Whistleblower Edward Snowden is no friend of central bank digital currencies (CBDCs). As early as October 2021, he described the idea, which was becoming increasingly popular among states, as a perversion of a blockchain, a “crypto-fascist currency.” In an interview with Marta Belcher, president of the Filecoin Foundation, the hacker reiterated his concerns: “The danger is very easy to detect.”
A CBDC is the digital version of a government currency backed by a central bank. Like other cryptocurrencies, certain properties can be “programmed”. While Bitcoin and Ethereum are considered (more or less) decentralized due to their characteristics, CBDCs are centralized by design. They are subject to state control. Since 2020, governments around the world have been working to introduce central bank digital currencies.
China tested its e-yuan for the first time during the Beijing Olympics this February. The United States and Europe are also intensively investigating the issue. The digital dollar is “top priority,” Joe Biden declared in a presidential decree this March. This is considered the starting signal for crypto regulation in the US.
CBDCs as a threat to freedom
Advocates expect many benefits from a CBDC for the state, its citizens, and local businesses. American economics professor Dr. Eswar Prasad wrote in the fall of 2021 New York Times: “Because transactions via CBDC could be monitored and prevented at the same time, financial crimes could be better detected and combated.” Small businesses would benefit from lower transaction fees. And during inflation, the Federal Reserve (FED) would have more options to take countermeasures. It could program the central bank’s digital money in such a way that it automatically decreases in citizens’ accounts over time. The incentive to consume would stimulate the economy.
Edward Snowden sees the CBDC primarily as a threat to the financial independence of citizens. Governments could “increasingly restrict our freedoms to use money.” As an example, Snowden refers to the Canadian government’s handling of protests against coronavirus measures in February 2022.
Ottawa truckers demonstrated in favor of a relaxation of the measures, and the state responded with severe sanctions, mainly of an economic nature. Millions in donations to protesters were seized from sites like GoFundMe. Then the Prime Minister of Canada declared martial law.
Snowden is not the only harsh critic of the CBDC
With sweeping powers, he froze protesters’ bank accounts and forced insurance companies to cancel their policies. The government has asked centralized crypto exchanges like Coinbase to suspend the accounts of sanctioned individuals. He also threatened donors with financial sanctions.
“For Canada of all people to do this, with a democratic and enlightened government, is a powerful example of why we should care about this development,” Snowden said. “The government can take our money out of our wallets with the push of a button. That should alarm us. It doesn’t matter if you’re for or against this particular protest.”
Snowden is not the only harsh critic of the introduction of a CBDC. Jake Chervinsk of the crypto lobby group Blockchain Association also warned Thursday of a “totalitarian nightmare” from the creation of central bank digital currencies. “The government would know what you are spending and where you are spending it at all times. He could program the CBDC any way he wanted and say, ‘You can only spend this dollar in certain places.’ I could freeze accounts or withdraw funds from accounts at any time.”
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