CBDCs' zero-day event denotes a paradigm shift in economic interactions that could fundamentally alter the landscape of financial transactions, economic exchange, notions of self-custody of money, and privacy.
When I consider cryptocurrencies and their need, role, and purpose as a technology to serve humanity, ultimately, it boils down to a single point.
These are systems under certain assumptions (different for every system) that one can assume are honesty or freedom from a single point of control.
When Central Bank Digital Currencies (CBDCs) finally hit the mainstream, they will shift basic assumptions of money and privacy. This new era could drastically change how financial transactions work, and it’s worth considering alternatives that might keep us out of the clutches of digital control systems.
In the crypto world, there’s always a lot of buzz—trends, hype, and noise. But beneath all that, many people's goal is to prepare for this significant shift.
There will constantly be marketing about updating the world economy, running markets, banks, etc., on decentralized blockchains. Why existing powers would tolerate and voluntarily cede their power to the people is never really discussed. It is generally against the trend of control systems. It seems illogical.
Historically, anyway, control systems grow until they collapse or are changed due to internal or external forces.
Why Cryptocurrencies Matter
Cryptocurrencies are attractive because they provide an alternative to centralized control systems. They aren’t issued or regulated by any central authority, which means they offer some degree of anonymity and resistance to surveillance. However, the effectiveness of this anonymity can vary based on how different cryptocurrencies are structured.
Cryptocurrencies aren’t without their issues — regulatory challenges, price swings, and scaling problems can be significant hurdles. Yet, because they’re decentralized, they’re harder to shut down.
In the end, the outcome of such systems may break down to survivability. Those that can will.
Privacy: The Shield Against Surveillance
Privacy-focused cryptocurrencies are designed to keep transactions anonymous and secure. These coins are crucial for maintaining financial privacy in an increasingly monitored world. They might not be perfect, but they’re a step towards countering pervasive control systems.
The cryptocurrency space's privacy and censorship resistance aspect has the most long-term value as a tool.
Excellent research and development are being done across systems that, even though they often fight, collectively may be the most significant developments in the long term.
Strangely, in all the “seasons” or rotations, privacy has never really been too sexy to the masses. This is a bit funny, given that many call the space “crypto.”
We can call many things a Zoo of digital tokens. But considering long-range threats and crypto's underlying use cases as counter systems, I don’t understand or follow much there.
Post Zero Day- Build for the Future
As a thought experiment, what would be left if that Zero Day change in the backend of digital money occurred today?
Exploring alternatives and strengthening the assumptions and security around such systems could bolster their survival and viability.
Barter Systems: A Classic Alternative
Bartering — trading goods and services directly without money — might make a comeback. While it’s less efficient than modern monetary systems, it could be a helpful alternative if traditional financial systems become overly regulated or disrupted.
Precious Metals and Commodities
Gold, silver, and other physical assets have long been used as stores of value and mediums of exchange. In a world dominated by CBDCs, these assets become more attractive for those looking to protect themselves from economic instability or central control.
- Gold and Silver: These have intrinsic value and a long history as money.
- Other Commodities: Items like oil, agricultural products, or rare minerals might also serve as valuable assets or exchange mediums.
Local and Community Currencies
Local and community currencies are a way to sidestep central control. These systems work within specific areas or communities and can help build economic resilience without relying on national or central banks.
- Local Exchange Trading Systems (LETS): These are community-based networks where people trade goods and services using a local currency or credit system.
- Time Banks: In these systems, people earn credits by providing services and spend those credits within the community.
These kinds of community-driven networks are powerful. They tap into local trust and connections, which are the backbone of human support systems. A tight-knit community or “tribe” for support and collaboration is a solid alternative to centralized systems.
Decentralized Finance (DeFi) Platforms
DeFi platforms use blockchain technology to offer financial services without traditional intermediaries. These include:
- Decentralized Exchanges (DEXs): Platforms enabling peer-to-peer trading of value globally without central authorities.
- Decentralized Lending Platforms: Services letting peers connect and lend and borrow assets directly with peers.
Innovative Payment Systems
New payment systems that don’t rely on traditional banks could also emerge. For instance:
- Digital Gold or Commodity-backed Tokens: Tokens tied to physical gold or other commodities could offer a stable store of value.
- Cross-Border Payment Solutions: Blockchain-based platforms that handle international transactions without traditional banks.
In a world where digital control systems are expanding, these alternatives offer various ways to maintain financial freedom and privacy.
I often have said, "Build for war."
It is a fair assumption that control systems will try to consolidate and destroy alternatives. The introduction of new control systems and the strength and resilience of other options may dictate much in the next few decades.
Economic freedom, privacy, self-custody, and sovereignty assumptions are worth preserving, but they will most likely face new challenges.
There is a lot of noise, hype, trends, etc, in the cryptocurrency space. But that, to me, is what success looks like for the space as a whole.
