Most people don't want CBDCs. Don't believe me? Read the comments from the ECB survey yourself. There's 16,000 of them and you'll need to translate many.
The ECB launched its “Public consultation on a digital euro” on 12 October 2020. They said that “Its purpose was to obtain input from the wider society on the economic and societal implications of issuing a digital euro and, if a digital euro were to be issued, on its design. The public consultation consisted of two multiple-choice and 16 open questions, divided into two parts depending on the main target audience of respondents: (i) the general public, in their role as users (referred to as “citizens” below), and (ii) experts from the financial industry, technology companies and academia (referred to as “professionals” below). However, in order to attract the richest possible set of different views, respondents were invited to share their views on all questions.”
This concluded 12 January 2021 with more than 8,000 respondents, which was, according to the ECB a “record level public response”.
Privacy and security ranked as the top concerns of respondents with 41% of respondents concerned about privacy and 17% of respondents concerned about security.
The problem with this result is that CBDCs, by their very nature, are not private, or secure.
According to the Bank for International Settlements “around 80% of central banks discuss the topic of big data formally within their institution, up from 30% in 2015. Third, the vast majority of central banks are now conducting projects that involve big data.”
The idea that a central bank won’t mine user data under the guise of national security, monetary policy, or financial incentives is naive, to say the least. First, they’re likely to do it under the guise of national security, or financial incentives, and then when they’ve onboarded enough people, they’ll flick the switch and enforce it on the rest.
This will obviously depend on the democratic norms of each country. Authoritarian countries like China have skipped all the steps and enforced everything right away, while other countries like the US, Australia and the UK, will slowly skip their way towards it.
In regards to security, there is a fundamental problem with centralized currencies like CBDCs when compared with decentralized currencies like Bitcoin. There is a single ledger based on a private blockchain with a single point of failure. Many people will push back against this and say not all CBDCs are private blockchains, but that’s because they haven’t been rolled out to the public yet. They may test on public blockchains, but to think they’ll roll them out on less centralized blockchains like Ethereum is a mistake.
Furthermore, now that many alternative blockchains like Ethereum have moved to Proof of Stake, they’ve effectively become centralized. This means that if a government wishes, they could change the code, or shut the blockchain down altogether.
The only blockchain that is sufficiently decentralized to protect itself from these types of actions is Bitcoin. I haven’t seen any governments propose building their CBDC on Bitcoin.
Historically, Central Banks have fallen victim to hacks from other governments and hacking groups. In July 2022, it was reported that the Federal Reserve fell victim to a decade-long espionage attack from the Chinese government. In addition to this, the hacking group Anonymous successfully hacked the Russian Central Bank two weeks after their invasion of Ukraine.
After 24,000 respondents wrote to the ECB with overwhelming negative responses to a CBDC, expressing their primary concerns around privacy and security, the ECB and other central banks have decided to press ahead against the people’s will with projects that lack security and privacy. These unelected officials clearly have another plan and its time people pushed back against it.
