The endgame for a fairer financial system

• Bitcoin’s attractiveness as a financial revolution remains undisputed.
• Central banks are fighting the impending revolution through CBDCs.

Bitcoin is often hailed as one of the most innovative developments in the financial industry since the dawn of the Internet. Its decentralized nature, which allows transactions to take place without the need for intermediaries, has ushered in a new era of financial independence and autonomy for individuals and businesses worldwide.

In accordance reports, Bitcoin has performed quite well since the beginning of 2023 compared to all other asset classes. By holding Bitcoin over a period of time, a person can potentially benefit from the cryptocurrency’s price appreciation. Additionally, because there is a finite amount of Bitcoin, its value can rise over time as demand increases.

In the long term, individuals can achieve financial freedom by using the self-sufficiency method. By using this method, individuals can fully control their money and reduce the possibility of theft or fraud.

However, it also requires a significant level of responsibility and diligence to ensure that investments are stored securely and managed effectively. Against this background, some blockchain protocols such as AllianceBlock has developed secured wallets to help users secure their Bitcoin holdings.

Furthermore, individuals can also achieve financial freedom through Bitcoin investments using the Dollar Cost Averaging (DCA) technique. This method involves buying a fixed amount of Bitcoin at regular intervals, regardless of the current market price. Interestingly, El Salvador used this strategy in 2021 following the decision to legalize Bitcoin as legal tender.

Bitcoin Pushback, The Case for Government CBDC Emergence

Although the use of Bitcoin has many advantages, governments are increasingly concerned about the potential threat that the decentralized crypto innovation poses to their sovereignty.

In an effort to prevent a complete takeover, central banks are now pushing for their own national stablecoins or Central Bank Digital Currencies (CBDCs). Countries that China has advanced testing and trials of the innovation with PNB Paribas which recently partnered with Bank of China to launch a digital yuan wallet to support corporate customers for both offline and online payments.

Because Bitcoin is decentralized, it operates outside the oversight of any government, making it difficult for governments to monitor and regulate its use, thus giving CBDCs better leverage across the board.

Over the years, this lack of control has raised concerns among policymakers that Bitcoin could be used for illegal activities such as money laundering, tax evasion, and terrorist financing.

Besides China, countries like Australiaand the UAE, among others, are also attempting to protect their sovereignty in the face of the Bitcoin revolution by creating their own Digital Bank Currencies (CBDCs). CBDCs, unlike Bitcoin, are centralized and issued by governments, making it easier to regulate and keep an eye on them.

In particular, CBDCs can also be designed to support government policies such as monetary stimulus, making them a more attractive option for policymakers and banks such as BNP Paribas lending support.

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