If central banks issue their own digital currencies, then it would destroy cryptocurrencies like Bitcoin, wrote Nouriel “Dr. Doom” Roubini in his latest column.
The article, titled “Why central bank digital currencies could destroy crypto,” saw the American economist building up his rants against the cryptocurrency space.
He had earlier called Bitcoin “a mother of all scams” in his testimony to the U.S. Congress, attracting criticism for his lack of knowledge about how the digital currency’s underlying technology works. This time, Roubini’s target was the crypto’s potential in central bank digital currencies (CBDC), which he expectedly ended up dismissing as “over-hyped.”
Dr. Doom attempted a psychological assault on the crypto community, calling them “crypto-fanatics” who were seizing on policymakers’ decision to launch CBDCs as proof of blockchain adoption.
“This is nonsense,” he frowned. “If anything, CBDCs would likely replace all private digital payment systems, regardless of whether they are connected to traditional bank accounts or crypto-currencies.”
Roubini explained that commercial banks were already holding central bank reserves as digital currencies and that the latter would not need to overhaul an already sound process to replace it with something like blockchain. He added by saying that CBDCs at most would allow individuals, corporations and non-bank financial institutions like payment services to make transactions directly through the central bank – without relying on private banks.
“By allowing an individual to make transactions through the central bank, CBDCs would upend this arrangement, alleviating the need for cash, traditional bank accounts, and even digital payment services,” Roubini added. “Better yet, CBDCs would not have to rely on public “permission-less,” “trustless” distributed ledgers like those underpinning crypto-currencies.”
CBDCs Are Anonymous
In his efforts to troll crypto assets, Roubini went on writing things that – after a certain point – literally stopped making sense.
Without ever explaining his stance, the Bitcoin-hater called cryptos unscalable, expensive, insecure, and centralized. It turned out to be an amusing moment for readers who just saw Roubing coming out in support of centralization, but preferred to criticize crypto assets for – allegedly – possessing the same feature.
Roubini also claimed that people use cryptos because they wish to be anonymous. Then he pitted CBDC as a challenger to crypto’s anonymity, stating that the former could also offer users the same.
“CBDC transactions could also be made anonymous, with access to account-holder information available, when necessary, only to law-enforcement authorities or regulators, as already happens with private banks.”
The comment left many things unanswered. For instance, what is Roubini’s perception of anonymity? Does he believe that having your financial information accessible to certain authorities guarantee anonymity? The economist could be right if his definition of anonymity is capped, but the crypto-sphere continues to believe that hiding not just identity, but also the transactions is real financial anonymity.
Fractional Reserves and Financial Crisis
For an economist whose wild guess about the 2008 financial crisis made him relevant overnight, understanding the true essence of crypto assets would be more difficult.
The fiat market is one of the most significant flawed systems ever, which is unable to read between demand and supply, and has repeatedly crashed the financial systems by manipulation and bad monetary policies. The global reserve system has shifted to one currency whose amount is unlimited and is in the hand of a few cronies.
All form of monopolies have turned corrupt and abusive lately. Roubini is among those who believe one crony should govern the entire financial system. Bitcoin, at the same time, is the first of many steps towards breaking down the financial monarchy and making it more democratic.
But Roubini won’t mention that. He refutes a technology that is just born and is still developing into something crucial – like the internet. Even a Nobel laureate like Warren Buffett was wrong about Google and Amazon tech stocks. All it takes is vision and belief – one at a time.
Let the trolls troll.
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