Nov 21, 2023

If Your Money Needs Permission to Be Spent, It's Not Money; It's a Social Credit Score System

In a world of CBDCs Bitcoin is the solution to preserve individual privacy and financial freedom

If Your Money Needs Permission to Be Spent, It's Not Money; It's a Social Credit Score System

The recent announcement of the FedNow Service, a new instant payment infrastructure developed by the Federal Reserve, has reignited discussions about the future of Central Bank Digital Currencies (CBDCs) in the West. The potential rise of CBDCs has sparked concerns that they will lead to social credit score systems in the West. With worries about privacy, control, manipulation, and financial exclusion, many voices are pushing back against the idea of CBDCs. In this piece I'll explore the issues surrounding CBDCs, the potential threat they pose, and consider Bitcoin as an important solution to preserve individual privacy and financial freedom.

The Concerns Over CBDCs

CBDCs are digital currencies issued by central banks, intended to function as a digital form of national currency. Their adoption would lead to increased data collection and surveillance, enabling the potential for social credit score systems to emerge. 

Many policy analysts, industry representatives, and government officials themselves have voiced their concerns about CBDCs. Federal Reserve Chair Jerome Powell expressed concerns about government visibility into real-time money transfers, stating, "We would not want a world in which the government sees, in real time, every money transfer that anyone makes with a CBDC."

CBDCs enable central banks to track and monitor every transaction, potentially giving governments access to vast amounts of data on individuals' spending habits, social connections, and other personal information.

Governments could use the extensive data collected through CBDCs to control and manipulate citizens' behavior, similar to how the Chinese Social Credit System functions. This might involve the implementation of scoring mechanisms and rewards or penalties based on citizens' adherence to certain criteria; and as governments and central banks gain access to more data through CBDCs, the scope of their use could expand beyond financial transactions. 

"Quite simply, even if such surveillance is not included in the [initial] design, it would be trivial to add it at a later stage. Once a door to surveillance is opened, it is virtually impossible to close." - Natalie Smolenski

Bitcoin as a Solution

In light of these concerns, Bitcoin emerges as an essential alternative. As a decentralized digital currency, Bitcoin offers users financial autonomy, privacy, and a means of exchange free from government control. Bitcoin's underlying technology, blockchain, ensures that transactions are secure, transparent, and not subject to manipulation.

What makes Bitcoin different?

Decentralized and permissionless: Unlike CBDCs, Bitcoin operates on a decentralized network without the need for a central authority. This means that transactions can be made without permission or oversight, preserving individual autonomy and privacy.

Limited supply and censorship-resistant: Bitcoin's limited supply and censorship-resistant nature ensure that it retains value and cannot be manipulated or controlled by governments or other entities. This makes it a more secure store of value and a medium of exchange that's both inflation resistant, and unable to be manipulated into an effective social credit score system.

Pseudonymous transactions: While not entirely anonymous, Bitcoin transactions are pseudonymous, allowing users to maintain a certain level of privacy while still benefiting from the convenience and efficiency of digital currencies.

The idea of money becoming intertwined with social credit systems, especially with the rise of CBDCs in the West, is a concerning prospect that could undermine individual autonomy and privacy. By embracing Bitcoin and other privacy-focused solutions, we can ensure that money remains a tool for economic freedom and not a weapon for manipulation and control.