CBDCs: the Good, the Bad & the Totalitarian with Nik Bhatia

“You’ll have Fed coin, JPMorgan coin, Bitcoin, Tether… you have the right to choose how to denominate your labour, your earnings, your savings; and I think that’s the future that we’re in for is this era of currency choice. And thank God for Bitcoin.”— Nik BhatiaLocation: Los AngelesDate: Friday 4th FebruaryCompany: USC Marshall School of BusinessRole: Author and Adjunct Professor of FinanceBitcoin empowers individuals, the threat to the state is clear. As the New German Chancellor Olaf Scholz asserted in December 2020: “We must do everything possible to make sure the currency monopoly remains in the hands of states.” As a response to Bitcoin, the major world economies are pilot testing CBDCs, and pressure is being applied to low and middle-income countries. In October 2021 the IMF stated in its Global Financial Stability Report that “Emerging markets faced with cryptoization risks should strengthen macroeconomic policies and consider the benefits of issuing central bank digital currencies.” The privacy concerns emanating from CBDCs are being exacerbated by the same organisations promoting them; in another IMF statement in late 2020 they stated a person's online search and purchase history is a suitable data source for undertaking a credit assessment. In addition, the anonymity of cash is known to be an issue for governments around the world. Whilst there are obvious benefits to enabling better payments processes to citizens, CBDCs could also facilitate state controls on how and when people spend money. The Bank of England is considering using smart contracts within a CBDC; the FT raised concerns about the potential for severe restrictions on personal freedom mirroring China’s “social credit” system.As we have seen, these fears are no longer being seen as theoretical threats that don’t apply to those living in western democracies. What is currently happening in Canada is giving even the most centred observers pause for thought. Bitcoin is the only obvious tool to provide freedom of currency denomination in a secure, trustless way, outside of the purview of Governments. In this interview, I talk to the Author and Professor of Finance Nik Bhatia. We discuss the rationale for CBDCs and their limitations, a new form of heavily surveilled ‘free’ banking, Bitcoin as a discovery and a right, and how the Lightning Network makes Bitcoin a currency. This episode’s sponsors:Gemini - Buy Bitcoin instantlyBlockFi - The future of Bitcoin financial servicesSportsbet.io - Online sportsbook & casino that accepts BitcoinCasa - The leading provider of Bitcoin multisig key security.Ledger - State of the art Bitcoin hardware walletCompass Mining - Bitcoin mining & hostingLVL - Bank on BitcoinBCB Group - Global digital financial Services-----WBD469 - Show Notes-----If you enjoy The What Bitcoin Did Podcast you can help support the show by doing the following:Become a Patron and get access to shows early or help contributeMake a tip:Bitcoin: 3FiC6w7eb3dkcaNHMAnj39ANTAkv8Ufi2SQR Codes: BitcoinIf you do send a tip then please email me so that I can say thank youSubscribe on iTunes | Spotify | Stitcher | SoundCloud | YouTube | Deezer | TuneIn | RSS FeedLeave a review on iTunesShare the show and episodes with your friends and familySubscribe to the newsletter on my websiteFollow me on Twitter Personal | Twitter Podcast | Instagram | Medium | YouTubeIf you are interested in sponsoring the show, you can read more about that here or please feel free to drop me an email to discuss options.