The Importance of the Debate on Central Bank Digital Currencies (CBDCs)

We live in an era of rapid and constant technological advancements, and one of these advancements is the creation of Central Bank Digital Currencies (CBDCs). However, it is understandable that there are conspiracy theories surrounding this new concept. After all, as a relatively new and still poorly understood technology, misinformation can easily spread.

Furthermore, the fact that CBDCs are issued by governments and central banks raises concerns about privacy, especially considering the different privacy concepts adopted by different countries, such as China.

In a democratic society, it is natural for people to be skeptical of the government and exercise their right to challenge authorities, especially when it comes to protecting privacy and promoting financial inclusion in an increasingly digital world. However, it is important that this challenge is based on accurate and up-to-date information, also taking into account the existing technology in the hands of the private sector.

It is crucial to understand that most central banks have started exploring CBDCs not only for monetary and financial stability reasons, but also due to concerns about the incentives and capabilities of big tech companies. These companies have the power to lock citizens into a single platform or ecosystem, as well as a proven track record of monetizing personal data.

Interestingly, alongside their commitment to physical cash, central banks have been pursuing CBDCs as a way to protect citizens' privacy. However, paradoxically, they have been criticized for these efforts. The truth is that most central banks see their role as providers of a reliable form of money, free from private incentives, in a digital world, just as they currently do with physical cash.

In an extreme scenario, if central banks took no action, there is a possibility that the physical currency notes we currently carry in our wallets could be replaced by digital currencies issued by big tech companies like Elon Musk or Mark Zuckerberg. Perhaps, in this scenario, conspiracy theorists would lament the end of national currency and wish that the central bank had protected our sovereignty against erosion caused by technology.

Another crucial point concerns wallets and even the DeFi world, as not all people are technically capable of safeguarding their security.

Recently, a whale fell victim to a phishing attack. (It is worth noting that the vast majority of users do not even know what whales are or how phishing attacks work.)

Even with a Ledger or Trezor, most users do not know how to safeguard their security. Therefore, every day we see news about lost private keys or human error in granting permission to a wallet.

That is why security experts advocate for the use of HSM, where the client will never be able to export their private key, and the creation of a proxy using account abstraction to create a protective interface for the user with the DeFi world.

This way, the user has the possibility to leave security in the hands of regulated companies that have years of experience and knowledge in cybersecurity.

Money plays a fundamental role in social structure, and sometimes we underestimate its importance. The way we interact with money is rapidly changing, and it is essential to involve the public in this journey towards digital currency. Now, more than ever, it is crucial to promote a solid and comprehensive public debate on what CBDCs should and should not do, and how we want to define our relationship with centrally issued money in the future.

It is important to remember that CBDCs have the potential to promote financial inclusion, ensure privacy, and protect the sovereignty of nations. Therefore, it is essential for society to actively participate in this debate to ensure that decisions made regarding CBDCs are based on public interests and the well-being of society as a whole.