No digital currency is more advanced than the Bahamas’ Bahamian dollar , according to PwC. It’s commonly referred to as the “Sand Dollar,” and it has the same functionality, legal validity, and authorization as a traditional fiat currency.
There are numerous benefits. The key ones are payment speed, efficiency, and security, with a general reduction in friction thanks to the blockchain. The Bahamas also intends to benefit from the initiative’s notoriety, positioning the country as the Caribbean’s crypto powerhouse.
The blockchain’s trackable nature will also aid in the prevention of money laundering, counterfeiting, fraud, and other financial crimes. According to the release, the CBDC can “give an outstanding record of income and spending, which can be used as supporting data for micro-loan applications.”
Let us have a look at the demerits:
There are legitimate privacy concerns here, as the government might theoretically track what you spend, when you spend it, and with whom you spend it. Accounts can also be frozen at any time — think of Tether, which has frozen specific USDT accounts following hacks in the past.
This raises a slew of concerns about a possible dystopian situation in which governments employ increasingly sci-fi concepts like social credit scores derived automatically from payment activities. Let’s assume the government was aware that you spent $10 on football betting last night, and this was reflected in your credit score—or, worse, your social score. It’s easy to imagine the power that more authoritarian governments might gain as a result of this.
Given how important money is to transacting in today’s world, CBDCs might impose sanctions at will and have complete visibility over your net worth, tax liabilities, spending patterns, and many other aspects of your life.
So far, the Bahamas has taken the lead. In this scenario, all indications point to this being merely a step toward efficiency and an innovative instrument to aid in the development of a larger crypto ecosystem for the Caribbean island.
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