Are CBDCs a Solution in Search of a Problem?

Are CBDCs a solution in search of a problem? According to Bittrex Global’s CEO Oliver Linch, central bank digital currencies (CBDCs) lack the fundamental benefits of decentralised cryptocurrencies and fail to present compelling advantages of their own. Linch shared this viewpoint during a conversation with Kitco News reporter Ernest Hoffman, where they delved into recent data indicating that 93% of central banks are actively developing CBDCs while simultaneously intensifying monitoring efforts within their nations’ crypto markets.

The discussion further covered both the arguments supporting and opposing CBDCs, alongside a review of the latest developments concerning China, Russia, Brazil, and other jurisdictions. Read on for an extract of the video and watch it in full here:

CBDC Means Many Things

Ernest: How do you view CBDCs first from a crypto perspective? Do you see them as an attempt to shrink or eliminate the private decentralised ecosystem?

Oliver: It’s really difficult to analyse CBDCs as if they were a homogenous entity because the fact is there are as many policy instances and competing ideas as there are CBDCs. Whilst it might be useful in terms of a general presentation to group them all together, actually they’re as disparate as you like…for those people worried about increased control and increased centralisation, yeah, those fears are there. People are worried about AML and KYC requirements and how they work – no one can tell you how it’s really going to work because each iteration is just difficult. I think the problem is that an awful lot of people throw around the term CBDC and talk about it as if it’s kind of an understood single idea and it’s really not.

Main Motives for CBDCs

Ernest: What are the major motives for the EU, the UK and the US exploring CBDCs?

Oliver: Well, there are some legitimate reasons for it, and you don’t need to become a conspiracy theorist on what the real motivations are, but when we get into it, the lack of depth of those reasons gives rise to a slight pause as to what’s really going on. Cross-border payments in fiat currency are expensive and slow, so for cross-border transactions there probably is a use case, but then you kind of run out of reasons right? Maybe there’s something to these conspiracy theories, maybe the governments kind of want to be in the cool gang and stay the word digital a lot, or maybe it’s a centralisation issue and they want control of information….

Questions Need to be Answered

Ernest: Do you need to be a conspiracy theorist to have deep reservations about the inherent potential of CBDCs to be used for control or to be simply invalidated remotely?

Oliver: No, I don’t think you need to be a conspiracy theorist but I think the solution is to identify these as issues and challenge the government, central banks and people promoting CBDCs to solve those challenges and only get involved if they can demonstrate they have solved X Y and Z…I think the advantage of CBDCs (and crypto) against Fiat currencies is the transparency layer. Yes, there are a lot of questions that need to be addressed and if there are robust enough answers to those questions, then conspiracy over. If there aren’t, then you answered the question yourself!

Watch the video now and listen to Oliver’s no-nonsense take on CBDCs in this informative interview with Ernest.

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