Despite the potential economic benefits of central bank digital currencies (CBDCs), the dangers of government abuse threaten to outweigh them, according to the consensus of stakeholders at Consensus 2023. “The crypto sector is ‘generally negative and worried when it comes to CBDCs, especially around privacy,’” said Arry Yu, co-chair of the U.S. Blockchain Coalition. This sentiment was echoed by the broader Consensus audience, with only 9% of 169 attendees answering that it was unequivocally possible to design and build a surveillance-free government-backed digital currency.
J. Christopher Giancarlo, the former chairman of the Commodity Futures Trading Commission and now executive chairman of the Digital Dollar Project, said during a keynote address at Consensus, “Digital currencies that effectively protect financial privacy in lawful transactions will be the world’s most desired.” Privacy was at the center of the discussion at Consensus, and participants hit on several suggestions for dodging a future dystopia. Suggestions included using open-source code, inspectable by anyone, and a transparent minting process that would discourage stealth inflation measures.
The group argued that sovereign digital money should strive to share the same privacy benefits as cash, with one popular idea being that users maintain control of data that’s collected about their financial activity. Smaller, lower-risk CBDC transactions could also be granted the highest level of privacy.