Octopus Overlords

1. What is a central bank digital currency (CBDC)?
A CBDC is a digital form of central bank money that is widely available to the general public.

"Central bank money" refers to money that is a liability of the central bank. In the United States, there are currently two types of central bank money: physical currency issued by the Federal Reserve and digital balances held by commercial banks at the Federal Reserve.

While Americans have long held money predominantly in digital form—for example in bank accounts, payment apps or through online transactions—a CBDC would differ from existing digital money available to the general public because a CBDC would be a liability of the Federal Reserve, not of a commercial bank.

2. Will a U.S. CBDC replace cash or paper currency?
The Federal Reserve is committed to ensuring the continued safety and availability of cash and is considering a CBDC as a means to expand safe payment options, not to reduce or replace them.

Put simply, a CBDC would most likely be the single largest assault to financial privacy since the creation of the Bank Secrecy Act and the establishment of the third‐​party doctrine.

Governments have long recognized that freezing someone’s financial resources is one of the most effective ways to lock them out of society. However, a CBDC could make the process easier and faster for governments by establishing a direct line between citizens and the government itself.

El Guapo wrote: ↑Tue Jan 23, 2024 5:16 pm Funny, I was told that crypto would disempower governments.

To simplify the discussion, let’s focus on Bitcoin considering it is decentralized, open, and permissionless. Put simply, you don’t need the permission of the Federal Reserve, Congress, any company, or any individual to use Bitcoin. You’re free to choose whether you’d like to use it and how you’d like to use it. And in the same sense, there’s no group or individual to freeze or seize your funds. However, this freedom goes beyond using Bitcoin for spending or saving. You’re also free to step in to help maintain the inner workings of the system (a process known as mining).

Central Bank Digital Currency	Bitcoin
Centralized	Decentralized
Government Provided	Market provided
Closed and permissioned system	Open and permissionless system
Censorable	Censorship resistant
Unclear and discretionary monetary policy	Clear and rules-based monetary policy
Unlimited supply	Fixed supply