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Central Bank Digital Currencies are a threat to liberty.

Nathan Day

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Who am I?

  • Nathan Day
  • Long-suffering friend of Mike
  • IT Consultant by trade - currently working in railway digitalisation
  • Tech entrepreneur, investor & advisor
  • Lapsed Lib Dem member
  • Bitcoiner

btcmap.org

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CBDCs are great!

Rishi Sunak, Prime Minister, United Kingdom

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CBDCs are great?

Agustin Carstens, General Manager, Bank for International Settlements

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Liberty?

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What is a CBDC?

Central Bank

Digital

Currency

Digital Currency

Cryptocurrency

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What is Money?

  • An agreed method of exchanging value
  • Solves the ‘coincidence of wants’ problem
  • Types of money
    • Rock, Shells, Salt
    • Silver, Gold
    • Fiat (USD, GBP, etc.) - physical and digital
    • Bitcoin
  • Money as a technology

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What do Central Banks do?

  • Control of the money supply
    • Inflationary - increase no. of units in circulation
    • Deflationary - decrease no. of units in circulation
  • Control the cost of capital
    • Interest rates
  • These are extremely crude controls
  • Facilitate fractional reserve banking
    • Licence commercial banks to create new monetary units
    • Usually on a very low reserve (1-5%)

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M2 Money Supply

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Debt

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Purchasing power

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What is Digital?

  • Unintuitive as it’s non-tangible
  • Marginal cost of digital copies is almost zero
    • Video games
    • Music
  • Digital scarcity is difficult to achieve
  • Scarcity has historically been a good property of money

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Privacy as a Right

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Privacy in the Digital Age

Eric Hughes, A Cypherpunks Manifesto, March 9, 1993.

Privacy is necessary for an open society in the electronic age. Privacy is not secrecy. A private matter is something one doesn't want the whole world to know, but a secret matter is something one doesn't want anybody to know. Privacy is the power to selectively reveal oneself to the world.”

Privacy in an open society also requires cryptography. If I say something, I want it heard only by those for whom I intend it. If the content of my speech is available to the world, I have no privacy. To encrypt is to indicate the desire for privacy, and to encrypt with weak cryptography is to indicate not too much desire for privacy. Furthermore, to reveal one's identity with assurance when the default is anonymity requires the cryptographic signature.

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Surveillance Capitalism

(not an actual quote!)

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Digital Money

  • We have digital currencies today:
    • Fiat over Visa/Mastercard/ApplePay/Google Pay
    • V-Bucks and Robuxs in online gaming
  • Asset issuer vs. asset transferer
  • All are simply numbers on a centralised ledger / database
  • These currencies require you to:
    • Trust the issuer - i.e. you won’t be de-based / diluted through ongoing issuance
    • Trust the custodian/transferrer - i.e. you won’t be stolen from and/or spied upon

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Money as a Technology

Nature’s ledger (gold) has robust parameters for supply and debasement but doesn’t move and get verified fast enough in the telecommunications age.

Mankind’s ledger (the dollar) moves and gets verified fast enough but doesn’t have robust parameters for supply and debasement.

The only way to fix this speed gap in the long run would be to develop a way for a widely accepted, scarce, monetary bearer asset itself to also be able to settle over long distances at the speed of light.

Lyn Alden

Lyn Alden Investment Strategy

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CBDC Properties

  • Linked to your identity - ID card by another name
  • Programmable money controlled by the Government
  • Enables fine grained control of monetary and fiscal policy:
    • Money can expire
    • Spending and transfer restrictions (geo, ideological, “for your safety”)
    • Automation (taxes, fines, etc.)

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The Unbanked and Identity

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CBDC Implementation Status

https://cbdctracker.org

https://cbdctracker.hrf.org

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Current HMG CDBC Position

On the basis of our work to date, the Bank of England and HM Treasury judge that it is likely a digital pound will be needed in the future. It is too early to commit to build the infrastructure for one, but we are convinced that further preparatory work is justified.

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A solution in search of a problem?

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A solution in search of a problem?

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HMG Digital Pound Roadmap

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What is Cryptocurrency?

  • Digital asset issued on a blockchain utilising cryptography.
  • Usually issued by a non-governmental organisation.
  • CBDCs are not cryptocurrencies, they are digital currencies.
  • There are now thousands of cryptocurrencies.
  • They are not decentralised and require trust.
  • These are unregistered securities that pass the Howie Test.

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Bitcoin, not ‘crypto’

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What is Bitcoin?

  • Open Source money since 2009.
  • Is a digital commodity, not a security.
  • Has no issuer and is not controlled by single entity.
  • Has a trustless model and incentive structure.
  • Has a fixed supply and known issuance schedule.
  • Has tangible links to the real-word as it requires energy to create.

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Bitcoin Prehistory

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How does Bitcoin work?

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