Central bank digital currencies died in the water

Mark my words: governments and central banks will never care about your wealth and privacy as much as you do. This reality is exactly why central bank digital currencies are already dead in the water.

They say if you can’t beat them, join them. This is exactly what CBDCs are trying to do. They want to join the party that is cryptocurrency without actually giving their citizens the privacy and democratic freedom provided by a truly decentralized digital currency.

In a recent article, I argued that regulation and law enforcement are a necessary part of cryptography going really mainstream. I definitely believe so, but that’s not what CBDCs will be able to achieve.

CBDCs do not decentralize wealth. They do not decentralize the power, ownership or control of funds. They will not give individuals oversight or sovereignty over the value in their portfolios.

Institutions creating these CBDCs will openly and externally promote the virtues of their innovation and their ability to use the best of cutting-edge technology to make mutual value transfer more efficient. They will advertise the need to make an archaic financial system more efficient and more in tune with the times. Consider for a moment two of the countries leading the way in developing their CBDCs.

Related: Central bank digital currencies have the power to overturn global finance

Who leads the development of the CBDC?

The Bank of Russia has released a consultation paper outlining plans for a digital ruble. Quite right! The Bank of Russia is working on a digital ruble. This news just came out of the press, just announced last month. But what was also recently announced is that the Russian government doesn’t look so kindly at cryptocurrencies or the issuance of new tokens. In other words, Russia wants a piece of the digital currency pie, but only if the government controls that digital currency. This is a fundamental problem with all CBDCs: none of them want to give the keys to the individual.

Related: Could Russia lead the Eastern European cryptocurrency boom?

To be fair, Alexey Guznov, head of the Russian central bank’s legal department, said earlier this year that owning cryptocurrency won’t be against the law as long as that cryptocurrency has been acquired in a jurisdiction that doesn’t prohibit it.

China is already testing its digital yuan. China is also racing to try to launch its digital yuan. Trials are already underway in Hong Kong Bay, and state-owned banks are testing a large-scale digital currency wallet. The digital currency electronic payment program China is rolling out includes two tiers: one for central banks and another for commercial banks. While commercial banks may use blockchain technology to settle some transactions, the central bank level will certainly be centralized.

Related: China’s CBDC digital yuan is close, but many details remain unknown

That said, control is what CBDCs are about: control over wealth, control over private citizens and, of course, control over data.

They are CBDC versus cryptocurrencies, not East versus West

The rush of central banks around the world to create their own digital currencies is not a battle between East and West. Far from that, it is more about pitting CBDCs against cryptocurrencies that they don’t have to worry about central authorities censoring or controlling anything.

The point is, the two fighters are not the same. CBDCs are actually just fiat currencies in digital format. The format may be different, but the goal is the same: to keep control over the larger financial system and penalize those who don’t play by the rules set by the central bank or the government that’s calling the shots.

Consider for a moment that the European Central Bank is seeking input from the public on what a digital euro might look like. The ECB’s website details many benefits of developing a digital euro, in particular, that the usability of a digital euro would shine whenever an extreme event such as a natural disaster or pandemic occurs. But there is a noteworthy, not-so-subliminal message that needs to be recalled in the ECB’s description of the digital euro:

“It could also be crucial if people were to turn to foreign digital means of payment, which could undermine financial stability and monetary sovereignty in the euro area.”

Let’s face it: the synonym for the phrase “foreign digital means of payment” is Bitcoin (BTC). Central banks don’t want you to use Bitcoin, Ether (ETH) or any other decentralized cryptocurrency. They want you to use currency that can be tracked. They want to be able to decide which regulators and tax authorities have access to your financial data and which don’t. CBDCs are not an attempt to revolutionize finance or technology.

They are essentially a last-ditch effort to maintain control over the individual, even as current decentralized currencies take wealth, power and influence out of the hands of the old world.

They cannot beat us, nor can they join us

Maintaining decentralized value and keeping power in the hands of the individual consumer is what gives cryptocurrency its power, not government-backed digital currencies that simply use blockchain technology.

Central banks can certainly use blockchain and claim they are joining something they can’t beat, but the reality is they can’t join. As global citizens and believers in cryptocurrency we don’t let them, nor should we.

Cryptocurrencies have come a long way since Bitcoin was launched in 2009. At first, people ignored them. Most of the people laughed. Now, central banks are trying to fight the cryptocurrency revolution. Eventually, the individual will win and your value will be in your wallet where it belongs.

The views, thoughts and opinions expressed herein are solely the author’s and do not necessarily reflect or represent the views and opinions of Cointelegraph.