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Can Bitcoin Win Against CBDCs?


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This article was originally published by Ayelen Osorio on Substack

“CBDCs are just one symptom of a broader problem that I see as the growth of the surveillance state.”
–Natalie Smolenski

By now, you probably know that bitcoin is a digital currency that can be sent across the internet to another person without needing a bank. But there’s another form of digital currency that is quickly being developed that you may be less familiar with — central bank digital currencies, or CBDCs for short. These are essentially the digital version of a fiat currency (like the U.S. dollar)

While bitcoin and CBDCs are both digital money, that’s about where their similarities end. Let’s explore the difference between the two, in the context of the traditional financial system, to understand each of their intricacies. 

The Difference Between Bitcoin and CBDCs

Monetary Supply 

A central bank controls the supply of its nation’s currency and stimulates the economy when necessary to promote growth. Since CBDCs are a digital representation of fiat currencies their monetary supply will be no different — centrally controlled. 

With bitcoin, there is no central bank controlling its monetary supply. New bitcoin is released on a programmatic, predictable schedule. This way, it removes a single decisionmaker from the money printing process, which itself is often associated with driving inflation. 

Another important distinction is that bitcoin has a limited supply of 21 million bitcoin. Bitcoin’s scarcity helps to ensure it retains value in the long term. CBDCs have no limit to their supply. 


As mentioned above, banks are at the centre of every financial task and transaction. CBDCs will retain this centralized operation, where banks decide who and what can be done, including the fees charged for any transactions, and who will be cut off and why.

“The ability to individually target monetary policies is another benefit of CBDCs. They’re fully programmable money meaning that deposits and [spending] can be controlled at the individual level… This actually represents a full merger of fiscal policy, monetary policy, and policing.”

Natalie Smolenski, Executive Director at Texas Bitcoin Foundation and Senior Fellow at Bitcoin Policy Institute

Instead, Bitcoin operates on a decentralized network of user computers. Each contributes to maintaining and operating the system, but none has the power to override the network. Rules are set based on user consensus in an attempt to remove power from a single authority.

Privacy And Monetary Freedom

For most of us, our financial transactions are known to our bank only. CBDCs would likely take this a step further, where all transactions would be recorded on a central monetary record. 

“CBDCs are just one symptom of a broader problem that I see as the growth of the surveillance state.”

Natalie Smolenski

Bitcoiners argue that freedom of speech and monetary independence relies on transactions not being tracked by a central authority that can decide who is good or bad. To them, monetary privacy is important to retaining freedom. That’s why when using bitcoin, they use a wallet address that has no personal information or identifiers attached to it.

It’s Bitcoin’s statelessness and censorship-resistant characteristics that make it a tool for monetary freedom. However, there are still ways to risk privacy within a Bitcoin system.


Upon their creation, CBDCs will be operated and managed by a central authority. Since people (particularly in the West) generally trust the financial system, trust almost certainly represents an advantage for CBDCs. Those who are not well versed in Bitcoin (or take the time to learn about it) will likely place their trust in CBDCs.

“Where we have pilot projects of CBDCs – for example in China, Nigeria, the Bahamas, and Eastern Caribbean – it’s clear people don’t want to use them. They see them [CBDCs] as surveillance coins, as attempts to corral people into the use of fiat currencies that many of them don’t want to use. So, there is a coercive element to the implementation of CBDCs that is not being taken into account at all in these debates at the state level.”

Natalie Smolenski

Until now, it has been hard for many people to imagine a decentralized payment system like Bitcoin. It’s complicated, it’s different, and therefore it’s difficult to trust. (By taking a few minutes a day studying Bitcoin, you’ll soon realize you’re learning about a broad range of topics including money, privacy, security, energy, and human rights.) 

The implementation of CBDCs is happening outside the democratic process and at a time when people don’t yet understand the power and significance of bitcoin. This timing should be alarming.

Overall, both bitcoin and CBDCs represent a digital form of currency. While CBDCs aim to replicate our currency in digital form, bitcoin represents a fundamental change in the financial infrastructure. 

Which Will Win? 

Despite all of its benefits, Bitcoin is yet to become a mainstream monetary system. There are no shortage of articles explaining why this may be the case, citing problems from energy consumption to the risk of losing passphrases. 

But part of the reason why people are hesitant about bitcoin is because of misinformation. Part of it is because we haven’t done a great job at simplifying bitcoin. Part of it is that, as Bitcoiners, we challenge the status quo to such an extent as to come across as conspiracy theorists, which only pushes people farther away. Part of it is because we’re early and this is nascent technology. And a big part of it is that the media/governments taint Bitcoin in an effort to push forward the agenda of a surveilling state. 

So while Bitcoin professes to fundamentally change the nature of our monetary system, it also faces the biggest hurdles to acceptance, mainly because people find the concept of a decentralized system hard to trust. And because they have blind trust in the systems that exist, without realizing that it is slowly falling apart right under their feet. 

It’s hard to say which will come out on top because people have different points of reference for how the world works and what’s right and wrong — and laziness, ego, and herd mentality get in the way. 

I hope it’s bitcoin that wins. Because it doesn’t discriminate or punish. It doesn’t censor based on political or ideological beliefs. It doesn’t create an engine of inequality. It’s fair, global, and private. And, it’s rooting for each human being. 

Whichever does win, and whichever you choose to support when the time comes, do it from a place of education. Know what you’re signing up for, what you’re being asked to sacrifice, and what centralized or decentralized values you stand for. 

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