CBDC or Central Bank Digital Currency is a new focus on the Central Banks as their answer to the cryptocurrency. However, it will not last as long as we may expect. Here are some reasons why CBDC will fail miserably.
CBDC is a copycat of decentralized technology
Blockchain is an immutable platform to record transactions from peer-to-peer networks. CBDC likely runs on an immutable blockchain with oversight of the government. It defeats the purpose of the blockchain as transparency.
CBDC needs to continue progressing to outpace cryptocurrency
CBDC needs to continue improving in order to attract more users from cryptocurrency. Yet innovation in the government is harder because its bureaucracy prevents innovation and is more conservative toward a consistent operation that will make CBDC obsolete.
Cybersecurity needs to upgrade to protect against attacks
There will have more cyber attacks launched against the government and they have to shift their mindsets to actively engage the attacks rather than passive defenses the attacks.
Consumer privacy protections
CBDC will make users’ privacy nake and that may not agree with the law and regulations that make citizens’ privacy protected without gaining exploited.
Print more money with one click
CBDC makes more than ever easier for the Central Bank to print more money to devaluate currency further.
Not decentralization whatsoever
CBDC is an ever more centralized surveillance currency that citizens will abandon to use once they are aware of the danger of using it.
Not more loopholes
CBDC will close loopholes in tax codes that make companies and individuals pay more taxes. It makes ever inflexible of tax regulations that companies will lobby to kill it.
As the Fed chair, Gary Gensler calls blockchain technology is a global catalyst for change, CBDC is not a solution but a short-sighted, cut corner advice to kill the central bank itself once for all.