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Response 39 to the UK Treasury Select Committee on the Digital Pound

This is the response we will soon make to point 39 in the committees's recent report.

My position so far, is there's a powerful vested interested engaged in discounting a Digital Pound CBDC in front of the committee. The treasury seem to be slightly pro the Digital Pound at this time for some well stated reasons.

Traditional finance has a heck of a lot to lose from the innovative new Digital Pound technology:

  • they could lose their monopoly on transactions and need to start competing again, but now under free conditions
  • it will expose a litany a data privacy failure being left fully unattended by traditional banking, far greater than is possible, all else being equal, when using the new technology
  • it will expose traditional bankings' inherent susceptibility to stability runs compared to the new techs inherent protection from that
So its curious that the very things traditional finance warns against are being 'projected' by them onto the new technology. Good strategy. Bad for the nation. 

<SNIP>

Privacy and data protection concerns

39. Many respondents to our inquiry highlighted privacy and data protection concerns associated with a retail CBDC, and the importance of these concerns being addressed to ensure adequate public trust and adoption of a CBDC.52 The Bank of England told us that concerns about data protection and privacy were also prominent in the large volume of responses received to the digital pound consultation.53

With all due respect, why the sudden concern? Traditional finance is a litany of data breaches. But it does not get an equal proportion of attention for that, compared to the Digital Pound. Are the respondents thinking irrationally? Or do they have a vested interest to protect their industry? If you understand how blockchain technology was designed from the root, privacy is innovatively firewalled from the blockchain to mitigate privacy concerns. There is now a tiny attack surface for surveillance of user identity. This means that for an attacker to gain visibility into user data they would have to do it on a one to one basis at enormous cost which every criminal or government would abandon due to being far more costly than the alternatives readily available. Traditional finance is hacked daily where millions of users’ data is compromised, per hacking attempt, which is very efficient economically for the hacker. Any further delay into adopting the new CBDC technology could be argued as reckless. Quality wallet providers assure the new technology maintains privacy by using a new coin address for every transaction, such that identity cannot be traced to the client or merchant user, without directing enormous resources at it. An astonishing boost to privacy when compared to traditional finances’ litany of failure here. Of course, it has to be assured somehow that wallet providers stay honest. And does the law not provide for that already with no further regulations or statute required?

 

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