I find this topic to be extremely political but it’s like it has fallen between the cracks of the political discourse. I could be wrong, of course.
Many countries worldwide are trying to implement some sort of digital ID and digital wallet.
The way this is portrayed by systemic sources is that it is going to be just like our regular ID and wallet. Just better for us.
Even tho the specifics will be different, there are some characteristics that will be standard. Both will be linked and controlled by a centralised entity or a combination of centralised entities (i.e. a government and a central bank).
Meaning, someone else has total control over the content of your wallet, this includes our ID and our digital money (see Central Bank Digital Currency). CBDCs are going to be a by default a 2-tier system retail (for people) and wholesale (for big institutions). And this is why this system will not be like our regular IDs or wallets.
Even tho as mentioned in this article this new approach needs to be adopted by the public, there are ways to force the public to do so. For example it could be required to use this system for tax purposes.
This is already a lot, and in the same time not enough. Some more info on the topic, coming from institutional sources can be found here:
European Union
World Economic Forum
- Reimagining Digital ID
- How universal wallets can help businesses unleash the full potential of digital identity
- CBDCs come in two forms: retail and wholesale. What’s the difference?
Wiki
Every “bad” thing stated here is already happening with fiat.
I don’t think so for several reasons, and please keep in mind that it’s not only about money but it’s in relation to IDs as well.
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Right now our ID cannot be deleted by a bug
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Our ID cannot be deleted on purpose by a government that doesn’t like our activism, for example
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Bank accounts and physical wallets are not the same. A bank account can be frozen for example. One can still live in several places around the world with cash only in their physical wallet. [Edit: Even tho the digital wallet, is portrayed like a common physical wallet, its properties are closer to a bank account, since it will be controlled by a central bank, most probably, or a government. Hope my point is more clear now.]
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In our physical wallet we often keep our ID, and we have control over it. In the digital wallet is where our digital ID will be stored, but a centralised entity will have the ultimate control over it, not us as individuals.
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The 2-tiers system of CBDCs means that for people (not for big institutions) there will be limits on holdings. This gives direct access to a centralised entity to our digital wallet. This can be implemented in many ways. An argument I heard floating around is to prevent the underage people from buying alcohol. This opens the door to unprecedented possibilities of control from the authorities towards individuals, I would say.
From Bank for International Settlements 2024 - BIS
more than half of central banks are considering a retail CBDC that is subject to holding limits
And the above are just a few of the basic differences.
