Let us begin with what CBDCs definitely are not: they are not a new kind of cryptocurrency akin to bitcoin. While central banks have discussed issuing CBDC in the form of a token and using distributed ledger technology (DLT), this does not mean that central banks intend to let people trade and hold it without oversight, let alone that they will not centrally control the overall supply of it. The purpose of DLT and tokenization is purely a question of which technology to use in the imposition and distribution of the digital currency; it does not mean that central banks have adopted any of the ideas behind the rise of bitcoin.

Some central banks may, however, believe that the existence and rising market value of bitcoin and other cryptocurrencies is evidence that there is a demand for digital currency, and that they should therefore step up and supply it. They don’t seem to realize that the demand for bitcoin—as the demand for gold—is demand for something outside the control of central banks and governments.



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