What are Central Bank Digital Currencies (CBDCs)?
CBDCs are digital representations of a country's currency that are issued and backed by the central bank. They aim to provide the same value and functionality as physical cash, but in a digital format.
The Advantages of CBDCs
Increased financial inclusion: CBDCs have the potential to make it easier for people without access to traditional banking services to participate in the digital economy.
Improved Efficiency and Transparency: They can make transactions faster and more secure by eliminating intermediaries such as banks and credit card companies.
The Drawbacks of CBDCs
Reduced Privacy and Freedom: Governments will have more oversight and control over the economy, which could lead to limitations on how you can use your money and a lower level of privacy and freedom compared to physical cash.
Limitations on Use: CBDCs can also have limitations on where they can be sent or the amount you can withdraw. If you had £25,000 in your bank, you may not be able to withdraw it all in one go!
Loss of Tangibility: Being digital, CBDCs lack the tangibility and emotional value of physical cash.This means it could be the end of paper money!
Programmable Money: CBDCs also represent "programmable money" as they can be easily embedded with smart contracts, which could give the government the ability to include new functionality and restrictions, as well as trace funds and reduce criminal activities.
Precious Metals as an Alternative: Precious metals however (such as gold and silver) have been used as a store of value for centuries and are not controlled by any government or central authority. They have a long history of retaining value even during times of economic uncertainty or inflation, and they have also been perceived as a hedge against inflation, currency debasement and other uncertainties.
What Does This Mean For You?
The money in your bank is about to be turned into CBDC, this means that you will potentially lose control over a lot of what you can and can't use your money for. This is the opposite with assets such as gold and silver, as they have many uses and are seen as great stores of value they are a good way to store your wealth.
Precious metals are also being brought into the modern day through the use of new technologies, you are now able to do anything that you can do with normal money, with Gold, for example...
5 key takeaways...
1. CBDCs are digital versions of a country's currency
2. CBDCs have the potential to change the way money works, for good.
3. They will allow governments more control over YOUR money.
4. Precious metals are becoming more and more like traditional money.
5. Gold is a great alternative to digital money, and gives you total freedom over your wealth.