about central bank digital currencies and basic universal income
This post is just a reminder and a dark 10 year bet that I hope will fail.
With US signing the executive order about digital assets and EU's ECB starting to consider digital euro, all while digital yuan is already live with the first test group in China, we can say that central bank digital currencies (CBDCs) are gaining traction with governments. At first glance the tech world would get excited that we are finally getting the deserved payment system for the digital age without the need of third-party transactions, but there seems to be more at stake.
If the promise of early crypto currencies was decentralization, avoidance of central authority and enabling anybody with access to the web to pay and get paid, CBDCs are reversing this to the direction where government has full authority over the entire digital currency - something that could not have been done with classic currencies - and we all know how this can be used. You may argue, that you can choose to not keep your funds in CBDCs and rather use other kinds of private crypto (Bitcoin and pals), but truth is that there is no guarantee that they will not be banned by law - like they already are in certain countries, mostly under the pretense of money laundering and criminal activities, but it is also a statement of power and monopoly of the currency. You may go the rebel way and decide to not play with your country anymore and move to wherever sanity is still a thing and be creative with your funds, but not everybody can and this defeats the main promise of crypto empowering everybody equally and giving everybody souverenity over their right to transact with other people freely.
Which brings us to basic universal income (BUI). BUI is the idea of giving every citizen a base monthly sum of money that would enable him to live with dignity and avoid poverty without the need to work for it. If you want more you should join the market. Different models are being tested around the world and generally it is not a bad idea if the economy of your country can support it somehow. I will not be going into the debate on why we need it in this writeup, since there are better sources about it around, but there is always a but...
Let's try to combine BUI with CBDCs and you can see that the government now has complete control over your assets. The first step is to only allow receiving BUI in the form of CBDC. Disable the ability to convert CBDC in any other currency for the receivers of BUI (which can be easily done, since this is programmable money) and in the end if govt goes fully totalitarian, limit the spending categories for BUI receivers.
You want to go gamble? Well not on BUI. Do you want to treat yourself to a craft beer? We only allow you to buy state owned lager brands. You were saving up part of your monthly BUI to purchase a home or somehow get something of your own? You can only pay rents with BUI - or even worse - let me just set an expiration date on your funds to drive the economy - whatever you don't spend this month is gone.
You know "it's OUR money not yours".
This may sound extreme and paranoid, but totalitarian governments already exist (or can turn into one quite quickly during any crisis - proven many times in last century, heck even last two years) and CBDCs are a lovely tool in such situations.
Let's hope this bet fails miserably and that common citizens don't give up their right to transact freely - I will be revisiting this post in 10 years.