Since 2014 banks are working on implementing central bank digital currencies (CBDC) and China is leading the way into this adoption. The country have been developing their CBDC and also testing it to integrate the system into people's live for payments in many places of their economy.
They integrated, for example CBDC into payments giants like Alipay or platforms such as Wepay, or used commercial banks as partners to use their central bank digital money to explore payments between commerce utilities and user needs.
To reach mass effect, they airdropped some digital money to people as red envelopes that could be claimed in certain cities in the country as test and to feel their feedback about the new system of centralized digital money.
They successful tested their CBDC on the Olympic Winter games in 2022 and all teams that were part of the event had the privilege to use the payment system, along with cash and credit cards, during all Olympic games. It was obviously a good marketing promotion strategy as they measured how efficient is the system to integrate definitely into Chinese society.
But, all this developments hide a major concern about this kind of digital money: privacy!
When Crypto started to boom in the eyes of the world years back, no government were pleased with it and made everything possible to stop the revolution. They viewed (and still) the decentralized financial economy as their main enemy and people who engaged with the ecosystem bad for their business, after all no government make money but depends on people taxes to survive.
So, they started to study the best way to use blockchain, the base for all cryptocurrency, to build their own money that could control better people's money and then many CBDC projects start to evolve.
There's nothing good coming for this government approach, as they never build something to benefit their citizens but to please their own agenda, after all, the government is concerned about taxes getting paid, not with people well being.
For that to happen, they planned very well are scheme that will control and monitor their citizens money without have to worry about where they spend their it, because if they feel threatened or think some of them are using their cash in a place they don't approve it can be frozen.
You heard it well, CBDC can be frozen as each user or citizen will have a digital fingerprint on the blockchain that will allow government to monitor and control them 24/7 knowing where their spend, transfer, use or even store their cash. CBDC are highly privacy intrusive money and if citizens think their own this money they are wrong.
For example, each account could be connected to all citizens basic needs. This account can be linked to people's ability to ask for a bank loan and based on credits which can be evaluated using a bunch of ways to verify its score. The score could be verified using online methods that could include the way people drive in the streets and how many infractions they have.
That is just an example but many others could be used as all citizens info will be on a central government database where can be seen by officials, stealing one and the most essential human right, their privacy.
Not only privacy will be stolen from citizens but also their freedom of choosing how to use their money as anytime can be frozen and penalized direct in users account which can incur in cash debts all in the benefit of the state.
Overall, CBDC can have some advantages to create for example, a Cashless society, a more "efficient and faster" payment system or turn the paper money obsolete that can lead to a more cheap payment method but the fundamentals behind it make it a dangerous and intrusive form of digital money for the ones who cares about privacy and freedom to use money as they wish.
CBDC can be monitored in a manner that citizens aren't seeing it yet.
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