It is no longer news that governments are seeking ways to regulate the finances of people through the use of central bank digital currencies. However, there has been a longstanding debate about how CBDCs will affect user autonomy and freedom. Several critics question why institutional leaders decided against adopting already existing options.
Brief History of Government Regulation
From time immemorial, the leaders have always sought one thing – control. To enforce these regulations, rulers set up various institutions that will oversee different aspects of society. This ranges from health and education to finance and migration.
In itself, having control over citizens or subjects is not a terrible thing. These ordinances are originally aimed at helping the government to properly serve its citizens. For example, knowing the number of people living or working in a specific region can guide the administrators on the proper infrastructure they need to provide. This principle applied to several other public goods.
However, these administrators have abused the power given to them by the people. There are countless instances of regional, national, and national governments abusing their authority. With digitalization becoming a trend in recent years, it is very easy for the authorities to become dictators. It is such that people do not know how much they are being controlled until the government “comes for them”.
A very recent example is the UK government asking people to file tax returns on their cryptocurrency investments. While this is a great initiative for funding public infrastructure, It has a major flaw of not being comprehensive. The issue is that the government does not fully understand cryptocurrencies. Therefore, they did not incorporate clauses users can use to get tax receipts when they lose money from investing in blockchain tokens.
There are several other cases of democratic leaders acting like dictators in regulating the actions of people. This has caused people to seek alternative measures that remove that unbounded level of control over people. After all, limitless power leads to abuse. With the era of CBDCs seems to be dawning, there are questions about its impact on user autonomy.
CBDCs and The Dilemma of User Autonomy
As mentioned earlier, the UK government introduced certain crypto laws in 2023. Since 2014, the SEC has been gradually enforcing various legal actions regarding the ownership and usage of blockchain-based assets. In 2022, President Biden directed that the OSTP work towards creating a digital dollar. While it may be held on a blockchain, there are questions about the freedom of people to use it as they please.
The Nigerian E-Naira is a very good example of why critics believe that CBDCs are fronts for governments to implement digital dictatorship. There have been several cases of leaders acting with impunity by using digital information at their disposal. For example, the Nigerian government froze the accounts of individuals protesting against brutality. The #EndSARS protest metamorphosed into the ban on cryptocurrency, with the government claiming that these individuals were receiving donations through crypto.
A recent example is the UK government getting private user information from online marketplaces about people who “flip” items. These details are compiled in a CRM and matched against the corresponding people. The aim is to get anyone with a “side hustle” to pay tax. Failure to do so will result in a notice from the government. While it is important to pay taxes, no one knows how these flippers can file tax returns when they incur losses while doing business.
The most worrying aspect of CBDCs and their impact on user autonomy goes beyond unrestricted access to information. Many critics fear that these central bank digital currencies can give governments leeway in indiscriminately freezing accounts of people. Unlike the current day, the government will not need to authorize or demand that banks block people’s access to their funds.
The Capacity of Governments to Launch and Sustain CBDCs
There is more to the delay in launching CBDCs than just ensuring user autonomy. Despite the calls for a central bank to control digital currency, it is becoming obvious that most countries cannot afford to bring their ideas to fruition.
The United States is not the first to contemplate this type of project. Kazakhstan, Thailand, China, Hong Kong, the UAE, Australia, Singapore, Malaysia, and South Africa are all working towards creating digital versions of their native currencies. Even Nigeria has launched the E-Naira, which is already in use (even though no one really uses it). The reason is that it is simply the same as transferring money to and from your regular bank account.
CBDCs are not cash funds that can be printed or indiscriminately. First, they have to be stored on the blockchain to ensure transparency (which most governments avoid). This leaves the option of either building a decentralized network from scratch or working with existing options. Most states would rather build a new and closed blockchain instead of working with the currently available ones. This choice will cost money that the authorities cannot afford or do not intend to spend.
Besides the cost, it takes a lot to build and sustain a decentralized network. The entire idea becomes worse when you factor in their unwillingness to learn about decentralized technology. Therefore, it is unsurprising that various leaders are simply just outsourcing the entire process to one agency or the other. Since they neither understand nor believe in it, state institutions have a difficult time developing and implementing proper frameworks.
Should they be able to pull it off, these establishments will most likely struggle with adoption. They may resort to the use of “legal force”, but that is another discussion entirely. The verdict will come if they can pull off the move.
CBDCs and User Autonomy – Stable Coins Alternatives
With the era of CBDCs seems to be dawning, there are questions about its impact on user autonomy. Considering these antecedents, it is almost certain that CBDCs will be used to prevent user autonomy among crypto users and traders. It is also not out of the question to assume that governments will use these digital assets to monitor people’s finances. There have been reports of the authorities keeping surveillance by working with private firms.
With the introduction of CBDCs, the administrators will not need private institutions to get restricted access to people’s private information. With the examples listed above, it is understandable why many people are against the idea of government-controlled digital assets.
On their own part, national leaders can restore faith in people by adopting stablecoins as alternatives to central bank digital currencies. There are several cryptocurrencies that represent most of the major fiat currencies of most countries. Instead of trying to create their own assets, the state leaders should regulate existing options. Proper regulation of stablecoins would have protected users from the Terra USD Crash.
The authorities can ensure that only companies with the proper assets to back their stablecoin can issue that type of cryptocurrency. Governments can also introduce policies to prevent these businesses from engaging in practices that put people at risk. A good example is the executive order by President Biden.
How tectum SoftNote Bills Ensure user Autonomy in the CBDC Era
The introduction of CBDCs hints at the intention of the government towards user autonomy. It is even more ridiculous that the authorities initiate policies towards concepts they have limited knowledge about. Considering these factors, it is essential that individuals take conscious steps to protect their interests. Luckily, Tectum SoftNote is here to help people maintain their privacy in an era of digital dictatorship.
Tectum SoftNote Bills enable users to transact anonymously, and no one can access their private information. The zero-knowledge proof system is so secure that not even Tectum employees have access to your information. Therefore, not even the government can access personal details like who owns which wallet and how much they have in their portfolio.
In addition, SoftNote is not tied to any institution and is available to every part of the world. This allows Tectum Merchants can sell their products and services to customers from anywhere in the world.
The best part about using Tectum SoftNote Bills is that people retain ownership of their tokens ALL THE TIME. It is not a case of depositing your assets to a pool and requesting permission to access it. Owners of SoftNote Wallet can always send, receive, and spend their crypto as they choose. No one can stop or restrict how people will use their money.