• Japan is preparing to roll out a digital yen as the first phase of its central bank digital currency (CBDC).
• CBDCs will be different from cryptocurrencies, but they will give central banks greater control over their economies.
• If implemented incorrectly, CBDCs can be used to create a social credit system where citizens are rewarded and punished for certain behaviors.
BoJ’s Digital Yen
The Bank of Japan is ready to deploy its first phase of the central bank digital currency (CBDC), which will be called the digital yen. This rollout is planned for April 2021 and is being referred to as an „experimental“ phase. The aim of this pilot program is twofold: firstly, to test the technical feasibility of the project; and secondly, to utilise private businesses‘ expertise in terms of technology and operations for designing a CBDC ecosystem in case it needs to be socially implemented.
Characteristics of CBDCs
Central banks around the world are developing their own versions of CBDCs, which have some distinct characteristics compared with traditional cryptocurrencies. These include being backed by government fiat currencies, giving central banks more control over their economies, and potentially providing safer options than other digital currencies. However, if these currencies are not implemented correctly or are abused by authorities, they could be used as a form of social credit system that rewards or punishes citizens based on their behaviour.
Potential Downsides
The potential downsides of such a system should not be overlooked either. Shutting someone off from their money could become as easy as flipping a switch if these currencies are misused by governments or authorities for political purposes. It has been seen in recent instances such as Canada’s trucker protest where citizens‘ accounts were frozen even after donating money towards the cause.
Bitcoin Necessary For Options
As more countries move towards implementing their own versions of CBDCs, it becomes increasingly important for people to have options when it comes to managing their finances – this is where Bitcoin can come into play. It provides people with an alternative means through which they can store value securely without relying on government-backed entities or being subject to any form of censorship or surveillance from authorities.
Conclusion
Overall, while there may be benefits associated with implementing Central Bank Digital Currencies (CBDCs) in certain nations around the world – providing increased safety and greater control over national economies – potential risks should also not be overlooked. Without having alternative solutions like Bitcoin available for citizens who do not wish to partake in such systems due to fears about privacy rights or freedom from state interference – then these ‘benefits’ may end up doing more harm than good in reality.