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Can someone with optimism and enthusiasm about CBDCs enlighten me how will this NOT devolve into a totalitarian dystopia with "programmed" money that can control the population down to the individual level?

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I find it intriguing that this kind of project will plausibly be the true legacy of the crypto community’s efforts. This is both ironic and tragic as their intentions were the opposite in the wake of the 2008 crash.

I think it’s also related to the lack of trained political scientists in the crypto movement. A first year undergrad is taught that real political power comes from whomever has a monopoly on violence. In this light crypto was always doomed to fail in this way. It had little to no affect on the underlying real power. It only worked 1 later up (monetary supply / taxation / etc.).

Because the crypto space are just scammers. They barely know anything

People working on Bitcoin are very aware of this and it has been extensively discussed this in the last 10 years and taken into account even by Satoshi

If you need an undergraduate course to explain that a monopoly on violence is what bestows power to a group, you probably aren't a scheming mastermind who is going to rework all of the systems of society.

You may be surprised. Smart people can be easily tripped up by small oversights. But that won't end their hubris that motives them to try it.

What does the crypto community have to do with this? A CBDC isn't even a cryptocurrency, and has no connection to them at all.

Programmable money, even though it's centralized.

Also known as a "bank account"?

Money in my bank account cannot have an expiry date, which is something that would be possible with this new digital currency. The bank cannot limit where I can spend it, at least not as easily.

To be clear, that's a tremendous concern, but it doesn't have any connection to crypto. The reason that the money in your bank account can't expire is because if a private bank tried to do that, it would trigger a bank run - everyone would withdraw their funds as paper, or transfer them to a different bank. The reason the CBDC is different is because there cannot be a run on a central bank as the issuer of currency, and it alone can assert that its unit of account is a legal replacement for paper banknotes. So it can establish policies like an 'expiry date' for deposited funds, which a private bank could not (at least, not until the central bank does first).

Banks certainly can limit where you spend your money though - again, with the exception of cash withdrawals.

Your original point of contention was that CBDC isn't even a cryptocurrency. It is presumably using the tech that was built by the crypto community, like smart contracts.

Why would you presume that? I think it's much more likely to use the same tech that banks and credit cards use for their own bookkeeping. "Money with an expiry date" is in line with line-of-credit products that banks already offer, and taken to its continuous limit, is simply a negative interest rate.

Because they are already talking about it.

https://www.forbes.com/sites/sap/2021/03/25/as-programmable-...

https://www.federalreserve.gov/econres/notes/feds-notes/what...

There's no need for them to use smart contracts. Why would you need a self-enforcing contract if you're the guy with monopoly on violence who's enforcing everything in the first place? Smart contracts are an attempt to solve the issue of decentralized trust; this is literally the opposite, an attempt at hyper-centralization.

This seems odd to me. The "money" you have in your bank is already purely digital, a fiction. It's not as if you go to and from the bank carrying physical notes and leave them in a box you control.

If your government wants to take away "your" money, they clearly have the technical ability to do it by compelling the bank to freeze your assets. Likewise, that bank you are currently trusting so much could readily shave a couple of zeros off your balance.

There is absolutely nothing technological stopping any of this.

For the shared fiction of "ownership" of intangible assets to work, we are all at the mercy of one thing: the rule of law.

Government is the monopoly on legitimate violence [In the US defensive violence* is also legitimate by the public, but gov holds monopoly on initiating violence]. They are a laughable distance from monopoly on all violence in their jurisdiction.

* As noted below, defensive violence against illegitimate initiators of violence [<- edit]

How does that work if you're held at gunpoint by law enforcement? Even if you know you've done nothing wrong, and are e.g. a victim of systemic racism?

There are lots of minorities that have chosen to shoot back on the way out when they know they're going to be gunned down. It still holds the government can't possibly own all the violence.

Violence in self-defense against imminent physical harm is legal in most of the world, although proportionality requirements vary.

Certain people have been pushing for digital money for decades, since long before Bitcoin was invented. Bitcoin was the culmination of a quest to find an alternative to that future that was already developing, not the inspiration for that future.

The legacy of the crypto community is the Bitcoin blockchain. Blocks are still being appended. It will outlast this instrument of financial oppression, as well as the UK itself.

> The Times 03/Jan/2009 Chancellor on brink of second bailout for banks

I don't like CBDCs but suspect in practice it wouldn't be very different to Visa/MasterCard duopoly. Mostly widely accepted except for some frankly quite random exceptions.

You'd imagine legal protection of this should exist just the same as it exists for assets now. Eg if you get a speeding fine you are contesting (or something hing more nefarious, say you're a journalist reporting in corrupt government) the state can[not] just confiscate your property without a court decision.

I was about to write "cannot" but then remembered Civil Forfeiture in the US. But my basic point is, I think most.l likely this wouldn't change things too much in practice.

I still don't much like them.

> in practice it wouldn't be very different to Visa/MasterCard duopoly

Now a monopoly controlled by the monetary authority, also for all payments:

>l likely this wouldn't change things too much in practice.

You are significantly underestimating how much of the day-to-day economy happens in "under the table" cash transactions (doesn't even have to be cash, some unsophisticated casino-chip setup like Venmo or Cashapp works as well) that wouldn't stand up to the kind of scrutiny afforded by a CBDC system.

Hmm, well, true. I guess I don't have much sympathy for the kind of industries that couldn't stand up to scrutiny.

There are also fairly benign cases of cash-in-hand industries like builders etc., dodging tax by taking cash payments of the book, good question how that would evolve.

You hit the nail on the head there btw, it would lead to a shadow economy based on some other medium of exchange, perhaps crypto. Except... How do you buy your crypto in the first place? Surely not with CBDC..!

>I don't have much sympathy for the kind of industries that couldn't stand up to scrutiny

In practice, what this means is that a great many industries (restaurants, construction, anything where immigrant labor is popular and viable, etc) have found a way to elide our — I'm speaking from a US perspective here, this may be different in the UK — sclerotic bureaucracy. Many things would become much more expensive with the introduction of a CBDC.

Also, this means that you're trusting the government to perfectly delineate the bounds of an acceptable life. I don't...

> Also, this means that you're trusting the government to perfectly delineate the bounds of an acceptable life. I don't...

So my main point is, I trust the government's inertia and inefficiency much more than its good intentions.

Let's say the govt has some evil plan to control people's spending, or try to eke out illegal transactions by sifting through their detailed accounts. Who is going to implement this, as in code up? In Europe at least, some underpaid coders who enjoy a 30h week instead. It will be designed and assessed by multiple committees, be hampered by legacy databases, lack of CPU time, and anyway the people actually in charge will not understand the technology, and have their own objectives, which will presumably be to move on from an IT project.

This is not meant to be mean to people who work on such projects, I'm sure there are many talented and dedicated people there but I think this is the environment they contend with.

Of course in US this might get outsourced to Palantir or someone like it and they would just maximise the true positive rate at all costs...

What this means in practice is that it won't eke out all illegal transactions. It just means that the thunder will strike at random, still increasing the risk (and thus the costs) for everyone involved, and deterring a lot more people than those who are immediately affected. It will also cause problems for people who aren't even doing anything shady due to false positives. We'll rant about it like we did about the no-fly list, but once the system is in place, it will be impossible to remove it. So it'll just gradually become more and more pervasive and oppressive over time as various politicians come up with different strawmen to attack.

There is also the idea with banking that I am trusting the bank with my money but I do have the option to withdraw the funds and put them under the mattress.

At least in the US, the idea of eliminating the ability to withdraw an account is absurd.

That form of money will simply never be widely used in the US. I believe the digital yuan already has this problem of just not being used enough.

From the other side of the argument, would you see a future in the next decades where cash is still relevant and significant amount of money can change ownership completely anonymously?

This might still be true for some countries, but most of us are already in a world where paper money is a “just in case” artifact and the gov could trace every single monetary transaction in the last 10 years.

The real fight isn’t on clinging to legacy systems, but to get safeguards baked in the new systems and have governments that care a minimum about their citizens.

I mean, you’ll never win again your gov. going full berserk, or at what price.

> From the other side of the argument, would you see a future in the next decades where cash is still relevant and significant amount of money can change ownership completely anonymously?

No. Also, I see CBDCs as a further step along this trajectory. Even more control. Even more granularity.

>The real fight isn’t on clinging to legacy systems, but to get safeguards baked in the new systems and have governments that care a minimum about their citizens.

I agree. Though I'm afraid human psychology is not compatible with the idea of "safeguards". As long as there is a 0.0000001% chance that this will help catch some pedophile or drug cartel, I bet there won't be widespread push for safeguards. Much like how there isn't any with internet surveillance or facial recognition in public spaces.

Naturally you might be asking, so what do I propose to solve this. To which I answer: Nothing. I don't really see a way out of the hole we are digging right now.

I somewhat optimistically see two different vectors that could move independently:

- untraceability: it’s probably out of the window. I don’t know how much we still had, but with full digital money everywhere it’s dead and buried.

- practical privacy: could probably be saved. It’s hope more than anything, but just as we currently don’t have a social score system while technically all the pieces are in place, I think digital money would stay in the same status quo as long as we keep the same social values.

Basically, we already have safeguards against widespread abuse of our digital systems, otherwise we’d already be in the same social state as China, I don’t see any technical barrier to that. The question would be on wether we can preserve that going forward.

If implemented with, or similar to, GNU Taler[1] then privacy for consumers is preserved, which is already better than credit/debit cards currently

[1] https://taler.net/en/faq.html

Is this a chaumian mint? I have never heard of this project, it's pretty neat.

There are a couple of chaumian mint systems in development in the Bitcoin ecosystem.

Cashu: https://github.com/cashubtc/cashu Fedminit: https://fedimint.org

In Cashu, a mint is a single custodian, while Fedimint is designed around a multiple federated mints in a multisig. Both issue e-tokens signed with blind signatures. Both of them also integrate with the Lightning network, so users of the minted cash can make use of the rest of Bitcoin ecosystem for payments.

Good thing we don't already live in such a dystopia.

I mean, banking is digital first and cash second.

Also, programmable money already exists and is called food stamps in the USA.

>Good thing we don't already live in such a dystopia.

Only if you think in a binary exists/doesnt't exist way. With digital payments first and cash never, this could be taken much further.

Food stamps are traded for cash all the time. You get less on the dollar, but people still do it in order to use it for other things.

Yeah this is why I hate food stamps. You can literally go to any hood, walk in front of the grocery store, and there is a burgeoning black market for the stamps (actually EBT card). They function as (discounted) cash for people who want them to be cash.

Just give the cash to everyone instead of this ridiculous failed program with overhead to make sure it's just spent on food. Families actually spending it on food would have more money then because you could cut the overhead costs and pay it out to everyone.

Think of it like Android vs iOS. Android has the ability to sideload apps. The vast majority of users never even enable that, but when you need that escape hatch, it's there.

Trudeau already froze protesters' bank accounts, so I don't see much of a difference with the current system.

I think the main benefits would be if we could get out of the VISA and Mastercard duopoly, and the requirement to settle trades in USD in the future.

It seems to me that CBDCs cut out a lot of the friction that currently prevents people from moving towards more interesting and decentralized payment infrastructure.

Any system backed by math seems to me to be strictly better than any system which is not backed by math. Legacy banking infrastructure is a dangerous mess, and needs to die. To me, the acceptance of CBDCs is an admission that the old ways are failing, and a crypto backed economy is the future. CBDCs will still need to compete with crypto assets already in existence, but at least now everything can speak the same language.

"a lot of the friction" can be something that keeps us from sliding down a slippery slope into a quagmire beyond our control.

But the current legacy system is an evolved standard. A drop-in replacement is likely to introduce a lot of unintended consequences, however beautiful in theory it may seem.

There are actual, visible consequences to trying to keep the old dying system alive. It's hopelessly broken, and more important, unsustainable. For it to truly be a product of "evolution", you have to let the broken parts die.

I wouldn't necessarily call myself "enthusiastic" about CBDCs, but I can certainly give some reasons why I find this proposal to be "fairly reasonable".

Firstly, they start off by saying that they don't think it's currently necessary and that they are just looking to the future. They then talk about the current state of affairs with more transactions being made digitally and more private entities offering some sort of online wallet. Most of these entities are not British in origin and they state that if the situation were to arise where a majority of the countries "cash" transactions were controlled by a foreign entity then this could constitute a security risk. Now, I am a very long way from being a flag waving nationalist but even I can see the sense in that.

Secondly, their proposal look fairly reasonable to me. I may be misreading it horribly but as far as I can tell the BoE is proposing to be an anonymous transaction layer. The diagram specifically states that they will not have any personal information associated with the wallet. It looks like the BoE would just hold an anonymous wallet with a GUID and a value. The PIPs have your user details and GUID. When you make a payment from your wallet to some other wallet the PIP just sends a request to the BoE to transfer a sum from one GUID to another and the BoE never receives any information on the payer and payee.

Because of this, it will be pretty difficult for the government to prevent any particular person making a payment, or to control how someone makes a payment. There are a huge number of private entities that will have the necessary status to get clearance to access the API, I am sure. Can you imagine the UK government trying to bully hundreds, maybe thousands of companies - some not based in the UK - into preventing payments to one person; and they would have to cover all entities because otherwise the person being targeted could just change wallet providers.

It could still potentially turn bad, but it looks to my (admittedly not highly experienced eye) that the BoE is trying to design a system that is reasonably resilient to the type of tampering and control that many people fear.

I don't have optimism or enthusiasm for CBDC, but it seems like it's bo different from the system we have now. All transactions are already digital, tracked, reported, and can be intervened in by your government. So what changes? The money system of the world is a series of computer programs run at banks. CBDC would just be changing those systems to run... blockchain algorithms. It's actually quite pointless to apply blockchain to something thst is inherenty centralized (which is why I have no optimism for CBDCs, they're a waste of everyone's time).

At least in the US, I just don't think this will ever work. It is ultimately only in the interest of the central bank. There are really no other participants that will be clamoring for this.

I am pushing 50 and I just can't imagine I live to see the day I can't get cash from the bank when we still have absolutely worthless pennies in circulation. This is such a fundamental change to money and banking I just don't see it being widely adopted.

You don’t need to control an individual. You need to control the population as a whole. Which governments do now, with taxes and other policies.

well met, nothing you just wrote addresses what OP asked.

>You don’t need to control an individual.

People who lived in Warsaw pact countries where you could only buy meat with a "ticket" would disagree with this. There is a very real desire in the ruling class to be this invasive.

... in a planned economy.

Which is the inevitable result of a CBDC. There is no way that a government can resist the temptation of control that CBDCs permit.

There is an increasingly popular sentiment in the West that dealing with income inequality and climate change requires an economy that is planned to a significant extent.

There's a little dichotomy here. If you try to control the population as a whole "head-on" you'd get decent backlash, especially in countries where such moves have been rejected.[Anecdotally i can speak only for EE] However if you try to convince the masses at an individual level, (i.e a bottom-> top approach) you can have more success, assuming you do this in a paced manner and not rush the tyranny (because that would be obvious). Nowadays the latter approach 'works' because most people have low attention span and such grifts go mostly unnoticed, or at least enforced with pretexts like security, protect the kids, etc.

The gov. vs the individual is an uneven fight. The same cannot be said about the gov. vs the people.

Up side is not to have to deal with payment processors, banks and so on, but single hopefully free or tax paid centralised system.

And I don't see worries too much as most of the bad things can already be done, or simply legislated on existing institutions by governments. Nothing actually stops at least with digital money from these things being done.

Has the SWIFT payment system devolved into a totalitarian dystopia?

No. The aspect of programmable money is currently missing. Also with cash being a viable escape hatch, I'm quite okay with the pros and cons of the current status quo.

What I'm worried about are the new proposals and the gradual erosion of cash as an escape hatch.

They tried using it to control Russia. Power will use the tools it has available will it wants to assert itself.

I did have an experience of having an international wire transfer denied and my account forcibly closed by a US bank because the name of the recipient matched someone on their prohibited person list. They did admit that it's not the same person, but didn't seem to care - my impression was that they were much more concerned with staying "on the right side" of govt regulations than they were about losing a customer.

Is that an example of a totalitarian dystopia? Not really, but it's not "the land of the free", either. I'm thankful that technology like BTC (or better yet, Monero) exists so that this kind of bullshit is merely an inconvenience and not a blocker.

> CBDCs devolve into a totalitarian dystopia with "programmed" money that can control the population down to the individual level?

How is it that Central Bank crypto will lead to a totalitarian dystopia, while BitCoin, Eth, Dog Coin, FTX coin etc are libertarian projects that will save the world?

CBDC's are not cryptocurrencies. Cryptocurrencies are decentralized and implemented by various foundations with open source protocols. CBDC's are planned and implemented by a central bank.

The "central" in "Central Bank" isn't just there for the lulz.

Soma. If you start consuming it soon enough it won't be a "totalitarian dystopia". It will be a utopia!

Maybe that's why they allow the fentanyl in through the border.

The old pound isn't going anywhere?

And maybe (dont kill me for this) some people need an adult in the room on occasions.

Maybe (again, hold yourself back) money given by the state should be spent in supermarkets, not on disco biscuits. A degree of control over that doesn't sound bad at all.

the only thing the negative voting on this comment shows is the utter lack of understanding of econ or governance topics by HN commenters.

Its not a problem, i understand we are a very small bubble which doesn't reflect society as a whole.

True, but the anti-intellectual arrogance of HN for a few select topics, like for example, people downvoting your comments, is irritating.

>And maybe (dont kill me for this) some people need an adult in the room on occasions.

To some extent I agree. The problem is that historically the limit of this state control was technology itself. Except now we are far too advanced to keep technology as this limit.

Money given by the state is an entirely different thing. If you need the state's money, you are ought to play by it's rules.

What I'm worried about is the state meddling with personal financials with pinpoint accuracy.

(For those unaware, 'disco biscuits' is slang for Ecstasy pills, I believe).

Sure, so it seems reasonable to prevent people spending benefits on drugs. However is there not a slippery slope towards preventing people buying (say) unhealthy food?

I can imagine some 'luxury money' that can be spent on anything and 'basic money' that you can't use to buy a pack of crisps or a bar of chocolate, only carrots and apples...

>I can imagine some 'luxury money' that can be spent on anything and 'basic money' that you can't use to buy a pack of crisps or a bar of chocolate, only carrots and apples...

This becoming a reality in my lifetime would convince me that time is a circle. My country had "dollar shops" before my time, where you could buy western luxury goods with foreign currency. Which was basically unobtainable for the average citizen.

https://bav-art.hu/blog/hello-tourist-dollarboltok-a-szocial...

> However is there not a slippery slope towards preventing people buying (say) unhealthy food?

Would that be such a bad thing.....? Again statistics would say people can't help themselves in that department.

Ok, and then it goes to alcohol, sugar, meat, and fuel as items that people can't help themselves to stop buying?

I mean, this is what consumption taxes do. A tax on sugar makes it more expensive to buy a sweet drink, so you can buy less of them for the same money. By putting it into the programming of the money, you make the control more precise - you can only buy 1 sugary drink a day, for example.

What if someone is doing exercise/ heavy work and need more sugar, for example?

Sure, that's one flaw in the (dystopian) plan. I'm sure there are many others.

I guess the horrible bureucratic solution would be to get a 'sugar license' or similar.

To be clear, this would be a nightmare, I think!

then you create a black market of non-sugary drinkers reselling their allowance to the sugar-addicted

freedom isn’t free

that’s a terrifying world of control

nothing like a perfect life of 90 years of eating grain and meat in the proper proportions

no thank you

Everyone seems very confused.

The old pound isn't going away, you can still blow your own money on a corn dog and cocaine if you so wish (under this hypothetical system).

Of course not. But these are long term concerns that are very real. Too much convenience can very easily take away the frictions that allow a governing authority to act. These are uninintended consequences involved in displacing a legacy system.

When I read comments like yours I can't help but wonder if sheltered naivety (from living under somewhat reasonable governments) or ulterior motives leads to statements like this.

Would you agree to your town council deciding what things you can buy with your wages? No? Then why is an even more distant institution any more competent on that front?

We already have technology for that. UK Gov gave a contract to Sodexho ages ago that limited what the user was allowed to buy. Not sure if its still in use - one problem was limited number of retailers who accepted the card.

And just who is going to set the rules where money given by the state can be spent? That is suggestive of a literal nanny state, and government dictats always introduce a certain arbitrariness on the level of individuals. The government cannot save us from ourselves, but given enough power, it will always try.

If we want that much state involvement then the state can just give people food directly instead of money that could be spent on anything.

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