The Case For Bitcoin Becomes "Significantly Stronger" - deVere Group
- Written by: Sam Coventry
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With the US government's work on a potential digital dollar accelerating, meaning a digital greenback could soon be a reality in the US, the case for Bitcoin becomes "significantly stronger."
This assessment is from Nigel Green, CEO and founder of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organisations.
Green's comments come after Nellie Liang, the U.S. Treasury Department's undersecretary for domestic finance, said the federal government will start meetings in the "coming months" on a Central Bank Digital Currency (CBDC).
Speaking last week in a speech for the Atlantic Council, Liang said that US officials are "actively evaluating whether a CBDC is in the national interest," and highlighted some of the potential benefits of a Federal Reserve-backed digital currency, noting it "could help preserve the dollar's global role" and possibly reduce frictions in cross-border transactions.
"This is the clearest sign yet that a digital US dollar could soon become a reality, pending Congressional approval," says Green. "With the world’s largest economy now ramping up efforts, the global race to CBDCs is now intensifying."
Green says it is estimated that more than 80% of central banks around the world are considering launching a central bank digital currency or have already done so.
The U.S. is therefore signalling it is now determined not to be left behind and is accelerating the project.
"It seems to have become a critical matter of global leadership, as China is the most economically powerful country to lead CBDC implementation," says Green. "Proponents of CBDCs say digital payments can be processed faster than traditional cash or check payments, reducing transaction times and increasing the speed of commerce."
deVere Group thinks transaction costs could be cheaper to process than traditional cash or check payments, potentially reducing costs for businesses and consumers.
Furthermore, a digital system could provide greater access to financial services for people who may not have access to traditional banking services.
"Whilst CBDCs might have many advantages, including convenience, efficiency and transparency, what they do not have is privacy," says Green. "In effect, the digital dollar is Big Brother-style surveillance technology."
He warns that state-backed, programmable digital currencies will provide governments with greater oversight of citizens’ transactions in real-time, potentially leading to the collection of sensitive personal information.
The data could include information about individuals' spending habits, income, and other financial activities, raising concerns about the potential for government abuse of this information, such as the use of financial data to monitor and control individuals' behaviour.
"It’s an extra lever of control that they’ve never had before." But this, says Green, is why Bitcoin and cryptocurrencies, will become increasingly attractive.
“Why? Because they still have all the plusses of being digital, – speed, efficiency and convenience – but they are fundamentally different as they run on an open, immutable blockchain. They are global, decentralized – with no one authority able to control - borderless, tamper-proof and censorship-resistant," he says.
Despite the US Treasury appearing to prepare for the launch of a digital dollar, there are a growing number of voices in opposition.
Representative Tom Emmer has introduced legislation in the House of Representatives that could limit the Federal Reserve from issuing a central bank digital currency, or CBDC.
Last month, Emmer affirmed that he had introduced the “CBDC Anti-Surveillance State Act” in order to protect Americans’ right to financial privacy.
According to the lawmaker, the bill would prevent the Fed from issuing a digital dollar “directly to anyone,” bar the central bank from implementing monetary policy based on a CBDC, and require transparency for initiatives related to a digital dollar.
"Any digital version of the dollar must uphold our American values of privacy, individual sovereignty, and free market competitiveness,” he said. “Anything less opens the door to the development of a dangerous surveillance tool."
"The US joining the CBDC race more fully underscores that digital is inevitably the future of money. It’s increasingly clear that in the not-too-distant future, we will have a multi-faceted system of currencies, including fiat, CBDCs, and crypto Whilst there are pros and cons to all, for many people programmable, trackable CBDCs will be unattractive due to the privacy and government monitoring concerns. What’s urgently needed is sensible, informed public conversation," says Green.