The world of cryptocurrency is taking on the banking industry. At the most basic level, a digital wallet can handle a large portion of what most people utilize a bank for. It allows individuals to send, store, and receive money.
That said, banks and cryptocurrency might find themselves on the same side of this battle. When it comes to a digital wallet, there is no difference as to where the asset came from. Hence, it could house something like ERC-20 tokens on Ethereum. At the same time, it could apply to a Central Bank Digital Currency (CBDC).
It is the latter that could pose a threat to both industries.
Battles can make strange bedfellows. Here is a classic example where the enemy of my enemy could be a friend.
This is what could pose an interesting future as the situation ramps up.
Eliminating Wholesale Banking
We now have a system where the banking industry is the intermediary (gatekeeper) of the entire monetary system. It is the commercial banks that engage with the economy, hence individuals and businesses. Central banks, in the advanced economies, deal only with the banks. They do not directly engage with the public.
A digital currency would eliminate this barrier. It would provide direct connection between the central bank and user accounts. No longer would a bank be necessary.
This might sound like a benefit to some. However, sometimes the devil you don't know is worse.
Under this scenario, governments would assume far greater control. Even though many Central Banks are "independent", it is not difficult to see the power that governments can hold over them. In the United States, the Fed chair is nominated by the President and approved by Congress. It is also that body which adds the mandates the bank operates under.
With a retail CBDC, not only is wholesale banking disrupted (on the path to eliminated), the politicians and bureaucrats in government will have direct say of what people can and cannot do. This is a slope most should be concerned about.
Of course, since people put their entire lives online without fear, privacy and sovereignty is not a thought for most. This is why it is up to both these industries to step up.
Pure Evil
Arthur Hayes of BItMex wrote a blog post outlining how CBDCs are "pure evil". This is a sentiment that most who understand what is taking place can agree with.
According to him, wholesale CBDCs are a given; they will be implemented. This is still not the end of the world since they will operate at the interbank level. However, what is the likelihood of things advancing into the retail sector?
Here is where the danger lies. We know politicians are drooling to get their hands on the money supply. They are using "inflation" as the reason. Of course, the general public's lack of understanding (along with most in crypto) of how this came about is feeding into the political scheme. Since most believe the Fed prints USD, they buy that it created too much money. Politicians naturally hold the solution. All this overlooks the fact that it was the political lockdowns that caused this in the first place.
Alas, the gullible public falls victim to what the mainstream media tells them.
CBDCs will be implemented while the masses are paying attention to the Kardashians or whatever they do today. Few are taking to time to truly learn what is going on.
Handouts are a powerful tool of the political class. They will use the idea of efficiently paying people in times of need as the reason for the CBDC. Keep in mind this is programable money, something that is very powerful.
At the end of the day, does anyone trust politicians?
The Powerful Bankers
There is little dispute about how powerful the bankers are. When it comes to the top dog in business, the banks are the leader. They are now coming under attack by a force that might be bigger than them.
We know that banks can take on most other businesses and squash them. They proved this over the decades. That said, they are under the control, to a large degree, of governments. This is especially true of depository institutions. They tend to operate under some type of government charter.
Hence, we can expect the bankers to not sit around and let governments walk all over their gravy train. They will mobilize all the power they have to affect the decision in national capitals. Jerome Powell is a big ally at the Fed. Unlike many who are economists at hear, Powell is truly a banker. He is there to protect their interests. It is why his Fed has little interest in a CBDC. This is a temporary reprieve.
At some point, his term will end.
This is where the market has to take over. Can it become larger than any single government? Here again, the bankers provide the answer. Governments can be overcome by operating internationally. Blockchain, by its nature, is global in scale. It matters none where one accesses it from.
Both cryptocurrency and the bankers have the same goal: to ensure that CBDCs do not become the norm. This is a classic fight between those who want control via government and those who fight in the private sector. Bankers might not be the nicest cats on the block. However, we do know what drives them and what they are after. Greed is their motive with the goal being "more". They are rather transparent about this.
The years of FUD against Bitcoin from the bankers needs to stop. It is evident why they did that: they saw the threat. There is, unfortunately, a bigger threat to them. That means it is time that people on both camps, cryptocurrency and banking, speak out against CBDCs. The BitMax article is a good starting point. Making sure the world knows that CNDCs are "pure evil" is a message that needs delivering.
A case could be made that a wholesale CBDC could have the goal of a faster, more efficient payment and settlement system. There could be a benefit to the users.
On the other hand, a retail CBDC has the only goal of power. This is why the banking industry should be against it. The power would shift from it to governments.
Neither bankers nor crypto advocates should want to see this happen.
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CBDC will be a new weapon to fight against the CRYPTOS as many countries like China have already introduced it and India is going to make it as their recent announcement. But still, central control is crucial there, and with the existing system how they will integrate or make something unlimited supply as printing dollars? As well as FUDs are ongoing phenomena that make new millionaires and are always welcomed by crypto dwellers.
And my opinion, the CBDC will help crypto to grow faster if we don't have the standard for valuation of the crypto assets with the real world's currencies then the existence of cryptos has nothing to deal with!
Hope, such an ongoing situation will make more countries ponder the technology, especially third-world countries like my own country Bangladesh where billions are just theft from the country and they don't allow cryptos in the fear of mass theft!
!PIZZA
You can guarantee that CBDC’s are going to destroy the entire planet if they are implemented. If you think it’s bad in Bangladesh right now, just wait until you are mandated to spend all of your money with the threat of getting less next month if you don’t. These are all going to happen, and far, far worse if we allow people to foolishly cheer on this abomination.
Yeah, agree in such case but how you will disintegrate crypto from the stable coins which are based on usd! It can be further tightening of the space and destroying. But we can't stop that but make some debate. May be I am wrong but I Don't know what is waiting?
The USD is not in control of the government. That is the major difference. The USD operates outside the control of government or the Fed.
With A CBDC, you are seeing the power in the hands of the politicians.
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Thanks a lot for your information, I can now realize and know how filthy the politics is!
I’m not sure whether to be happy or terrified that the fed chair and banks have this power. They are normally the criminals but we could potentially be cheering their hesitancy right now because of what we know will happen if these are implemented. Scary times for sure!
The commercials banks are in charge of the ledger. We are dealing with private bank money here. Most dont realize it. The bankers are in control, making sure all is accounted for. We can change that with blockchain and crypto.
Of course, if a CBDC is implemented, it completely changes the equation, for both industries.
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If is a fight crypto and bankers can win I believe it is worth a try. as much as I want the bankers to lose their power I don't want anything to happen to crypto
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A good way of looking at it. The fact that CBDC's are coming is pretty undeniable. The fact that banks might not be as on board with them as people might think is an interesting and clear twist. I hadn't considered that before.
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They do make an unlikely ally.
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We definitely need to open our eyes as to what the play is here and it is quite scary to think they could end up with so much power.
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The CBDCs don't benefit anyone besides the government politicians. All it does is give them more control and I do hope that the banks win out in the end because I think it's better in their hands versus the government. Although the banks don't like crypto, they will accept it because it provides them a chance to earn money.
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It actually surprises me early this year to hear two prominent officials in our country (one from the Central bank and the other from the private sector) extolling the merits of this "pure evil" over cryptocurrency.
That's frightening! If this will materialize, this new kind of serfdom is more subtle than the socio-economic structured abandoned by mankind prior to the advent of the capitalist system.
I think once implemented, that will be very successful.
Thanks for the BitMax article!
!PIZZA
!CTP
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I think the CBCD FED's will pay bankers to say yes. Bankers are so easily bought. Bankers don't care how we live they care about how they live. Who caresa about the customer. CBCD will make it good for bankers, and the greedy to easily comply.
I say when you get your CBCD tyrant coins you exchange them asap to crypto, and the next day you complain you need more. Yoiu keep exchange it to crypto of your choice. If they ban it you still do it, nothing is against the law until you get caught. Look at what happens whe tey get caught, nothing.