Blog #9 - EOTO Project #2 - CBDC

Cryptocurrency in on the rise in the United States. Bitcoin is currently the largest, most popular form of cryptocurrency. I personally have absolutely no idea what Bitcoin is or how it even works. The same goes for NFTs. My older brother is very involved with cryptocurrency, and I made the mistake of chatting with him about it before beginning this EOTO project. Not only did I leave the conversation with more questions than answers, but I was also twice as confused. He explained something about imaginary money and how the currency is calculated through computer generated mathematical equations. However, the main takeaway (and the one part that I did understand) was that cryptocurrency like Bitcoin is independent of a central bank. Basically, funds can be sent from user to user without a bank. 

CBDCs are related to Bitcoin. CBDC stands for central bank digital currencies. In its simplest terms, a CBDC is a government regulated form of electronically issued money. To dumb it down even more, CBDC means that the government controls your money and has access to your financial profile. It's basically government controlled Bitcoin. Some people find that interesting, while others are skeptical. CBDC means that money can be accessed more easily, and on a broader scale. That causes some concern (no doubt) about the security of CBDC. 

CBDC has a lot of gray area when it comes to privacy. CBDC could be bad for an individual's privacy. means that there's no use or need for central banks. The money is accessed and issued by the government. This also means that the electronic money will be managed by tech companies. These companies will have access to your information, and can do what they want with it. They have access to your financial profile and all of your information. In turn, that information and your profile can be leaked. At that point, your finances at at the mercy of somebody else -- and that somebody is likely not someone you want to be in control of your money. Private and commercial banks would be greatly affected by the mass spread of CBDC, since it isn't dependent on a central bank. 

CBDC has some potential for some good things. Digital currency decreases the need for physical cash. Part of CBDC is the push towards a cashless or a nearly cashless society. For the most part, that would be more convenient due to the fact that there wouldn't be a need to carry cash around. CBDC would improve efficiency of payment systems  and make digital currency easier.

If CBDC becomes more widespread in the United States or if it eventually becomes the new normal, then everyone is going to affected. If we come to live in a world where the government and tech companies control all of our money, then financial security will be greatly compromised. Tech companies are notoriously bad at protecting user information, and that would be no exception to financial information. There's nothing fun or safe about personal information getting stolen and leaked. With CBDC, this risk would increase, and all of our financial information would be in danger of being compromised.