The development and implementation of central bank digital currencies (CBDCs) is an active area of research and experimentation for many central banks around the world. While some central banks have announced plans to develop and issue CBDCs, others are still in the research and exploration phase.
As of 2021, the People's Bank of China (PBOC) is reportedly the closest to issuing a CBDC, with a pilot program underway in several cities. The PBOC has stated that the digital yuan is not intended to replace cash, but rather to complement it and increase the efficiency of the country's payment systems as well as to combine it with their already up-and-running social scoring system.
Other central banks that have announced plans to develop CBDCs include the European Central Bank, the Bank of Japan, and the Bank of Canada. In the United States, the Federal Reserve is reportedly exploring the potential benefits and risks of issuing a CBDC, but has not yet made a decision on whether to proceed.
It is important to note that the development and implementation of CBDCs is a complex and technical process that requires significant consideration and planning. As such, it is likely to be some time before CBDCs are widely available and in use. So it gives you some time to think about it.
CBDC and social scoring systems
It is possible for central bank digital currencies (CBDCs) to be designed with social scoring systems, which use data on an individual's behavior to assign them a score. This score could potentially be used to determine an individual's eligibility for certain financial products or services, such as loans or credit.
The use of social scoring has raised concerns about privacy and the potential for discrimination. Critics argue that social scoring systems could be used to unfairly discriminate against certain individuals or groups, based on factors that may not be relevant to their creditworthiness or financial behavior.
There is currently no consensus on the use of social scoring systems in the context of CBDCs. Some central banks, such as the People's Bank of China (PBOC), have indicated that they may consider using social scoring in conjunction with CBDCs. However, other central banks have expressed concerns about the potential risks and have stated that they will not use social scoring in their CBDCs.
Ultimately, the use of social scoring in CBDCs will depend on the specific design of the CBDC and the policies of the issuing central bank. It will be important to carefully consider the potential benefits and risks of such systems before deciding to implement them. Having said this, it is also time to think about if you want yourself to be included or excluded from potential impacts of CBDC.
Is CBDC a decentral cryptocurrency ?
No, central bank digital currencies (CBDCs) are not decentralized cryptocurrencies like Bitcoin, Ethereum, HEX, Pulse, PulseX or others.
CBDCs are digital versions of a country's traditional fiat currency, issued and backed by the central bank. They are designed to be used by consumers and businesses as a means of payment, as well as a store of value. The value of a CBDC is directly tied to the issuing country's traditional currency and is subject to the same monetary policies.
Real cryptocurrencies, on the other hand, are decentralized digital currencies that are not issued or backed by any central authority. They use decentralized networks, such as blockchain, to record transactions and ensure their security and integrity. Real cryptocurrencies are not tied to any specific country or traditional fiat currency and are not subject to the same monetary policies. Real cryptocurrencies are following the 1st principles of crypto, principles why crypto was invented. To check what the principles of crypto are check here.
CBDCs differ from real cryptocurrencies in that they are issued and backed by a central authority, while real cryptocurrencies are decentralized and not controlled by any central authority. This means that the value of a CBDC is directly tied to the issuing country's traditional currency, while the value of a cryptocurrency is determined by market forces.
Why you should use real crypto instead of CBDCs
Cryptocurrencies, such as Bitcoin, Ethereum, Litecoin, HEX, Pulse, PulseX and others offer an alternative to traditional fiat currencies and central bank digital currencies (CBDCs). They also offer an alternative to build your financial system in a decentralised manner. There are several reasons why someone should choose to use real cryptocurrencies and real decentralised ecosystems over traditional fiat currencies or CBDCs:
Decentralization: Normal cryptocurrencies are decentralized, meaning they are not issued or controlled by any central authority, such as a central bank. This can make them attractive to users who value financial independence and autonomy.
Pseudonymity: Many cryptocurrencies allow users to remain pseudonymous, meaning that their transactions can be traced back to a specific address or identity, but cannot be linked to a specific individual. This can provide a level of privacy that is not possible with traditional financial instruments.
Low fees: Cryptocurrencies often have low fees compared to traditional financial instruments like wire transfers or credit card transactions. This can make them an attractive option for users who need to make frequent or small transactions.
Accessibility: Cryptocurrencies can be accessed and used by anyone with an internet connection, making them a potentially useful option for people who live in areas without access to traditional financial institutions.
Potential appreciation in value: Some cryptocurrencies, like Bitcoin, have seen significant appreciation in value over time. While there is no guarantee that this will continue, it has the potential to make cryptocurrencies a good investment option for those who believe in their long-term potential.
It is important to note that cryptocurrencies carry their own risks and uncertainties, and it is always advisable to do your own research and carefully consider the pros and cons before investing in any financial instrument. We recommend usining decentralised crypto and decentralised eco systems to become independent of the central banking and central social scoring systems in general.
👉 Examples of eco systems following these principles you will find here