On Wednesday, Australia drew one step closer to potentially establishing a central bank digital currency.

Aka 'CBDCs' (aka government run stablecoins).

How do we say this without coming off as complete alarmists?

...we'll start here:

You know how in Japan, they have vending machines that sell alcohol to anyone with cash on them?

But kids never use them, because in Japan it's just 'not done,' culturally?

In pretty much any other country (Australia, especially), beer dispensing vending machines would be abused, so the option isn't presented.

We feel the same way about central bank digital currencies.

Sure, they're not without their benefits - but the potential for abuse is, ah...rather severe. So why present them as an option?

Let's cover the pros/cons.

Pros:

From a regulatory standpoint, a government approved stablecoin would probably open up a lot of doors for crypto.

(Law makers are going to feel way more comfortable passing crypto friendly legislation, if the government has skin in the game).

Plus, the 'government approved' stamp on CBDCs will no doubt help to comfort/onboard a bunch of new users into the world of crypto.

Cons:

Actually, just 'con' (singular).

There're probably a bunch of downsides that could be listed and detailed, but we're just going to focus on one. The one.

CBDC functionality can be altered on a per user basis.

For example:

Seb's CBDC savings are frozen because he said something the government didn't like.

Or, Chevy can't spend his money on beer because he's starting to look a little chunky.

Which, yes, is an INSANE thing to theorize.

(Our tinfoil hats are almost obscuring our eyes at this point).

...but, just like the idea of beer dispensing vending machines:

Why present the option, when we already have a system that's harder to abuse?

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