The Bank of England is currently running ‘working groups’ on aspects of their #CBDC proposals.

Bitcoin Policy UK have submitted the paper in the link below, giving detailed feedback on our privacy concerns.

TLDR: While we remain opposed to the creation of a #CBDC in its entirety, our view is that the ‘least worst’ option would be a form of anonymous Chaumian e-cash, which no third party can monitor, control or censor - namely, a digital bearer equivalent to physical cash.

To quote Silkie Carlo of Big Brother Watch, “Anonymous, private, low threshold e-cash could have a future - but Western Countries like Britain won’t accept anything that looks like a ‘spycoin’.”

Key points from our paper:

1. We remain opposed in principle to the creation of a digital pound or CBDC, and our policy position is unchanged - that it is a solution in search of a problem; one that will serve no useful purpose not already served by existing forms of digital money.

2. The proposals to give ‘tiered’ access to the #CBDC in return for the surrender of more and more personal data should be abandoned.

3. These proposals effectively treat personal and transaction data as a form of currency themselves - the digital pound would become more useful the more personal data is surrendered by its users, who would pay for increased usability with the currency of their personal data. It is therefore an unfair and exclusionary model of money.

4. There is little to no sense in expending time, personnel, money and other resources in replicating a system that will be broadly identical to the modern system of commercial bank accounts, while having none of the advantages of the physical cash system. If a CBDC has to exist at all, then better privacy may be afforded by the implementation of Chaumian e-cash.

5. For the Bank’s CBDC truly to replace physical cash, or to offer a genuine digital alternative, it needs to mirror the key features of physical cash. These include being a bearer instrument, offering strong anonymity for transactions and ownership, (the former two characteristics being of particular relevance to this privacy consultation) and must also allow direct claims against the central bank by the public.

6. Without these characteristics, the CBDC is unlikely to be attractive enough to compete with existing digital payment options, leading to public mistrust, low adoption, high running costs, and eventually the failure of the entire enterprise - which is not an outcome with which we as an organisation would be disappointed.

#NoSpycoin #NoToCBDCs

https://www.bitcoinpolicy.uk/post/privacy-and-the-digital-pound-resisting-threats-to-privacy-and-financial-freedom