Bitcoin, shitcoins and CBDC on the menu of the Bank for International Settlements annual report

Bitcoin, shitcoins and CBDC on the menu of the Bank for International Settlements annual report

The Bank for International Settlements (BIS) was deeply involved in the explosion coin stable Terra-Luna in its annual report. There are central bankers He seized the opportunity to promote the very dystopian CBDC and rubbed the knife into the wound of the CrYpTo.

The BRI exult

The shiitcoinery downturn has given the authors of BIS’s annual report plenty of food for thought. We can read that then “The weakness in the specs-backed mechanism system has been exposed due to the explosion of the TerraUSD stablecoin and the collapse of its twin Luna tokens. […] operating thanks to the influx of new speculators “.

Further afield:

“The Luna sign had no intrinsic value and its value came primarily from user influx into the Terra ecosystem. The related loan protocol, Anchor, offered the UST a deposit rate of about 20% to attract these new users. »

This is the definition of ponzi. Trust the BRI who knows what he’s talking about…

Many pages of the report are dedicated to this coin stable EDS “It’s not only the most significant failure among many other little – known signs, but has also fallen by more than 90% since the peak of 2021”.

The BRI swiftly mocked the rise of the stables “trying to add value to the US dollar and other common currencies”What “Indicates a pervasive need to rely on the credibility provided by the unit of account issued by the central bank”.

As a reminder, the stable tires they are essentially tools for speculators to sell their BTC for a lower conversion fee than for a real dollar. It is written in the report that “The primary use case for stablecoins is to overcome the high price volatility and low liquidity of cryptocurrencies like bitcoin.”

It should be noted, however, that the equivalent of hundreds of millions of dollars in bitcoin is exchanged every day. This is more than Apple stock, which has a daily volume of less than $ 100 million.

The Luna fiasco allowed the BIS to reverse the importance of appearance “unit of account“currency:

“The central role of the central bank is to provide the unit of account for the economy. The fact that stablecoins must have credibility of importing central bank money is a great illustration of crypto structural shortcomings. »

This statement quickly goes to work. In fact, only big speculators use it stable tires . These latter people have no great interest in the holderswho invests in the long run, well aware that we are on the verge of hyperinflation, among other reasons.

So the argument of the unit of account (the fact that we cannot buy anything directly in BTC) is very weak. Bitcoin fulfills its function as a store of value, even without being a unit of account.

Another banana peel worn by the BRI has to do with why we see it shitcoins. By Central Bank of Central Banks:

“The more users go to blockchain, the more congested and the higher the transaction fees, which opens the door to new competitors who can compromise security in favor of higher transaction throughput. . »

The BRI here pretends not to be aware of the Lightning Network which allows millions of transactions to be made. This technology is deliberately omitted from the report.

DeFi also took out his step:

“Despite its name, DeFi shows a tendency towards centralization. Many key decisions depend on “governance signs”Often pre-mined and distributed to teams of developers as well as early investors. Its governance is therefore highly focused. »

What we can only say is that the BRI has the right to point the finger at the criminal activities of the Ponzian CrYpTo. However, it’s funny to read that “Cryptocurrencies suggest potentially useful features that could improve the current monetary system”.

The whole part of the report is focused on bitcoin and how it works. In particular, there is a dedication to his foal Vitalik Buterin and his celebrities scalability trilemma.

This allows us to remember that we cannot “improve” bitcoin. This famous trilemma states that it is impossible to complete one aspect of bitcoin (speed, decentralization and security) without reducing another dimension.

For example, it would be perfectly possible to increase the speed of bitcoin transactions, but at a less decentralized cost. Similarly, reducing energy consumption would erode security.

We bet that the bank for international settlements will not interfere with the “decentralized” aspect of its CBDC …

“The monetary system of the future”

For the BIS, the currency must perform three functions. She has to be “store of value, unit of account and means of exchange”. This definition has not changed since Aristotle 2300 years ago.

It is the Greek philosopher’s definition of Biblical simplicity compared to the hundreds of pages of Basel’s fiat banking system. In this regard, we have previously written:

“Some people argue that bitcoin is a bad unit of account because of its volatility. But this confuses “volatility” and “respect”. […] The fact that bitcoin is not a tender tender is an extremely rare argument. It is up to the communities to decide this issue. Historically, money has always been THE social convention par excellence. In this regard, it is interesting to note that Plato and Aristotle, both contemporaries, had different views on the gold coin. For Plato, money was just a simple social convention. It does not matter if you use shellfish or salt, as long as everyone agrees to accept it. A serious error according to his student Aristotle who stated otherwise that the currency should have intrinsic value. Aristotle has proved the right a thousand times in history. Gold has retained its purchasing power, níl has no shells ”

The BIS then looked at how useful cryptocurrency functionalities could be integrated into a future CBDC-based monetary system.

It is a safe bet that the 21 million unit limit will not be part of… Or maybe, only then for the FAW “wholesale”. That is to say the currency that the BIS dreams of creating to replace the petrodollar (international reserve currency) and SWIFT network (international payment network).

It is true that, with inflation close to 10% in Europe and the United States, many countries are beginning to wonder whether they are doing well in maintaining their foreign exchange reserves in euros and dollars. The BRI is in ambush…

The second type of CBDC is called “retail” . Unlike the CBDC “wholesale” (accessible only at central banks), CBDC “retail a currency accessible to all.

This type of CBDC raises the issue of privacy and the BRI is aware of this. In fact this new currency will have what the BRI expects “Protect privacy as a fundamental right and allow users to control financial data”.

We are at ease, or not:

“In an unauthorized blockchain […], all transactions are public. Confidentiality is maintained by hiding the user’s true identity behind a private key. On the other hand, a monetary system based on real users’ names raises the question of the protection of their privacy. Privacy is a fundamental human right. No one else needs to know which supermarket one is shopping for. »

To overcome this problem, the BRI says it is looking at cryptographic techniques. Especially the zero-knowledge proofs (ZKP) which helps to prove that something is real (transaction) without disclosing any other additional information.

We can read more:

“CBDCs’ data management architecture can give users much greater control over their personal data, while protecting consumer privacy and well-being. Indeed, central banks have no commercial interest in personal data and can therefore design systems in a credible way for the benefit of the general public. »

Central banks would have no interest in knowing everything about our consumption habits. Well… Except that all this data that is being jealously guarded by central banks must be disclosed when making a loan in order to pass them through the AI ​​mill that will consider whether or not it is worth borrowing money.

It is certain that our data will always be scrutinized at the end of the machine learningand that the BRI could derive enormous hegemonic power from it.

Let us conclude this quick summary of the highlights of this lengthy report by specifying that CBDCs will be based on digital identity.

The BRI has not expanded on this universal and centralized digital identity. The latter is crucial, however, and is likely to allow very easy access to the myriad of other data that all the apps collect what they need.

In short, the CBDC will be the antithesis of bitcoin. Transactions will not go out to be truly anonymous, can be prevented for x reasons, not to mention the money supply will not go out to be settled.

It will also be programmable. In other words, conditions can be attached to our money. To put it more bluntly, the FAW is the complete control tool that will one day be able to apportion the population.

It is not your servant who says it, but the Chairmanfrom the BRI in person:

“With CBDC, unlike cash, central banks will have full control over the rules they decide to use. »

Asked about the next steps of nutrition in the phased implementation of the FAW, the Chairman of Nutrition told U.S. lawmakers last Thursday “It’s something we need to explore as a country”.

“Our plan is to work on the political and technological side of the coming years and to commend Congress at some point”said Jerome Powell.

The BRI report concludes on its own initiative by promoting that the construction site will take ten years. The ECB has been talking for five years. Where will bitcoin be by the time the bankers set up this monetary gas plant?

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Nicolas teterel avatar

Nicolas Teterel

Journalist reporting on the Bitcoin revolution. My papers deal with bitcoin through geopolitical, economic and libertarian prisms.

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