Topic: Is Digital dollar a threat to Bitcoin ? - page 2. (Read 387 times)

If compared as a means of payment, bitcoin today is still not widely used because most people prefer to accumulate and hold bitcoins than to use it as a payment method. If compared as an investment, it is clear that CBDC does not have any effect on bitcoin, as CBDC is fiat, just a currency but in digital form.

So I believe CBDC can't threaten or affect the development of bitcoin, when CBDC comes out, instead of using fiat, we will use it for daily activities. BTC and CBDC are entirely different.

This kind of question has surfaced on the forum before, and the answer is simple, it's a threat to it, but the threat would be minimal. A threat in the sense that many that are using Bitcoin for particular reasons like payment and investments might want to divert to the US Central Bank Digital Currency (CBDC) because it's better for investment in my experience and would be more readily available for that purpose. But for payment, this would depend on the offers the digital currency comes with. If it's such an offer with zero to a low transaction fee, more people would adopt it in place of BTC.

The main strength of BTC is in privacy and anonymity, and it would use that to continue to secure its place amongst rival payment systems.

I guess you just answered the question yourself, so no need for me to elaborate more on this anymore. Because these are two different kinds of digital currencies altogether, because while the "dollar" is centralized (I.e controlled by both central banks and government), Bitcoin on the other hand is decentralized (I.e independent on its own)

Exactly. What I always say is that things that are not in the same category can not be a threat for each other. That is bitcoin and centralized coins (eg. CBDCs). But another way of saying it is things that are in the same category are a risk for each other. "Digital Dollar" or any other form of centralized payment system is a threat to existing centralized cryptocurrencies like stable coins. The day CBDCs are introduced the centralized stablecoins like Tether will start dying because people would start mass migrating to them since as you said they are a lot safer considering governments issue them not some shady company that can be shut down by the government!
Such transition won't affect the market though. It will be a smooth one that affects the company and anybody bag holding their shitcoin.

What threat?

I don't think many people are using Bitcoin as a currency, most of them are use Bitcoin as an investment, so what's the threat if the holders only hold the coins and didn't have any intention to send or convert their coins to fiat in hurry?

I will say we might use CBDC in the future since the marketplaces will get forced to accept it, but it doesn't mean I will sold all of my coins.

I don't think so, if CBDCs were created and used on exchanges, I would use CBDCs instead of current stablecoins. Stablecoins created by private companies, it is riskier than government CBDC. I will skip centralizing them, I will just talk about their safety, then it is clear that CBDC will win this race. Like the accusations we see in USDT, if unfortunately, Tether crashes, our assets in USDT will also disappear, but if it is CBDC it will be safer.

Logically, this will not affect Bitcoin because besides being centralized, Bitcoin is also limited in number. I often encounter news like this and for us it is not a threat. If you see and have followed the development of the crypto space, Bitcoin is a threat to those who think Bitcoin is a rival.

I think smart people who are able to see the potential of economic systems will always be happy to choose Bitcoin for the long term. Not without reason.

fiat/CBDC wont be backed by an underlying asset nor of "strength of national currency"
its purely backed by income/tax/court laws of maintaining that population gets paid in fiat, pays taxes in fiat and fines/debts in fiat(legal tender laws). which keeps fiat in circulation and popular by citizens

Bitcoin's mission and purpose won't change in the slightest because of the introduction of a CBDC. The situation remains the same: the CBDC is pretty much the same as a simple dollar bill from the perspective of how it is created (out of thin air) and how it is backed (by nothing). Now some will argue that the dollar bill is backed by the strength of a national economy, but that would imply that the money printing is based on a rational relationship between the quantity of money being produced and put into circulation and the strength of the economy., but all too often have we seen a decoupling of money quantity and the economy's strength. It just doesn't make sense anymore (and probably might have never made sense, but wasn't as consequential as it is now getting more and more).

In my opinion, both are entirely different, so they cannot threaten each other, using CBDC is no different than you are using fiat. In a sense, CBDC is a digital version of fiat and if we cannot compare fiat to bitcoin then CBDC is similar.

I agree with pooya87's point: digital dollars have been around for a long time, and we have been using them for a long time, so it would not be correct to say that it is a threat or will compete with bitcoin. Bitcoin is not just a currency, it is an asset and an investment, so to speak, there is no such thing as a government-created asset class to compete with bitcoin.

CBDCs have always been inevitable, if a scammer can create their own useless coin then it is clear governments can do the same, but as you state I do not see them as opponents for bitcoin, since anyone which is holding bitcoin for reasons beyond just making money will know it is a terrible idea to exchange their bitcoin for those CBDCs.

And while CBDCs will compete against stable coins there is no guarantee they will beat them in a fair competition, as if you need to identify yourself just to open a wallet then many people will prefer to keep using stable coins for the time being.

It's basically going to be another altcoin competing with Bitcoin in my mind.

Also, I'm sure there will be some issues with CBDCs as they're going to be implemented per country in different ways, and somehow they'll be talking to each other.

most CDBC including US, canada, china, sweden, africa all try to emulate the so called "two layer"(no coincidence) of bitcoin-liquid/LN
there is a third (top) layer joining these CBDC called the m-bridge which is like the IMF SDR reserves network

yep certain corporate sponsored devs used/abused bitcoin to sandbox test CBDC future decisn using bitcoin and sub networks

the US trial variant(hamilton) of CBDC has a 2 second "blocktime" which has caused in tests bottlenecks of settling 1.7m/2 seconds where it would only be 100% at 3seconds+ for 1.7m tx fully settled

the blocks are not mined nor staked. they are just premined units put into multisig signed tx's(for commercial bank reserves).. where by the transactions in the block are collated and signed by trusted parties(central bank + certain commercial banks)

below the blocks. are the smart contract networks that[as said above] assign reserves in multisig between commercial banks
and then the commercial banks act as hubs for customers payments in their own sub network in milli second(0.07sec) payments

where funds loop through commercial banks smart contracts and the commercial banks then swap reserves between each other every 2-3 seconds to settle the balances out


                       central bank
                    /          |          \                         blockchain
    commerce --- commerce --- commerce
   commerce --- commerce --- commerce
   /     |   \          /     |   \          /     |   \         sub networks
user user user  user user user user user user

---

CBDC fiat wont be deflationary. they will continue to be able to co-sign more value into existence at the blockchain level to however much reserve amounts the want thus devalue the holdings at the subnetwork level of users

users cant just take their keys to any commercial bank wallet app it is multisig meaning they would have to set up new multisig with new (account) at other commercial bank and send funds across (like opening new account to close first account)

though commercial banks "autopilot" their tx signing of a users signed payment, commercial banks can refuse to co-sign if certain rule breaks occur

though the user database of KYC stays at the subnetwork stage, the commercial banks can report certain activities to financial authorities of criminal investigation where the authorities can then get a court order to view all payment KYC details of suspected criminal act  from the commercial bank involved

in short the Central bank is not monitoring all user payments, they delegated that role to the commercial banks, the central bank and financial action task force/regulators only receive the suspicious activity

CBDC failure has nothing to do with bitcoin, and even successful CBDC has no effect on bitcoin, they are basically 2 different assets, and CBDC is simply an upgraded version of Fiat. CBDC is inevitable because we are in the digital age and the government's goal in issuing it is to try to control the people more than to compete with bitcoin. If the digital dollar were to be created, I would consider it a rival to today's stablecoins rather than bitcoin or altcoins.

People won't turn towards CBDC, at least bitcoin adopters, because they know the differences betwen bitcoin and the digital fiat, while also aware digital fiat has no difference to fiat. Who is going to adopt CBDCs are the people who don't want to use bitcoin, but for crypto market it doesn't make any difference, nothing changes. It will be the same scenario we face right now. The only problem is that governments start using coercive power to force people using CBDCs and to stop using bitcoin. That would be done through a ban, but I guess most countries are safe from this threat, since governments are adopting relatively friendly stances regards bitcoin and crypto.

Digital dollars are developed to limit the usage of bitcoin and make people turn towards CBDC. Already many countries have done it, and this will get added to the list. Nothing specific as to make bitcoin down. As said in a post the misunderstanding could make few people get into it at the beginning. This might cause some temporary impact which in the long term gets subsided.

They are creating the opposite, it might really be having that notable feature or something which shows much better in terms of transaction speed and high number on volume but
still people who are seeing that decentralized things is always been better then it would be just simply ignored.They could create all the things they do want but as long it would
be that centralized then people wont really be seeing these things to be interesting.Just like the rest which are trying to make out which interest and recognition
isnt really that much.

If the government lets things flow naturally, the Digital dollar will never be a threat to Bitcoin.  The only threat to Bitcoin is the government that creates that Digital dollar.  The reason is that the government can impose a regulation that prohibits any Bitcoin transaction or usage of Bitcoin just to promote their CBDC.  It will not only cut people from using Bitcoin but also discourage any future adoption of Bitcoin.

Is it even possible to create a system to convert crypto assets one to one to something like digital dollar?

It's a tricky one, but I absolutely believe that the digital dollar poses a threat to bitcoin. There is a possibility that the federal government will enact absurd taxes and restrictions. There are a number of ways in which this could negatively impact bitcoin owners, and even lead to a desire to sell their assets. As a result, the Fed will provide bitcoin owners with a tempting offer to convert their funds to the digital dollar at an initial one-to-one exchange rate that will eventually depreciate.