Bitcoin vs. digital fiat is freedom vs. serfdom

Opinion by: Simon Cain, contributor at Bitcoin Policy UK

Most jurisdictions globally are researching, developing or implementing retail central bank digital currencies (CBDCs). If you see these as harmless move-with-the-times digital updates of old-fashioned paper money, look again. CBDCs potentially mean financial serfdom via a monetary panopticon where the authorities closely control every transaction. 

If you think this sounds paranoid, just consider the words of Augustin Carstens, head of the Bank for International Settlements — the central bank for the world’s central banks. Lamenting the authorities’ current inability to control cash transactions, he says that with a CBDC, a “central bank will have absolute control on the rules and regulations that will determine use... also we will have the technology to enforce that.. that makes a huge difference with respect to what cash is.”

How “absolute control” might work

CBDCs could be programmed so you can only buy certain things from certain people, at certain times, within specific dates, or only in approved locations. Their validity could depend on compliance with all government policies (climate, medical, social, and tax). They could be subject to maximum or minimum holding limits. They could be programmed to discourage saving and encourage 'investing' in approved shares and bonds (such as the new EU 'SIU' initiative or in line with UK financial industry lobbying and 'research'). 

Politicians and central bankers may say they do not intend to implement any such controls, but such assurances are worthless. To quote the UK Parliament's own Economic Affairs Committee, "while the Governor of the Bank of England told the committee that he did not see a CBDC as a way to implement monetary policy, the committee noted that his successors may disagree".

Freedom to transact is fundamental to freedom itself. Once you can no longer choose what you do with your money, you're on the road to monetary serfdom. How can you defend yourself? 

Bitcoin fixes more than monetary serfdom 

Bitcoin fights financial subjugation. Because it's the world's most decentralized and censorship-resistant money, Bitcoin held in self-custody cannot be frozen or confiscated, and its transactions cannot be stopped. This isn't theoretical. It has already been proven in countless cases of financial repression all over the world, whether in Russia and Ukraine, Afghanistan and Cuba, or globally by organizations from WikiLeaks in 2011 to the Bitcoin Humanitarian Alliance in 2025. 

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But financial serfdom isn't the only risk with CBDCs. The UK's Economic Affairs Committee also points out that "a centralized CBDC ledger, which would be a critical piece of national infrastructure, could be a target for attack from hostile state and non-state actors." Governments and public entities are always being hacked and leaking data, which they exacerbate by constantly hacking each other. Having your access to money entirely dependent on their competence is a terrible idea. 

Bitcoin fights financial institutional failure. And again, this isn't theoretical — it has also already been proven. When banks fail, or their systems go down, Bitcoin always remains up and running because it is the world's most reliable computer network. For well over a decade, Bitcoin has not been down for even a fraction of a second. 

Bitcoin is ultra-decentralized, and there have been zero successful hacks of the Bitcoin ledger itself during that period, despite its worth being in the trillions of dollars. Public or private, monetary or otherwise, no other large network can come close to this reliability and resistance to physical, virtual or political attack.

Nowhere is immune from digital fiat 

CBDCs look to be coming to the major Western economies. The European Central Bank is set to complete preparations for its 'digital euro' CBDC this year. Americans may now have a presidential order "prohibiting… a CBDC within the jurisdiction of the United States," but stablecoins look set to become government CBDCs disguised in decentralized private-bank clothing, able to perform the same functions. 

The current US administration's enthusiasm for stablecoins is remarkably aligned with the favored CBDC framework of the BIS, "a hybrid model which allows the division of labor between the central bank and private intermediaries." For a peek into this potential stablecoin-as-CBDC world, just look at what being embedded in the US dollar system already means for the world's leading stablecoin. "We follow US laws and regulations when it comes to freezing," says Paolo Ardoino, CEO of Tether, which doesn't even operate inside the United States. "We have on-boarded the FBI and US secret services; we work with the Department of Justice almost daily and the Treasury."

Whether it's called a CBDC or not, you'll likely soon be subjected to some form of digital fiat. But, at present, there's nothing to stop you from accessing some self-sovereign 'outside-the-system' money. As permissionless peer-to-peer digital cash, Bitcoin can defend against monetary serfdom and protect from the failures of financial institutions. And, in its own sly roundabout way, it is the best and only truly decentralized tool for doing so.

Opinion by: Simon Cain, contributor at Bitcoin Policy UK.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.