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Edward Snowden again weighed in on the rise of central bank digital currencies (CBDCs) when he spoke at Camp Ethereal 2022 last week, expounding on why these new assets are problematic.
In an interview with Marta Belcher, president of Filecoin Foundation and general counsel at Protocol Labs, the whistleblower said "the risk is very easy to illustrate."
His problem with CBDCs is that they could give governments too much control over citizens’ finances. His choice of analogy? Scrooge McDuck in "DuckTales," the cartoon from the late 1980s.
Scrooge, Snowden recalled, had "a giant vault full of coins and dollar bills and things like that. And if he needs money, a giant magnet comes out of the top of it, and it just pulls dollars out of everybody in the town's pockets. That is what a CBDC is, right? And that's really all it is."
A CBDC is a digital version of a fiat currency (like the US dollar or euro), backed by a central bank. They are centralized by design, whereas cryptocurrencies like Bitcoin and Ethereum are decentralized.
Governments around the world are in different stages of researching or implementing CBDCs. The Bahamas, in 2020 released a digital version of their home currency, and China is fast pressing ahead with its digital yuan.
Snowden has previously criticized CBDCs, describing them as "cryptofascist currencies" that could "casually [annihilate] the savings of every wage-worker."
At Camp Ethereal 2022, he expanded on his case. With CBDCs, he said, "We don't realize that we have immediately been subordinated and collectivized to the central actor in the economy. The dollar is that today in its electronic form. But the cash, the sort of physical legacy form of it… When you go down to the bodega, or the deli, and you buy a ham-and-cheese, the guy who presses the button on the register that's been there since 1975, and the till pops out and he puts the dollar in and gives you a dollar back, that still works—regardless of what the government is interested in. As we move towards increasingly electronic versions of cash… our freedom from permission becomes ever more finite and ever more limited. And increasingly we're being asked to step more through these gates, and that is a tremendous concern."
Snowden returned to his Scrooge McDuck analogy again later in the interview when discussing the Canadian government’s crackdown on truckers protesting the country’s COVID-19 rules. A Canadian superior court judge in February froze millions of dollars worth of funds—including Bitcoin—during protests in Ottawa.
"The idea that Canada of all places would do this—and I think most people see Canada as a pretty enlightened government—is really an illustration of the concern," Snowden said. "Whether you're for or against this particular protest or protest movement is really secondary to the problem that, at the flip of a switch, we are vulnerable to being unable to take anything out of our wallet. That giant magnet pops out of the top of the building."