CBDCs Vs. Cryptocurrencies: Side-by-Side Comparison!!

Central bank digital currencies are like Cryptocurrencies but better Now this statement is obviously false But not everyone knows that it’s wrong And it’s one that i’ve heard a few times Over the last few months given that Governments around the world are rushing To roll out their central bank digital Currencies i suspect these kind of Misleading statements are going to Become more common in the near future That’s why today i’m going to compare Central bank digital currencies with Cryptocurrencies to show you just how Different they really are and why one is A tool for slavery and the other is a Tool for freedom [Music] Before we discuss this important subject There are some terms and conditions that Need to be checked if you think this Video is financial advice You are incorrect it’s just entertaining Educational content please contact a Financial advisor if you got wrecked If this is a first-time affair my name Is guy and i’d like to welcome you to my Crypto layer It’s packed with high quality crypto Content that will make you aware coins Tokens news and reviews explained in a Way that’s balanced and fair If this is the kind of stuff that makes You stare subscribe to the channel and

Ping that notification bell down there Okay that’s all you need to know about Me it’s time to compare cryptocurrencies With cbdcs Let’s start with how these two financial Technologies came to be now believe it Or not central bank digital currencies And cryptocurrencies have something of a Shared history Central bank digital currencies aka Cbdc’s and cryptocurrencies have their Roots in various digital currency Initiatives most of which came about in The 1990s The biggest difference there is that Many of the ancestors of cbdc’s were Created with the intention of optimizing Payments primarily in a domestic setting In other words these digital currencies Were intended to optimize the existing Financial system by integrating with it Two examples here are finland’s e-money System called avant in the 1990s and the Czech republic’s digital currency called Q in the early 2000s both of which were Closely connected to their respective Countries national currencies and Banking infrastructure While some consider finland’s e-money to Be the first cbdc it’s generally agreed That the first actual cbdc to be Released was the bahamian sand dollar in October 2020 though almost every country Is actively working on a cbdc of some

Kind In contrast to cbdc’s many of the Ancestors of cryptocurrency were created With the intention of replicating or Even replacing the existing financial System In many cases this meant they were Internationally available to anyone with An internet connection Two examples here are david charms ecash In the 1980s and adam back’s hashcash in The 1990s As some of you will know today adam is The ceo of blockstream one of the Largest bitcoin related companies As most of you will know bitcoin is the First cryptocurrency and it was created In 2008 by a pseudonymous individual or Group who calls him her or themselves Satoshi nakamoto The first bitcoin block contained a Hidden message which read quote Chancellor on brink of second bailout For banks This was the headline of the times Newspaper here in britain on january the 3rd 2009 the same day bitcoin went live Now if that didn’t make it clear enough Bitcoin’s explicit intention is to Replace the current financial system and Just about every cryptocurrency that has Come into being since that time shares This ethos Whereas bitcoin was created in response

To the 2008 financial crisis cbdc’s were Essentially created in response to Cryptocurrencies to be exact cbdc’s were Created in response to alternative Digital currencies of all kinds be they Public or private For example china began developing its Digital un in response to the rapid Growth of financial technology companies In the country during the 2010s Similarly the united states began Developing its digital dollar in Response to facebook’s digital currency Dubbed libra which was revealed in 2019 And thankfully never made it off the Ground On the other hand indonesia began Developing its digital rupiah in Response to cryptocurrencies after the Last bull run in 2017 and 2018. Meanwhile the marshall islands began Developing its cbdc dubbed the marshall East sovereign in response to the Development of cbdcs in other countries In all of these cases there is one Common theme and that is centralized Control of the financial system This is ultimately what makes today’s Cbdc’s different from their predecessors Which you’ll recall focused on payment Optimization rather than centralized Control as such we can define cbdc’s as Being a type of digital currency that is Centrally controlled by the government

And requires permission to use and we Can define cryptocurrencies as being a Type of digital currency that is not Controlled by anyone and does not Require permission to use If you’re having a hard time wrapping Your head around cryptocurrencies i Suggest watching my video about Cryptocurrency for beginners before Proceeding or you can listen to the First few episodes of the coin bureau Podcast you’ll find them below Now this brings me to how cbdc’s and Cryptocurrencies work under the hood and I’ll start with three important Definitions for the terms blockchain Distributed database and distributed Ledger technology A blockchain is a type of distributed Ledger technology that’s decentralized Meaning it is not controlled by a single Individual or institution Instead blockchains are controlled by a Vast network of individuals and Institutions who are unrelated The visualization you see here should Make that clear notice that there’s no Single point of failure A distributed database is a type of Distributed ledger technology that is Centralized meaning it is controlled by A single individual or institution as Seen here Notice that there is a single point of

Failure You can think of a distributed database As being the same thing as a blockchain Except that one is centralized and the Other is decentralized now this isn’t Entirely correct but let’s keep things Simple Now distributed ledger technologies are Technologies that make it possible to Securely store and update records of Financial transactions across multiple Devices usually computers Distributed ledger technologies include Blockchains distributed databases and Other tech like directed acyclic graphs And other architectures that i will Never truly understand Now these terms are important to know Because many countries claim that their Cbdcs will use a blockchain As you just learned however the Countries that claim their cbdc’s will Use a blockchain will actually be using A distributed database because it will Be centrally controlled by the central Bank Although it’s possible if not likely That the officials making these Statements don’t know the difference or Don’t care to make the distinction some Would say that the purpose of using the Term blockchain is to intentionally Mislead the public into thinking the Cbdc in question is just like a

Cryptocurrency To be fair there are a few countries That seem to be planning to launch their Cbdc’s on cryptocurrency blockchains but Even then it’s more than likely that the Central bank will still maintain total Control of its cbdc because it would be Issued as a token On that note it’s time for a couple more Definitions So There are two types of cryptocurrencies Coins and tokens a cryptocurrency coin Is given as a reward to the computers Which process transactions for a Cryptocurrency’s blockchain Cryptocurrency coins are also used to Pay for transaction fees on a Cryptocurrency’s blockchain So for example btc is given as reward to Cryptocurrency miners that process Transactions on the bitcoin blockchain These cryptocurrency miners also earn The transaction fees paid in btc Note that cryptocurrency miners are Basically just powerful computers Conversely a cryptocurrency token is a Customizable digital asset that exists On a cryptocurrency’s blockchain Cryptocurrency tokens can be used for All sorts of things for example Non-fungible tokens or nfts are used to Prove that you own a unique piece of art There are also cryptocurrency tokens

Called stable coins which mirror the Price of fiat currencies mostly the us Dollar now the key takeaway here is that The creator of a cryptocurrency token Can give themselves total control over The transfers of that token the supply Of that token and so on This is the case with centralized stable Coins which are centrally controlled by The companies which issued them and any Cbdc’s that are issued as cryptocurrency Tokens will likely work in a similar way This centralized control is a big part Of why decentralized stable coins have Become so popular and you can learn About the largest decentralized Stablecoin and how it works by using the Link in the description This ties into the economics of cbdc’s And cryptocurrencies and i’ll start by Explaining the economics of the current Financial system to give you some Context Central banks around the world are Tasked with encouraging economic growth While keeping inflation under control Central banks do this by raising and Lowering interest rates when interest Rates are low it becomes cheap to borrow And makes saving less attractive This incentivizes individuals and Institutions to spend rather than save Which increases economic growth However it also increases inflation as

There is more money in circulation when Interest rates are low When interest rates are high it becomes Expensive to borrow and makes saving More attractive this incentivizes Individuals and institutions to save Rather than spend which lowers economic Growth However it also decreases inflation as There is less money in circulation when Interest rates are high Now there’s one big problem with this Economic model and that’s that while Money can easily be created it’s a lot Harder to take said money out of Circulation This inevitably leads to inflation in The long term Now for a while the prospect of Long-term inflation wasn’t a problem Because fiat currencies were backed by Gold This put a limit on how much money could Be created in an economy because more Gold had to be acquired to issue more Money However this limit was effectively Lifted when the gold standard collapsed In 1971 and since that time we’ve seen What can only be described as long-term Inflation with the prices of many assets Exploding in fiat terms while staying The same when priced in gold The crazy thing is that this inflation

Didn’t show up in official inflation Statistics until very recently and if You watch my video about the cpi you’ll Know that this is partially because These official inflation statistics have Been adjusted many times since they were Introduced to make them seem less severe The fact that this inflation is starting To show up in the official statistics Means it’s even worse than the Authorities are letting on If that wasn’t bad enough individuals And institutions took on record levels Of debt when interest rates were low and This means that raising interest rates Too high would result in an economic Catastrophe as these individuals and Institutions would be unable to pay back Their debts Not only that but many governments have Record levels of debt too and we’re Already starting to see the first signs Of a default in some countries In short the money supply has grown so Much that inflation is off the charts And raising interest rates is not an Option because of all the debt that’s Been built up in the financial system Over the years From the perspective of the central Banks cbdc’s offer a solution to this Situation this is because in a cbdc System it’ll be possible for the central Bank to easily destroy money as well as

Issue it and that’s just one of the many Features a cbdc would have For starters they’ll actually be two Types of cbdc’s wholesale cbdc’s that Will be used by select individuals and Financial institutions and retail cbdc’s That will be used by regular folks like You and me What this means is that there will be One financial system for the people in Power and another financial system for Everyone else Now note that when i say cbdc i mean Retail cbdc for the remainder of this Video Now in addition to being able to create And destroy money cbdc’s will make it Possible for central banks to freeze Cbdc holdings set limits on cbdc Holdings set expiry dates for cbdc Holdings set location limits for where Cbdc’s can be spent set time limits for When cbdc’s can be spent set limits on How much cbdc can be spent decide what Can and can’t be purchased with cbdc’s Add a tax to every cbdc transaction Automatically flag or block suspicious Cbdc transactions create custom cbdc Limits for different individuals and Institutions depending on whatever Criteria they decide And last but not least implement Negative interest rates by gradually Deleting unspent cbdc holdings over time

Now these are all features of cbdcs that Have been openly discussed by the Financial institutions i just mentioned The craziest part is that a continued Increase in centralized control is Required to prevent the current Financial system from imploding at least As far as central banks and governments Are concerned Any alternative would involve giving up Some or even all the control central Banks and governments have over the Financial system and it’s safe to say They would much rather see the financial System burn to the ground than lose Control of it This is why some financial institutions Such as the imf have outright Recommended that countries use cbdc’s as A tool to fight the adoption of Cryptocurrency to maintain said control More about that in the description Now when it comes to the economics of Cryptocurrency it really depends on the Coin or token we’re talking about For the purposes of this video i’ll Stick to bitcoin’s btc since it’s Arguably the biggest crypto competitor To the current financial system Unlike fiat currencies btc has a maximum Supply of 21 million this supply is Created slowly over time and every four Years the amount of new btc being mined I created is cut in half

It’s believed that the last btc will be Mined around 2140 and you can find out What happens then using the link in the Description i digress As basic economics dictates a gradual Decrease in supply combined with the Same or more demand results in a higher Price Over the years bitcoin has seen Exponential adoption this has resulted In an increase in demand while the new Supply of btc has been on the decline Resulting in the price action you see Here btc’s gradual appreciation in price Has incentivized millions of computers To process transactions on the bitcoin Blockchain which has made it extremely Decentralized and therefore very secure As a matter of fact bitcoin is believed To be the most secure payment network on The planet The best part is that as btc’s price Continues to climb the bitcoin Blockchain will only continue to Decentralize This makes it the ideal base layer to Build additional financial technologies On and there are many crypto projects And companies that are leveraging the Bitcoin blockchain for its security Because btc is increasing in value over Time even relative to gold this creates A strong incentive to save rather than Spend btc

This relates to the next topic on the Menu and that’s the differences in Custody between cryptocurrencies and Cbdc’s now custody is just a fancy term For how your money or assets are held For anyone wondering With cryptocurrencies you have the Option of self-custody meaning you can Keep your coins and tokens in a digital Wallet that is entirely controlled by You Because personal information isn’t Required to create a cryptocurrency Wallet this makes all cryptocurrency Transactions pseudonymous by default Now it’s extremely important to note That pseudonymous is not the same as Anonymous and most cryptocurrency Transactions are actually not very Anonymous at all This is because most cryptocurrency Blockchains are publicly viewable Meaning you can see all the transactions Taking place on them in real time With enough analysis it’s possible to Link pseudonymous cryptocurrency wallets To real-world identities especially if The person who owns that wallet has Interacted directly or indirectly with a Crypto platform that requires kyc such As a cryptocurrency exchange This is one of the ways that blockchain Analytics companies track cryptocurrency Transactions and you can learn more

About their other methods using the link In the description now where was i ah Yes wallets Unless you’re holding cryptocurrency in Your personal crypto wallet chances are It’s being held in a custodial wallet Meaning that crypto is technically owned By someone else under your name This includes cryptocurrency exchanges By the way you might think you have Control over your crypto with such a Setup but in reality the custodian only Lets you make transactions so long as You abide by their terms and conditions Which nobody reads until it’s too late Self-custody is a foreign concept for Cbdc’s if all the de facto terms and Conditions i mentioned earlier didn’t Make it clear enough all your cbdc Holdings will be kept at the central Bank and it will ultimately decide what You can or can’t do with your digital Dough In terms of privacy i reckon this Sentence from one of the bank for International settlements is cbdc Reports sums it up quote Full anonymity with cbdc’s is not Possible This is because the central bank needs To be able to track everything to a t to Impose the sort of totalitarian controls I mentioned earlier You will of course have to complete kyc

To use a cbdc and according to the world Economic forum’s massive cbdc and Stablecoin report central banks will Assign your digital identity a dystopian Social credit score which will determine What you can and can’t do The result will be a total absence of Privacy with cbdc’s which is a huge Problem because privacy is required for Financial freedom you can still be Coerced even if your transactions can’t Be stopped To add insult to injury cbdc Transactions that don’t belong to you Will not be viewable meaning only the Central bank will be able to see what’s Going on behind the scenes This will apply at the network level as Well because the technology that Underlies a cbdc will almost certainly Be closed source That’s unless it’s issued as a token on A cryptocurrency blockchain in which Case it’ll be open source since almost All cryptocurrency blockchains are open Source Heck even privacy oriented Cryptocurrencies are open source and you Can learn all about the most popular Privacy coin out there using the link in The description To wrap things up i want to talk about What a cryptocurrency based and Cbdc-based economic system would look

Like As i mentioned a few moments ago btc has Been increasing in value over time even Relative to gold and this creates a Strong incentive to save rather than Spend btc this makes a btc-based economy Analogous to one where interest rates Are consistently high meaning inflation Would be very low or even negative Logically this means a btc-based economy Is also one where it would be more Expensive to borrow and that could limit Economic expansion in a worst-case Scenario this could lead to something Called a deflationary death spiral where Spending decreases resulting in lower Prices resulting in lower production and So on and so forth until the economy Peters out The thing is that the threat of a Deflationary death spiral seems to be Nothing more than a fiat currency Finance conspiracy theory as evidenced By the fact that the economy has been Deflationary for most of human history This is simply because innovation makes Everything cheaper as time goes on and The deflationary trend only changed Whenever a central bank decided to turn The money printer on A btc-based economy also doesn’t Necessarily require using btc as the Currency btc could simply become the Hard money that backs a more elastic

Currency the same way gold used to back National currencies and that system Seems to have worked out pretty well Ironically enough it looks like a Cbdc-based economy would face the same Sort of deflationary risks for similar Reasons namely a cbdc’s status as a safe Haven asset in the eyes of the average Investor This status has been noted by multiple Central banks as the primary reason why They’re not rushing with their cbdc Rollouts This is because a cbdc could suck Billions or even trillions of dollars Out of the traditional financial system And this includes government bonds which Are also seen as safe haven assets and Considered to be cash equivalents by Experienced investors and regulators Alike If you watched any of my recent videos About the federal reserve you’ll know That the interest rates on government Bonds determine the interest rates in The wider economy and that these Interest rates are dictated by supply And demand If everyone started selling government Bonds for cbdc’s because of say some Financial or geopolitical crisis this Would cause the interest rates in the Economy to skyrocket eventually leading To a next level deflationary death

Spiral and potentially even a full-on Government default and collapse Even if central banks programmatically Put measures in place to prevent this Scenario from occurring a cbdc economy Would still put central banks in direct Competition with commercial banks As admitted by the bank for International settlements in one of its Cbdc reports quote a common theme is That maintaining bank profitability Would be challenging The bank for international settlements Also determined that the only way banks Would be able to remain profitable would Be to jack up interest rates this would Make borrowing extremely difficult and Once again result in sub-optimal Economic conditions due to deflation Luckily for the financial elite there Seems to be one solution and that’s a Synthetic cbdc which was defined by the World economic forum in that massive Cbdc and stablecoin report A synthetic cbdc would involve having a Centralized stablecoin issuer holding The assets backing its stablecoin with a Country’s central bank If you watch my video about the assets Backing stablecoins you’ll know that the Two largest regulated sable coins are Backed almost entirely by cash Equivalents and you’ll recall i hope That this is code for government debt

Now this is admittedly ingenious because It means everyone who buys a regulated Stablecoin is financing the us Government by indirectly purchasing Government debt which in turn keeps Interest rates low and allows its fiat Ponzi to continue As far as holding assets with a country Central bank this seems to be happening Too because the assets backing the usdc Stablecoin are being custodied by Blackrock which has an uncomfortably Close relationship with the federal Reserve You can learn more about blackrock using The link in the description Now i know this video has been a scary Ride so i want to end on a positive note If you ask me there is no chance cbdcs Will reach mass adoption and this is for A few reasons First the bank for international Settlements found that only four to 12 Percent of people in developed countries Would voluntarily adopt cbdc’s this is Significantly lower than the current Adoption rates for cryptocurrency and The fact that financial institutions are Studying cryptocurrencies to recreate The same adoption curve with cbdc’s Says it all Second the people who know how to create Distributed ledger technologies are Better off working on a blockchain than

A distributed database it turns out that Creating a cryptocurrency coin or token That does something that’s objectively Useful and valuable can result in Astronomical profits and no shortage of Social approval Creating a cbdc gives you a six-figure Salary at best and paints you as the Enemy of society in the eyes of many And last but not least central banks are Losing the narrative on cbdc’s i’ve seen Dozens of videos on youtube besides my Own talking about cbdc’s and they’re all Getting hundreds of thousands of views The more that people become aware of Just how dystopian these cbdc’s are the Harder it will be for governments to Roll them out we’re already starting to See politicians in the united states and Elsewhere propose bills to prevent their Central banks from issuing cbdc’s and It’s because they know their voters Don’t want them As the saying goes the pen is mightier Than the sword so share this video with Your friends and family to make sure They know the difference between central Bank digital currencies and good old Cryptocurrencies Now if you enjoyed it be sure to smash That like button if you want to make Sure you don’t miss the next one Subscribe to the channel and ping that Notification bell

If you want more from me you can check Out my second channel called coin bureau Clips or tune into the coin bureau Podcast which is available on spotify And all those other apps You can also find me on twitter tiktok And instagram and get exclusive insights About the crypto market on the daily by Joining my telegram I also have a weekly newsletter that Reveals my personal crypto portfolio as Well as what other topics i plan on Covering in upcoming videos If you’re feeling lucky you can enter Our competition where we’ll be giving Away one whole bitcoin yep 10 lucky Winners will each win 0.1 btc If that sounds too good to be true Checking out the link in the description Is what you should do Thank you all so much for watching i’ll See you again real soon this is guy over And out [Music] You

Coinbase
OUR TAKE

Coinbase is a popular cryptocurrency exchange. It makes it easy to buy, sell, and exchange cryptocurrencies like Bitcoin. Coinbase also has a brokerage service that makes it easy to buy Bitcoin as easily as buying stocks through an online broker. However, Coinbase can be expensive due to the fees it charges and its poor customer service.

Leave a Comment

    • bitcoinBitcoin (BTC) $ 65,012.00 0.08%
    • ethereumEthereum (ETH) $ 3,518.80 1.5%
    • tetherTether (USDT) $ 0.999092 0.05%
    • bnbBNB (BNB) $ 592.34 1.64%
    • solanaSolana (SOL) $ 134.18 1.15%
    • staked-etherLido Staked Ether (STETH) $ 3,519.15 1.5%
    • usd-coinUSDC (USDC) $ 0.999752 0.03%
    • xrpXRP (XRP) $ 0.490046 0.71%
    • dogecoinDogecoin (DOGE) $ 0.124395 0.93%
    • the-open-networkToncoin (TON) $ 7.13 2.49%