In short, permissioned digital currency is all the bad parts of crypto and none of the good parts, while simultaneously getting rid of all the good parts of cash. There's almost no benefit to the user that something else doesn't do better.
I think this is the key concept over and above digital. It's the difference between http et al and AOL/Compuserve.
https://permissionlessinnovation.org/what-is-permissionless-...
Crypto is all the bad parts of a CBDC and none of the good parts. A CBDC will eliminate any argument for crypto ... with the exception of paranoia ... which is unfounded since crypto keeps a public record of everything you do.
So a US CBDC will be decentralized, permissionless, transparent, non-censoring, and run on open-source software based on an open specification?
Fees are currently as low as $0.03 on Ethereum layer-2 solutions (!= side-chain) [4]. The fees will further fall as the technology improves, and once L1 gets (data-/dank-)sharding and other L2-scaling oriented upgrades.
[1] https://makerdao.com/en [2] https://reflexer.finance [3] https://www.circle.com/en/usdc [4] https://l2fees.info
Fees in crypto fantasy land are irrelevant to most people.
How much does it cost to pay your rent or buy food in the real world?
Crypto is probably not going to beat domestic interbank dollar transfers for small amounts, these transactions can be regulated down to zero fees like we see in the EU and UK.
Thank you. It's probably not going to beat domestic interbank dollar transfers for ease of use either. With a CBDC, most consumers will only notice new capabilities and faster money transfers --- at zero cost.
Back to the original point: A CBDC will eliminate any argument for crypto --- except for paranoia.
And about paranoia --- imagine the outcry if government decided to store every transaction you ever did in an immutable public database?
Forcing citizens to use a CBDC is straight out of 1984 playbook.
FUD anyone?
Citizens won't be using a CBDC --- at least not directly. Everything *citizens* do will still be denominated in good ole USD just like always.
The CBDC will be used behind the scenes by banks and the Fed to speed up and modernize the banking system --- to replace the antiquated ACH system that was originally designed in the paper check era.
Basically, a CBDC will allow digital wallet like features to be seamlessly added to every existing US bank account.
Your landlord doesn't exist in crypto land either --- and he will quickly grasp the fact that doing business in crypto has real world costs.
The idea is that the benefits to the user are a more stable economy (lower inflation, higher employment), a more effective safety net (politicians more likely to approve payments that can't be spent on gambling), and greater peace (targeted sanctions as an alternative to war).
Whether any/all of these will work effectively is debatable of course, but there are legitimately good reasons to think they would. And no, there's no alternative that does them better, and crypto certainly doesn't. Again, the individual merits can be argued, but the idea that it is "all bad no good" is simply not the case here.
I could be wrong, but I don't think many citizens would vote for a policy that would give up so much of their privacy, autonomy, and civil rights for the hope that central banks and government officials will make the right economic decisions next time given the data a digital currency provides.
The central bank doesn't have a crystal ball to know with certainty where inflation will go. Much of that depends on historical events outside the US that are by definition unknowable -- how will food and energy prices be affected by war in Ukraine, for example?
But central banks are able to plan and then adapt appropriately as circumstances change. And citizens have long voted for effective central bank policy -- economic fears about inflation and recession are reliably the #1 popular concern. If a digital currency can help this, most voters will be very happy with it. After all, for people (like myself) who already make 99% of their purchases with credit cards, they're not giving up much.
That government officials are fallible and incompetent is (in my opinion) the weaker argument. Even if they were extremely competent and had a crystal ball that predicted the future (they don't), nobody should trust the intentions or the goals of government agencies with such ubiquitous and unchecked power.
> there's no alternative that does them better
State-run EBT cards exist and seem to be working OK.
Federalizing more things reduces people's ability to usefully vote with their feet by moving to a different State when people don't agree with State government policies.
> more stable economy (lower inflation, higher employment)
Speculative and seems unlikely. Do you have examples where a CBDC helps pay for projects better than the existing payment rails?
There is no good reason for the government to have complete control over all of your finances and purchasing decisions on a granular level (if you value human freedom, autonomy and dignity at all).