

Centralized and decentralized cannot exist at the same time as means of payment, it should be one over another.I feel digital currencies from government has better chance to take over decentralized if it gets implemented in near future but when people knows about decentralized and get adopted to it then coins from government will have no meaning to exists.

It could not defeat crypto since it would basically help crypto. However, it could destroy usdt type of currencies. The stablecoins that we have right now would be challenged by a big authority and that would be very dangerous to many people and I still feel like there is a big chance cbdc is actually done just because of it. Governments realized that these companies are taking billions of dollars and if they do it themselves it could be even more.

So, it is a way they could collect tens of billions of dollars and not even have to pay it back most of the time, since most money that becomes usdt never goes back to usd as well (some do, but most don't) so it is a great way to increase capital for the governments. Biggest rivals would be stable currencies that exists now, not cryptos.

I was thinking that, if anything, CBCDs would only further legitimise Bitcoin.  All the people who say Bitcoin "isn't real" or that it's "just a bunch of ones and zeroes" won't have a leg to stand on when they unquestioningly accept CBDCs like a bunch of hypocrites.  Calling it now. 

CBDCs will not defeat crypto, because crypto was already captured by the big speculators. Today cryptos are just assets to be pumped or dumped in the big casino which is legacy finance. You cant use crypto as a daily currency, as its value can plunge 60% overnight, so nobody will accept it. Whereas a CBDC have the guarantee of the State (which regulates legacy finance, but not crypto) that it will have a stable value. Also CBDCs will not have financial products such as derivatives, where the asset can be bought and sold without the speculator having it.

Any banker talking ill of bitcoin and other cryptos today, is doing so only to buy it cheap. They are not really antagonizing it, because they know cryptos have failed to become real currencies. In fact, it is failing even as store of value, as the recent coronahoax drama showed, with bitcoin having the biggest correlation with the stock market in its history. So no harm will be done by CBDCs.

I don't think that crypto is going to be the one that will bring into the competition with cbdcs but, it's the traditional payments that we have. We can separate cbdcs and cryptos to the use cases that they should have. The governments might think that it's going to be easy for them to implement these cbdcs but look how few the countries are that's using the cashless transactions in daily living although, they can enforce it through their authority. That's why they'll put it to test and will wait for the results and reaction of the people which will be involved in the adoption of cbdcs.

In this term competing as a payment system, I think cryptocurrency will be beaten to the pulp.  Remember CBDC is government issues monetary system so it is automatically a legit mode of payment and will be entirely used by banks and businesses without any problem at all.  Cryptocurrency can easily be beaten in terms of adoption once this (CBDC) system is implemented.  I am not against cryptocurrency, I like it actually, but let's face reality.

As a means of payment, decentralized cryptocurrency and digital currencies of states will compete with each other. Most likely, it will be the existence of two different branches of financial digital assets. Despite their fundamental difference, these two directions in digital currencies should coexist. Both of them will have their users and will sometimes be in the same payment cards.

There is probably competition but not very different from what we have right now. There will always be competition if there is more than just one currency in use within a single jurisdiction. And the government will either allow both to be acceptable or ban the other. That's the status quo. 

I don't think the rise of CBDCs will obliterate cryptocurrencies. After all, CBDCs are most likely for domestic use. When used in cross-border transactions, there may be necessary conversions first and most probably with high fees. Bitcoin, for example, is borderless and will make you save a lot.

I agree with you that CBDC can never defeat Crypto in the long run because Crypto is so popular and so powerful that it cannot be broken by the government Many countries around the world are supporting crypto and becoming more powerful. No one can compete with crypto The bank has not been able to replace crypto so far  In that case, even if the CBDC is under the control of the government the demand will decrease.

For every action, there is a reaction. No government is ultimately powerful. If some political powers start pressuring crypto, the opposition may turn it to their benefit by promising the population to defend crypto. Besides, blockchain is an advanced technology and will obviously continue to evolve. Oppressing the technological progress is a pathway to oblivion. Of course, there are some autocratic governments (like North Korea, Russia or Iran) that aim to throw their population back to the stone age, because it's much easier to rule a brainless flock of sheep, but we can claim that the governments of most developed countries are not so stupid to fight technology.

I would say that cryptocurrencies will be able to occupy their niche, but they will not be able to completely defeat fiat currencies, just like fiat currencies will not be able to defeat cryptocurrencies. Countries also treat cryptocurrencies in very different ways, someone legalized, and someone forbids.

Launching their own digital token is like harming their own banking system because there won't be any need of banks if we are moved to the digital currencies created by our governments.And also its more like the physical cash which is already existing in the digital form so I don't think it will have effect on decentralized mode of payment at any point.

What I think of CBDCs is that they are really the future of cashless society that we are dreaming for, we can't stay this way with bitcoin pushing it to be a currency of the future coz I think there are more chances of it being a investment, or any crypto at least. As @Jackg says " Bitcoin is a deflationary coin whereas a cbdc would be an inflationary currency so they are not competing in the same markets.", I agree, they won't fall on the same market and competition would not be that much of a problem. But at the end of the day, it is still people that will choose what currency are they going to use in their own way.

There's no ways CBDCs can defeat cryptos in an ethical way. It can only happen if a government chooses to impose a ban on cryptos and creates legal provisions for severe punishment.

Technically government cannot curb the usage of cryptos and I believe, Russian central bank also admitted the same few months back. So the only way left for government is to create fear among the crypto users of their country.

However, I don't see it happening in foreseeable future. While a lot of countries are discussing to implement CBDCs, only one country has started their trial run. So it's easier said than done!

Exactly. We all know this has been an experiment since day one. Even after 11 years since BTC's inception, the crypto space is still not mature for the mainstream world. I'm guessing that once crypto is robust enough for mainstream payments, other countries will be able to fully implement their own CBDCs. Then, people won't have a need for crypto (expect those who value decentralization/censorship-resistance) since a CBDC would do the same thing with a stable price. Interest into crypto might continue to decline, until CBDCs are used on top of anything else. Decentralized cryptocurrencies like Bitcoin and Ethereum will still live alongside centralized digital Fiat, but they'll be used by the minority.

In authoritarian governments like China and Venezuela, the use of a CBDC could be enforced. People will be penalized if they're caught performing transactions in decentralized cryptocurrencies. The rest of the world could continue as normal adopting crypto alongside Fiat in every way. One thing that makes crypto unique from Fiat is its deflationary model (Bitcoin). No government will allow its CBDC to be deflationary, as it gives people more spending power. They want something they can control and manipulate to their own needs. An inflationary CBDC will be no different than physical cash today. Instead of printing money like crazy, central banks would simply issue new coins on the centralized Blockchain ledger.

Nonetheless, no one knows the fate of crypto in the future once CBDCs are released. My hope is that both could live alongside each other for the foreseeable future. But as central banks and governments consider crypto to be a threat to the existence of the world's monetary system, they could do anything in their power to stop its use worldwide. The best way to do this is by cracking down on centralized exchanges until there's no way for people to get access to crypto directly using Fiat. While DEXs, atomic swaps, and in-person trades are still an option, they're not as liquid as centralized markets. If that happens, then CBDCs will ultimately win. Just my thoughts

Definitely, as major countries now are looking for digital currencies, most are making their own is a threat to cryptocurrency. The government will not allow any decentralized body to take over the control on the economy's brain, financial, that will evade everything on their premises. In short, if we are fan of digital decentralized currency they will make a way to promote their own centralized currency, as simple as that.

Since they cannot shut down decentralized entity by any means, it will be a joint forces of centralized and decentralized currencies in the future.

How about you guys? Would you want your transaction to be anonymous and privacy relative or stick with traditional one but digital?

Cryptos like bitcoin are a prototype, they're iot the final solution and they continue to be adapted and evolve.

It's handy to keep an open source borderless currency in usd if you're using one yourself as a country because open source software is patched a lot faster than governmental software... These will also be two completely different things.

Bitcoin is a deflationary coin whereas a cbdc would be an inflationary currency so they are not competing in the same markets...

Now that there have been talks among central banks in launching their own CBDCs, the fate of crypto could be at stake. Governments wouldn't allow anyone to use alternative currencies in order to enforce the use of national digital currencies (CBDCs). They might believe that decentralized crypto is the threat to the existence of the world's monetary system. Such events haven’t happened yet because central banks are still attached to physical cash. Once they're able to "be in par" with crypto, they might do anything at their disposal to prevent people in the mainstream world from using cryptocurrencies like Bitcoin and Ethereum.

What are thoughts? Do you believe that at some point in the future, CBDCs could defeat crypto? Or will CBDCs co-exist with decentralized cryptocurrencies for the foreseeable future?