Imagine a Central Bank ‘erasing’ Bitcoin in 2022

By Kenneth Rapoza

Remember last year when the weather changed and everyone said: “Thank God, 2020 is over. The new year will be better!”

And 2021 brought us more coronavirus cases, more jobs threatened with loss due to coronavirus reduction policies, more masks and repeated protest rallies in some parts of Europe: a phenomenon that had disappeared for at least a generation. So, was 2021 better?

Rumors say that Central Banks in the West are planning to jointly issue a Central Bank Digital Currency (CBDC). Inflation is running at historically high levels. What if the EU, the US and Japan issued a CBDC? What would this mean for Bitcoin?

As a Bitcoin (and cryptocurrency) investor, one of my biggest fears is that Central Banks might crush Bitcoin. Heavy taxation and very strict regulatory restrictions would make the new digital dollar or digital euro, or as it was otherwise called, the new digital currency of the powerful capitalist states, more attractive than Bitcoin. Example: tax -minimum– 50% on Bitcoin liquidation, including purchases through the most popular digital currency.

Tell me crazy, but if there is one threat that can break Bitcoin, it is these guys in the power centers of the western banking system. I do not mean Goldman Sachs. I am referring to their counterparts in the Bank for International Settlements (BIS) – better known as the “Central Bank of Central Banks”.

In January 2021, BIS CEO Agustin Carstens said at an event at Stanford University’s Hoover Institution that Bitcoin “could collapse” and that Central Bank Digital Currencies were better.

Here is the proof.

If Bitcoin dies, Carsten will have killed it.

We know that they do not see it with a good eye.

“Secure money is vital to our economies and the central banks are the only ones who can provide it,” Carstens said. “If digital currencies are needed, then the Central Banks will have to issue them.”

I thought Bitcoin would try this hard. Blockchains like Ethereum – perhaps startups that run Metaverse and issue coins – would be spared if the market still treats them as volatile penny stocks rather than trading currencies. On the contrary, there are places in the world where you give Bitcoin and buy real estate, while in the past you also shopped from Tesla.

“We are constantly hearing about the CBDCs. It is clear that some countries planning to issue their own Central Bank Digital Currencies are enacting laws that either ‘block’ or significantly restrict the extraction of cryptocurrencies by individuals in order to neutralize competition at the national level.” points out David Dobrovitsky, CEO of Glitter Finance, without mentioning the obvious: this is exactly what China is already doing. She is constantly referring to her pilot plan for the issuance of the digital yuan, while for at least two years she has been trying to “crush” Bitcoin through stricter regulations.

On December 27, Glitter Finance was funded by the Algorand Foundation to develop a cross-chain between Algorand and Solana.

It is clear that Central Banks – and their friends in government – see Bitcoin as a threat to the current fiat currency system.

“We have a fiat coin, which derives its value from nothing, and which can be printed indefinitely. Therefore, it is extremely vulnerable to inflation,” Dobrovitsky said. digital format does not solve the problem “.

I do not know if he is right about that.

“A CBDC will be issued by the same institutions that led to the global ‘inflationary crisis,'” Dobrovitsky added.

Here he speaks perfectly logically.

“It is a given that a Central Bank Digital Currency will be released alongside many other digital assets,” said Troy S. Wood, executive at Impel, which handles financial data (ISO-20022), including cross-border payments, using XDC network.

Cathie Wood is not as worried as I am about whether the CBDCs will kill Bitcoin. “Bitcoin is the ‘king’ of digital assets,” Wood wrote in an email. “People are using Bitcoin as a hedge against inflation and as a ‘profit-making tool’ to increase their assets. It will continue to be used for these purposes, probably for a long time to come, as the monetary system continues to print more and more. “More money creating inflation – or hyperinflation – and at the same time the devaluation of traditional currencies. Such a development will push Bitcoin to new historical highs,” Wood said. “I would not be surprised if – within the next decade – some countries used Bitcoin to settle their debts.”

Let’s also remember El Salvador’s “Bitcoin City”. “What international organizations call the ‘Bitcoin Experiment’ is nothing more than how the mass adoption of a cryptocurrency changes a country’s economy. If it succeeds, a game over for fiat currencies,” the president wrote on Twitter on December 23. El Salvador Nayib Bukele Ortez.

As for the stifling regulatory oversight of Bitcoin, no one has substantially responded to my concern that the tax authorities are treating cryptocurrencies as new capital gains and simply want to crack them down, projecting their risk as a means of tax evasion.

Most cryptocurrency marketers have no problem creating a regulatory framework. It has been claimed for years that it would give them credibility and drive out “harmful” players.

“A clear regulatory framework is needed for the wider development and adoption of cryptocurrencies worldwide,” said Dennis Wohlfarth, CEO of Accointing.

Those of you who have an hour and a half to “kill”, you can watch Wohlfarth’s interview on cryptocurrencies and taxation in March 2021.

Wohlfart, however, sets a condition for the regulatory framework: “It must be formulated in consultation with industry experts and not unilaterally.”

History abounds with instances where the authorities wanted to take complete control of something that “ordinary mortals” preferred as it was. In such situations the success rate of the “institutions” is small. “Central authorities do not win,” says Dobrovitsky.

Bitcoin and other decentralized systems maintain the privacy of transactions. Privacy is a value that most of us still share. With the exception of videos on TikTok, the average person generally wants privacy.

In addition, Bitcoin is not substantially affected by inflation, because such currencies have a specific offer. It does not involve the “political” bureaucracy that one in two – unknown why – hates you.

“Bitcoin is not vulnerable to government corruption, as it is not controlled by a central government,” Dobrovitsky said.

It is precisely for these properties that Bitcoin is adored by its followers. But as the famous crypto becomes more and more mainstream, do you think those who keep it in their Gemini wallet understand the difference between decentralized and fiat currency? Most would say no. I think the BIS and the central banks know this. Therefore they estimate that they can “pull” a lot of people away from Bitcoin. How many? I do not know. I feel, however, that 2022 brings enough clues to answer the question.

Read also:

* Jack Dorsey predicts: “Bitcoin will replace the dollar”

* The “oracles” for Bitcoin: Is the biggest “bubble” of all time popping or a new rally?

* Bitcoin could pull Turkey out of the monetary crisis