Privacy Issues Surrounding CBDCs Call for Decentralized Currency

  • CoinDesk CEO Emily Parker told CNBC yesterday that CBDCs raise inappropriate privacy concerns
  • She also noted that there are tremendous innovations in the crypto sector in terms of data protection

In a recent Interview speaking to CNBC, Emily Parker, the managing director of cryptocurrency news agency CoinDesk, bemoaned the potential downsides of a CBDC and advocated a world where users have the ability to hold decentralized currencies. Parker concluded on the basic philosophy of Bitcoin decentralization away from control by centralized entities such as the government, so that no one can manipulate or shut down the network.

User Privacy Concerns

The CEO also told Power Lunch that the definition of centralized currencies makes it clear why a decentralized coin is so urgently needed. Centralized currencies are plagued by privacy concerns, and users would rather not be persecuted by their governments, even if they engage in completely legal activities.

In addition, Parker acknowledged that while Bitcoin is not completely private, it offers a moderately good level of privacy, adding that she expects people to look for private forms of money.

“I think central bank digital currencies are in some ways the best arguments for decentralized currencies like Bitcoin, because one of the problems with central bank digital parties is that they are not necessarily private. They can potentially be tracked by governments and Bitcoin is not completely private, but it is relatively private. It offers a relative level of privacy and there are many privacy innovations in the cryptocurrency space”, she said.

The preference of crypto in crime due to its anonymous nature is a misconception

Parker also scattered the Misconceptionthat crypto is a preferred channel for use by criminals in activities such as money laundering and ransom transactions. She noted that crypto is not completely untraceable, since transaction data recorded on a blockchain can be decrypted, only that this requires a lot of effort.

“Sure, you raise an important point, and I think, you know, a lot of regulators are nervous about cryptocurrencies for this reason, because they associate them with crime. But in some ways it’s a misunderstanding, because firstly, Bitcoin is not completely anonymous. Bitcoin transactions are stored on a blockchain, so they can be tracked to some extent […].“

Last month, the US Federal Reserve finally published its CBDC White Paper, in which it warned that the introduction of a CBDC would come with its own risks. The bank said that the centralization of data means the risk of hacker attacks, and a possible change in fiscal policy could destabilize the country’s financial system.

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