Amnon Samid, CEO of BitMint, an AI-Powered Cyber-Innovation Hub, tackles current cryptography-based digital currencies, that cannot serve as a means of better financial fairness and inclusion.
Thus, they are risking national financial systems and overriding digitalisation over users’ privacy, and may not ensure smooth deployment and operation, which will hamper their widespread adoption, whether they are CBDCs or stablecoins issued by the private sector.
Amnon highlights that a well-designed quantum-based digital currency, based on demonstrated protocols, that are being ignored by most central banks, can foster innovation, convenience, security, and privacy without compromise, enabling personalised experiences, as well as regaining bilateral private payment, that was robbed by all payment rails, except cash, while granting users control on their privacy, data, and money, without being an enabler for illicit activities.
Happy New Year! We hope you had a relaxing festive time and didn’t forget to read some of our CBDC series articles. The last in line in 2023 was from David Birch on the digital sterling.
Today we continue with an insightful article from Amnon Samid, CEO of BitMint.
Key takeaways
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This article is an introduction to a proper description of the digital currencies evolution and demonstrates how almost everyone would enjoy digital currencies, if well designed, from citizens to businesses, merchants, retailers, institutions, communities, and States.
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We are facing a lot of misconceptions regarding digital currency, from misunderstanding the difference between digital payment and digital money to the wrong assumption that the creation of digital currency should be based on classic cryptography and that technology cannot guarantee cash-like privacy.
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The biggest challenge for us today is to let the world gain an understanding of the disruptive use cases that a well-designed digital currency can offer, not being lured by inferior solutions of influential technology vendors, that cannot fulfil peoples’ wish-list and cause a negative sentiment and scepticism.
A new financial language is required
A common misconception of many is that digital currencies exist already, while not realising the difference between digital payments and digital money. Central Bank Digital Currencies (CBDCs), stablecoins, and asset tokenisation are all expressions of a new financial alphabet. This financial language cures a fundamental deficiency experienced by money when most of it became computer-handled. Money then lost its identity, which was there when money was physical, and it shrunk to be a number only. The new financial language restores identity to digital coins and thereby puts them at par with physical coins as to the inherent advantages held by banknotes and metal coins while offering cyber-unique advantages for being subject to cryptographic processing. Banks, merchants, and private phones will all hold money in dedicated cash registers offering clarity, security, and accountability.
Who is responsible for the sceptic sentiment toward CBDC?
Financial Times argues that ‘CBDCs still have not found their raison d’être’ and The Economist writes that CBDCs ‘create new problems while solving few’. In the Wall Street Journal, we read that Surveillance Risks Shape How Central Banks Test Digital Currencies, arguing that the race to explore new payment systems highlights trade-offs between performance, privacy, and security. Apart from questioning the necessity and unresolved security issues and potential intrusions, the race to explore CBDC highlights fear of government control, identification, and access.
These misconceptions regarding the benefits that a properly designed digital currency can bring to individuals and society, stem from the preference of central banks, to examine only inferior concepts, promoted by major technical vendors, which are conceptually similar to currencies created by cryptography, and which are limited in functionality, in the ability to provide privacy, while introducing new threats to the national financial systems.
China is the only country that developed its inhouse capabilities to introduce a full-fledged CBDC, following five years of the learning process from major experts, including building and testing the first ever retail CBDC that passed banking stress tests, based on an Israeli technology provider, before any other central bank starts a serious exploration process.
Most countries rely on major four or five CBDC solution providers as well as one huge consulting firm and various regional providers, that are playing a significant role in shaping the CBDC concepts, that does NOT provide real…
Read More: Gaining trust for self-referential CBDC (practical solutions)