Is UK’s digital pound ‘Britcoin’ innovation or a darker kind of 1984-esque state control?
No doubt I will be slammed as being ‘alarmist’, branded as ‘sensationalist’, and as ‘serving my own vested interests’.
However, it is important to look at the UK’s recently announced plans for a digital pound – or ‘Britcoin’ – beyond the press releases being presented by the Treasury and the Bank of England.
Last Friday, here in CityAM, we predicted that Britain is to launch its own central bank digital currency (CBDC).
Today, Tuesday, this has been confirmed, with the BBC reporting that, “both institutions want to ensure the public has access to safe money that is easy to use in the digital age”.
Chancellor Jeremy Hunt said of the state-backed currency: “While cash is here to stay, a digital pound issued and backed by the Bank of England could be a new way to pay that’s trusted, accessible and easy to use…that’s why we want to investigate what is possible first, whilst always making sure we protect financial stability.”
A digital pound could have some advantages, including speed of transactions and transparency.
But, in my view, it has a darker side too.
And this darker side is what makes it the opposite of a cryptocurrency, such as Bitcoin.
Although like crypto, the digital pound will run on the blockchain, the same technology on which Bitcoin runs, it is entirely different.
Many major cryptocurrencies are decentralised and not controlled by any one organisation.
However, the UK’s plans for the new ‘Britcoin’ are the complete centralisation of money, with no intermediaries or monetary instruments.
As the state sets the code of this new, programmable form of money, they also give themselves hitherto-unknown oversight and control over where, how and when that money is spent by citizens.
The Economist reported that CBDCs “promise to make finance work better but also to shift power from individuals to the state, alter geopolitics and change how capital is allocated… once ascendant, [they] could become panopticons for the state to control citizens.
This is Orwellian-esque tracking and tracing of your money.
And it could see you rewarded for ‘good’ behaviour and punished for ‘bad’ behaviour.
Theoretically, it could lead to the authorities locking down money on everyday scenarios.
For example, if you make the ‘wrong’ choices about what food and drink you’re buying, how little exercise you’re taking, what car you’re driving, how bad your carbon footprint is, having too much disposable income in your account, which causes or political agendas you support…
A Bank of England Director, Tom Mutton, has said that a CBDC “opens up new technological possibilities, including programming: effectively allowing a party in a transaction, such as the state or an employer, to control how the money is spent by the recipient”.
In effect, because the government of the day creates and controls the programmable currency, they could use your money to create social, political, cultural and economic outcomes that they want. This is straight out of dystopian novel 1984.
It’s not just in Britain where CBDCs are incoming; they are reportedly under development in more than 100 countries globally.
This means that in a matter of years we can be pretty confident that we will have a multi-faceted system of currencies moving forwards. The mix will include fiat, CBDCs, and crypto.
I’m also confident that as programmable, highly-surveilled CBDCs mean less freedom for the individual and more for the all-seeing state, crypto will become increasingly popular.
CBDCs help take away financial independence and autonomy from citizens. And for this, we have decentralised, digital, borderless, global, tamper and censorship-proof, unconfiscatable Bitcoin.