Imagine a Bitcoin erasure by the central bank in 2022

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Can the central banks of the biggest capitalist economies, working in cahoots, destroy Bitcoin to force … [+] compliance with the central bank’s new digital currencies?

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Remember 2020 when everyone said on New Years Day and New Years Eve, “Oh, thank goodness it’s over. This year will be so much better!

And in 2021 we have had, more Covid, more threats of job loss due to Covid policies, more hiding and in parts of Europe – constant protests not seen in at least a generation. How did 2021 go in comparison?

We have rumors that Western central banks are planning to jointly roll out a central bank digital currency. We have record inflation. What if the EU, US and Japan rolled out a central bank digital currency (CBDC)? What would this mean for Bitcoin?

People who have read my work here know that one of my biggest fears as an investor in Bitcoin (and cryptocurrencies) is a total withdrawal of BTC by central banks. It’s not hard to imagine, even, exaggerated regulatory hurdles and taxation in order to make the new digital dollar or digital euro, or whatever the name of the new digital currency is among the great capitalist nations, much more attractive. than Bitcoin. I see 50% tax (or more) to be withdrawn from your BTC, including for making purchases.

Call me paranoid, but if there’s one thing that needs to bring Bitcoin down, it’s these guys in the power centers of the West Bank. Not Goldman Sachs GS. I’m talking about the Bank for International Settlements (BIS) – better known as the Central Bank of Central Banks.

In January, at the start of 2021, BIS chief executive Agustin Carstens told a meeting at Stanford University’s Hoover Institution that Bitcoin “could go down” and that CBDCs were better.

Here’s your clue.

If BTC dies, it will be people like Carstens who kill it.

We know they are not fans.

“Sound currency is at the heart of our market economy, and it is central banks that are uniquely placed to provide this,” Carstens said. “If digital currencies are needed, central banks should be the ones issuing them. “

I thought Bitcoin would be the one to take it on the chin the most. But blockchain protocols like Ethereum and perhaps the startups working in the Metaverse that issue coins will do well, as the market now treats them as volatile stocks and not as a currency to buy and sell. Bitcoin, on the other hand, in some parts of the world you can buy real estate with it. Before, you could buy Tesla.

“We keep hearing about CBDCs. It is evident, especially in some countries that are trying to get their own central bank digital currencies out, that they often institute laws that prohibit or significantly restrict the private crypto sector, in order to eliminate competition at the national level, Glitter Finance CEO David Dobrovitsky says, without mentioning the obvious here – China is doing just that. They constantly talk about their pilot project in a digital renminbi and have been busy cracking down on Bitcoin for at least two years.

Glitter Finance received a grant from the Algorand Foundation on December 27 to build a bridge between Algorand and Solana.

Clearly, central banks and their friends in governments see Bitcoin as a threat to the current fiat system.

“We have a fiat currency, backed by nothing, which can be printed endlessly, and is therefore very sensitive to inflation,” Dobrovitsky explains. “Putting an old currency in a digital format will not solve this problem,” he thinks.

I don’t know if he’s right about that.

“A CBDC will be created by the same institutions that created a global inflation crisis,” Dobrovitsky said.

Okay, that makes perfect sense.

“It’s obvious that there will be a central bank digital currency, as well as many other digital asset projects,” says Troy S. Wood, project manager at Impel, a spin-off of XinFin Fintech, who transmits financial messages (ISO-20022). , including cross-border payments, using the XDC network from India.

Wood is much less concerned than I am about the CBDCs killing Bitcoin. I have yet to find such a big worry wart on this issue as I have. Of course, I did not turn over every leaf, nor look under every rock. If you’re there, I’ll find you.

The Salvadoran president believes that, in emerging markets at least, BTC will bypass centralization … [+] control the monetary systems managed by the most powerful central banks in the world.

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“Bitcoin is the king of digital assets,” Wood tells me in email correspondence from Dallas. “People use Bitcoin as a hedge against inflation and as a vehicle for speculation for asset appreciation. We will continue to see it being used like that, and probably in the long term, especially as the monetary system continues to print more and more money causing inflation – even hyper inflation – as well as the traditional devaluation of the currency. This should push Bitcoin to new all-time highs, ”said Wood. “I wouldn’t be surprised to see countries use Bitcoin as a way to settle debts with each other before the end of the decade.”

Remember the “Bitcoin City” of El Salvador.

“What international organizations have called the Bitcoin Experience is nothing more than the world watching how mass adoption is changing a country’s economy. If it’s for the good, it’s over for the fiat, ”Nayib Bukele Ortez, President of El Salvador, said on December 23, 2021 on his Twitter account.

When it comes to regulating Bitcoin to Death, no one has really said anything substantive in response to my concern that the tax authorities are treating crypto as a new capital gain and crushing the light of day, making it is too risky on the tax front alone. .

For the most part, the entire crypto industry is in agreement with the regulations. As we have heard for years, this gives them legitimacy and kicks bad players out.

“Concrete regulations are needed for the development and adoption of cryptocurrencies around the world,” said Dennis Wohlfarth, CEO of Accointing.

For those with an hour and a half to kill, Wohlfarth did a 1.5 hour crypto and tax interview which you can watch here on YouTube. The interview was posted in March 2021, so it’s still relatively fresh.

There is, however, a caveat to all regulations. This must be done in cahoots with industry experts, and not a separate affair, says Wohlfarth.

History is full of times when centralized authorities wanted to exercise full control over something that ordinary people preferred as it was. Their success rate in these situations is slim. “It does not favor the central authorities,” says Dobrovitsky.

Bitcoin and other decentralized systems maintain privacy. The powers that be do not need to surround you in Russia because you are driving a heavy gas user, although they would love to inflict that kind of punishment. I mean, who’s with me on this one? Privacy is something most of us still agree on. Aside from our crying videos on TikTok, in general, the average person enjoys privacy.

Additionally, Bitcoin doesn’t really have an inflation issue because the coins created have a set supply. There is no politicized bureaucracy that probably hates half of you for some reason.

“Bitcoin is not prone to corruption in any government because it is not controlled by a central government,” Dobrovitsky said.

This is what true Bitcoin fans love about Bitcoin, but as it becomes more common, do most people who hold Bitcoin in their Gemini wallet even know the difference between centralized and decentralized? My guess is no. I guess the BIS and other central banks are counting on this and can turn people away from Bitcoin. How much is anyone guessing. But my hunch is that we might find more clues on this issue in 2022.

*** The author of this article owns Bitcoin and Algorand. ***

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