The Central Bank of Kenya (CBK) has mulled about launching a digital form of the Kenya shilling for a few weeks now.
On Tuesday, Patrick Njoroge, the Governor of the Central Bank of Kenya will be on NTV to speak about that.
For over 20 years now, governments of the world have moved to restrict the civil liberties of their citizens. Most have used tragic events with questionable origins to trash the constitution and give law enforcement more powers to step uponthe integrity and privacy of citizens.
In the ‘tragic event’ scenarios, countries such as the USA used the Patriot Act to ‘legalise’ spying of private citizens, diminish individual rights under the guise of fighting terrorism.
In the other softer ways, and it depends on where one stands, the COVID-19 pandemic provided all governments leeway to trash individual liberties to freedom of speech, rights to access to information and the right to good healthcare.
20 years is a lot for anyone to remember anything and as time went on, being bombarded with half-truths and lies, the government maintained a stranglehold on their citizens.
This brings me to what CBDC is and why it is being implemented.
In 2008, the world experienced an economic downturn, most companies that were previously thought to be very stable collapsed under the weight of the global economic meltdown.
Most of the chaos was blamed on one man, a Ponzi schemer of great repute known as Bernie Madoff. Wall Street had a role to play in it and some big banks too.
Banks went out of their way to offer subprime mortgages because they made so much money from the derivatives, rather than the loans themselves hence leading to collapse.
In layman’s terms, banks made risky loans and then created mortgage-backed securities from the assets they held.
In 2009, a pseudonymous person by the name of Satoshi Nakamoto wanted to end all these schemes, he decided that the world shouldn’t be taken for a ride ever again. He created Bitcoin and launched it in March of the same year.
Before 1913, central bank money was backed by gold, but as time went on, the pressure on Gold as a backing for the money that is to be printed run out. By 1971 the US government removed the World’s reserve currency, that is US dollar from being backed by gold. From then on it was a roller coaster ride down. Inflation would skyrocket and the schemes that led to the meltdown in 2008 has origins in that fiat money is backed by nothing more than government decree or if you are a bit rough, ‘backed by air.
Just six weeks after the September 11 attacks, a panicked Congress passed the “USA/Patriot Act,” an overnight revision of the nation’s surveillance laws that vastly expanded the government’s authority to spy on its own citizens, while simultaneously reducing checks and balances on those powers like judicial oversight, public accountability, and the ability to challenge government searches in court. Most of the changes to surveillance law made by the Patriot Act were part of a longstanding law enforcement wish list that had been previously rejected by Congress, in some cases repeatedly. Congress reversed course because it was bullied into it by the Bush Administration in the frightening weeks after the September 11 attack.
The American Civil Liberties Union (ACLU)
Money that is created out of thin air will be printed without following the due processes.
Between 2020 and now, the US government has printed 80 per ent of dollars in circulation, leading to never-seen-before inflation.
The Russia-Ukraine war is a decoy for all governments to explain away why their economies have failed to protect consumers from high commodities prices.
We are not far away from hyperinflation in the USA. Tough times are coming to the rest of the world too.
If tough times come, citizens will become more restless and government officials will be in danger of being physically attacked.
Back to Bitcoin, the weakest link in the fiat money is the centrality of it, where the central banks will have a say. They can print money, they can freeze money, they can also seize the money. This is sometimes done without good reasons, but words such as terrorist, dissident might be thrown here or there.
So Bitcoin, as created, came to solve the issue of lack of transparency, integrity and also put a cap on money. Inflation creates poverty because as your saving in fiat sits in the bank, its value decreases over time.
As for Bitcoin, which enjoys the technology of cryptography and only 21 million coins will ever be mined through a complex solution of mathematical problems, Bitcoins become deflationary.
Unlike fiat, this particular cryptocurrency can’t be manipulated to the same extent by changing interest rates and increased money printing. Most importantly, Bitcoin’s supply will never exceed 21 million which makes it an attractive store of value that is resistant to inflation.
To fight back and appear to do something about the ills of cash and fiat in general, Central Banks of the world (Federal Reserve of USA sign-ups) created Central Bank Digital Currency (CBDCs).
Well CBDS doesn’t have and will not have the same immutable qualities of Bitcoin cryptocurrency.
Differences between Bitcoin and CBDCs
CBDCs will still be centralised and prone to manipulation.
CBDCs will still be frozen if the government labels you a terrorist or a dissident. This still makes it a tool for control and an effective one at that; in that cash will surely be banned in about 10 years and the only way to transact will be through Central Bank issued digital currency carried on plastic cards with a person’s information, cars keys or inscribed in someone’s body part.
This article is an opinion piece that started with the issues of privacy and freedom.
CBDCs will be centrally issued and controlled, this will worsen the current issues about privacy and freedoms of the individual.
CBDC is not good for the general greater good. The larger scheme of things has always been that the government wants easy tracking of all, everywhere, anytime and it all starts with a welfare state, where a series of unfortunate events, such as Covid-19, have made more and more people dependant on the government for handouts.
In the USA, the government gave a section of the citizens a stipend of Sh200,000 per household. On Monday, the Biden Administration announced that all individuals earning less than $300k (Sh4 million) will be eligible for biweekly $500 (Sh60k) stimulus checks.
Fiat money is being printed at a very crazy rate in the USA. Hyperinflation is coming.
On 21st June 2021, The Telegraph, UK’s leading news site carried the following opening lines to its story about CBDC, ‘The Bank of England has called on ministers to decide whether a central bank digital currency should be “programmable”, ultimately giving the issuer control over how it is spent by the recipient. Tom Mutton, a director at the Bank of England, said during a conference on Monday that programming could become a key feature of any future central bank digital currency…”
Ultimately, in an attempt to fix the world, Satoshi Nakamoto never entertained the idea of cryptocurrency exchanges or the Bitcoin lightning network which have so far watered down, albeit a little bit, the Bitcoin ideals of distributed power, networked integrity, indisputable value, and stakeholder rights that include PRIVACY, SECURITY, FREEDOM and OWNERSHIP.
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