A potential scenario of the future "co-existence" between CBDCs and crypto (BTC for the example, given regulatory uncertainty):
- Most nations, even those that are crypto-friendly, implement a CBDC as it becomes the only way to buy and hold foreign reserves (no idea how you'd move the entire FX market into adoption but less imagine it happens) -> you want to hold in your reserves tokens from the most productive/stable nations, to buy you need to use a CBDC as well.
- Most western nations ban any on/off ramps platform to get crypto from a CBDC (we're going in that direction). Perhaps they allow only BTC/ETH to allow for taxation + tracking of anyone offloading their wealth into their nation token.
- Small crypto-friendly and African+Asian nations allow for a wider use of on/off ramp mechanisms as they see the benefit.
- Hence North Americans and Europeans choose to have a % of their wealth allocated in Asian CBDCs, as it allows them to bank and access the crypto market.
- The consequence? US, CA and EU CBDCs become devalued in the FX markets. Two courses of action are considered:
1. Banning EU, US citizens+businesses from holding any Asian CBDC, which leads to a currency war as Asian nations retaliate, further accelerating the demise of the US/EU axis.
2. Allowing again the on/off ramps to crypto, attracting more capital and industry.
One way or another, Banks go to Zero, Orange Coin wins.
This is good. Could happen in a way where BRICS nations become hostile toward foreign CBDC as you’re suggesting.
Wouldn’t rule that out.
Decentralized crypto wins in the end. You have full network effects on multiple cryptocurrencies now (BTC and ETH). Countries couldn’t kill even one (BTC) when it was in its “infant” stages.
I never thought of it as Crypto vs CBDC, its been more like CBDC are the flip side of CRYPTO. I've always believed CRYPTO was introduced to the masses as a way to to lead to the adoption of CBDCs.
How will a CBDC affect companies such as Visa, MC, Stripe, Block, PayPal etc.? Will they be forced to only transact with a CBDC? Will individuals spending power at these companies be limited to available CBDC in their govt. account? Do individual KYC bank accounts, 401k's, brokerage accounts get converted in time to a CBDC based valuation?
Doubt anyone knows the answer here to be honest (the goal is to get rid of cash eventually under the disguise of safety as the first quote shows), CBDC is basically like cash (except they can brick you with a click) so it wouldn't be some sort of revolving credit value at first.
“We don't know who's using a $100 bill today and we don't know who's using a 1,000 peso bill today. The key difference with the CBDC is the central bank will have absolute control on the rules and regulations that will determine the use of that expression of central bank liability, and also we will have the technology to enforce that.”
Do you have a particular view on gold and silver as alternate means of payments when CBDC's get implemented? I'm not talking about pallets of gold and moving that but enough coinage for daily expenditures.
Do you see bitcoin as an asset and a form of money, while all others are just a currency?
We're not positive on gold or silver since we doubt new people will buy it (the youth is all about crypto) just go on TikTok and Instagram and Twitter, practically no one young buys it.
If you want to own some go for it, just wait till you have to sell it through there is a huge spread on the price.
Physical gold and silver, and bitcoin more so look to be a SOV among the long term holders. I don’t see gold and silver taking the place of a form of payment in an increasingly digital financial space.
In economies with launched CBDC like Nigeria, it works as a SOV and form of payment/medium of exchange. As well as small economies like El Salvador. I expect this trend to continue over time.
Could happen. However, compare the “enforcement” the Nigerian Central Bank took and the “incentivized” approach the Chinese central bank took, and compare adoption of each based on respective population and China wins.
As well as the fact of educating citizens. China has done much more educating of Digital alternatives than Nigeria as well. Helps break the psychological barrier of “digital money”
If CBDC is implemented here in US, will the fed gov make it illegal for business entities to accept other digital currency (btc) as legal tender? The fed gov has the incentive, the power, and the institutional support to make it happen, whether people want it or not. And what is the value/utility of btc in that scenario?
No one knows. Game theory would suggest small countries would adopt first (as we saw with El Salvador) since they have nothing to lose getting off the dollar.
The incumbent is the last to give in since they have everything to lose.
What interesting is that with some foresight, in a theoretical scenario in which the US decided to become THE leader in supporting/fostering crypto innovation, despite losing the “control” currently in place with the increasingly less powerful USD, they’d be in the driver’s seat for the next generation instead of fighting yesteryear’s battles.
But old, deeply entrenched parties are gonna do what they do - double and triple down until their last dying breath.
Just wanted to know your POV - overall makes sense, how do you think payment system via BTC or any other coins would work out in the future, value wise?
For example, assume that in future the time has come and BTC is valued at $50K at time of transaction and the item costs me 1 BTC. So, that product is $50K. One year later, 1 BTC goes up $100K.
Doesn't it mean that I've paid the item $100K? And any ways to go about this?
Out that far? It would likely have much less price mobility. IE if it was really 1M per BTC then it's unlikely it would go to $2M quickly. or even $900K quickly as volatility would dampen.
Right now all this stuff is a tadpole in the financial world, derivatives, stocks, bonds are all in the many trillions.
Reminds me of Snow Crash by Neal Stephenson. Official USD had been inflated to near total worthlessness and corporations that could offer stable value stepped in and issued their own currencies.
Obv some differences w crypto instead of corporate currencies, but same path of official govt fiat being shunned and deprioritized.
There is no reason to do that, you can if you want to, but I don’t believe that’s the hedge you’re looking for unless you heavily subscribe to the de-dollarization movement.
The hedge against US CBDC would be crypto and a hardware wallet. More specifically, the majors, BTC and ETH.
Lifestyle question. In WSP you recommend not having social (IG in this case). I’ve. noticed that for getting the girls it’s easier if you have (flex/lifestyle pictures), but on the other end I hate “showing off”. Seems like in the dating scene if you don’t have an IG presence you’re at a huge disadvantage.
If you were 23yo, 300k NW, above average for looks (not a brag but can pu at clubs without saying a word) would you even bother publicly putting yourself out there? Or is the juice not worth the squeez? Plus I like your IG so this would give another reason of using it other than just a chick funnel.
Great article Scholar!
A potential scenario of the future "co-existence" between CBDCs and crypto (BTC for the example, given regulatory uncertainty):
- Most nations, even those that are crypto-friendly, implement a CBDC as it becomes the only way to buy and hold foreign reserves (no idea how you'd move the entire FX market into adoption but less imagine it happens) -> you want to hold in your reserves tokens from the most productive/stable nations, to buy you need to use a CBDC as well.
- Most western nations ban any on/off ramps platform to get crypto from a CBDC (we're going in that direction). Perhaps they allow only BTC/ETH to allow for taxation + tracking of anyone offloading their wealth into their nation token.
- Small crypto-friendly and African+Asian nations allow for a wider use of on/off ramp mechanisms as they see the benefit.
- Hence North Americans and Europeans choose to have a % of their wealth allocated in Asian CBDCs, as it allows them to bank and access the crypto market.
- The consequence? US, CA and EU CBDCs become devalued in the FX markets. Two courses of action are considered:
1. Banning EU, US citizens+businesses from holding any Asian CBDC, which leads to a currency war as Asian nations retaliate, further accelerating the demise of the US/EU axis.
2. Allowing again the on/off ramps to crypto, attracting more capital and industry.
One way or another, Banks go to Zero, Orange Coin wins.
This is good. Could happen in a way where BRICS nations become hostile toward foreign CBDC as you’re suggesting.
Wouldn’t rule that out.
Decentralized crypto wins in the end. You have full network effects on multiple cryptocurrencies now (BTC and ETH). Countries couldn’t kill even one (BTC) when it was in its “infant” stages.
They only get stronger from here.
I never thought of it as Crypto vs CBDC, its been more like CBDC are the flip side of CRYPTO. I've always believed CRYPTO was introduced to the masses as a way to to lead to the adoption of CBDCs.
Great article.
How will a CBDC affect companies such as Visa, MC, Stripe, Block, PayPal etc.? Will they be forced to only transact with a CBDC? Will individuals spending power at these companies be limited to available CBDC in their govt. account? Do individual KYC bank accounts, 401k's, brokerage accounts get converted in time to a CBDC based valuation?
Doubt anyone knows the answer here to be honest (the goal is to get rid of cash eventually under the disguise of safety as the first quote shows), CBDC is basically like cash (except they can brick you with a click) so it wouldn't be some sort of revolving credit value at first.
“We don't know who's using a $100 bill today and we don't know who's using a 1,000 peso bill today. The key difference with the CBDC is the central bank will have absolute control on the rules and regulations that will determine the use of that expression of central bank liability, and also we will have the technology to enforce that.”
Do you have a particular view on gold and silver as alternate means of payments when CBDC's get implemented? I'm not talking about pallets of gold and moving that but enough coinage for daily expenditures.
Do you see bitcoin as an asset and a form of money, while all others are just a currency?
We're not positive on gold or silver since we doubt new people will buy it (the youth is all about crypto) just go on TikTok and Instagram and Twitter, practically no one young buys it.
If you want to own some go for it, just wait till you have to sell it through there is a huge spread on the price.
As usual just an opinion.
Physical gold and silver, and bitcoin more so look to be a SOV among the long term holders. I don’t see gold and silver taking the place of a form of payment in an increasingly digital financial space.
In economies with launched CBDC like Nigeria, it works as a SOV and form of payment/medium of exchange. As well as small economies like El Salvador. I expect this trend to continue over time.
very interesting takes, had missed that CDBCs are so close
Much closer than anyone realizes
Good article Scholar
Thank you F’er!
Nice article. If you believe in the Bible, no one will by able to buy or sell without signing up/pledging allegiance. Sounds like a CBDC
Could happen. However, compare the “enforcement” the Nigerian Central Bank took and the “incentivized” approach the Chinese central bank took, and compare adoption of each based on respective population and China wins.
As well as the fact of educating citizens. China has done much more educating of Digital alternatives than Nigeria as well. Helps break the psychological barrier of “digital money”
If CBDC is implemented here in US, will the fed gov make it illegal for business entities to accept other digital currency (btc) as legal tender? The fed gov has the incentive, the power, and the institutional support to make it happen, whether people want it or not. And what is the value/utility of btc in that scenario?
No one knows. Game theory would suggest small countries would adopt first (as we saw with El Salvador) since they have nothing to lose getting off the dollar.
The incumbent is the last to give in since they have everything to lose.
What interesting is that with some foresight, in a theoretical scenario in which the US decided to become THE leader in supporting/fostering crypto innovation, despite losing the “control” currently in place with the increasingly less powerful USD, they’d be in the driver’s seat for the next generation instead of fighting yesteryear’s battles.
But old, deeply entrenched parties are gonna do what they do - double and triple down until their last dying breath.
An interesting read thanks for providing this info
Imho I am not very concerned about the CBDC
I believe businesses will massively adopt it. Nothing to hide and fast transactions
People will have some money there, but probably be resistant to change. Also, there is a huge black market. It can't disappear overnight
So probably either cash or decentralised crypto will also exist. I doubt a CBDC can be forced where all other options are eliminated.
My $0.02
Great article.
Just wanted to know your POV - overall makes sense, how do you think payment system via BTC or any other coins would work out in the future, value wise?
For example, assume that in future the time has come and BTC is valued at $50K at time of transaction and the item costs me 1 BTC. So, that product is $50K. One year later, 1 BTC goes up $100K.
Doesn't it mean that I've paid the item $100K? And any ways to go about this?
Out that far? It would likely have much less price mobility. IE if it was really 1M per BTC then it's unlikely it would go to $2M quickly. or even $900K quickly as volatility would dampen.
Right now all this stuff is a tadpole in the financial world, derivatives, stocks, bonds are all in the many trillions.
Reminds me of Snow Crash by Neal Stephenson. Official USD had been inflated to near total worthlessness and corporations that could offer stable value stepped in and issued their own currencies.
Obv some differences w crypto instead of corporate currencies, but same path of official govt fiat being shunned and deprioritized.
Yes it is similar to that book.
Excited to go to participate in the Q&A. March 15 is my birthday and I turn 19 😎😎
Cool remember the event is in Austin Texas so only participate in the giveaway if you can make it there!
I look forward to participate and win a pass 😃
@BowTiedScholar- as a hedge, should we open an account and purchase Digital Yuan?
There is no reason to do that, you can if you want to, but I don’t believe that’s the hedge you’re looking for unless you heavily subscribe to the de-dollarization movement.
The hedge against US CBDC would be crypto and a hardware wallet. More specifically, the majors, BTC and ETH.
Hey Bull,
Lifestyle question. In WSP you recommend not having social (IG in this case). I’ve. noticed that for getting the girls it’s easier if you have (flex/lifestyle pictures), but on the other end I hate “showing off”. Seems like in the dating scene if you don’t have an IG presence you’re at a huge disadvantage.
If you were 23yo, 300k NW, above average for looks (not a brag but can pu at clubs without saying a word) would you even bother publicly putting yourself out there? Or is the juice not worth the squeez? Plus I like your IG so this would give another reason of using it other than just a chick funnel.