The Digital Dinar: Another Tool for Control

The Digital Dinar

The Algerian Prime minister recently announced the government's interest in adopting the Digital Dinar, a move that has been praised by some as a way to attract investments and involve Algeria in the global fintech innovations movement.

Many countries are starting to look into creating their own CBDCs, even Arab ones. The trend comes as a panicked response from governments that are seeing innovations in the FinTech industry escape them while they’re stuck in their rigid, old-fashioned policies.

What is a CBDC?

Defining a CBDC isn’t an easy endeavor, even for banks, in simple terms we could say that a central bank digital currency (CBDC) is similar to fiat money in that it’s issued by the central bank and is capable of being transacted digitally. But “that is already happening?” you might ask. Well, the catch with CBDCs is that the government is aware of every transaction that is being done with the currency, it’s aware of the parties involved, the type of exchange and every minute detail you can imagine about the transaction.

Why do governments want it?

Governments seem to be chanting the same song when it comes to their reasons for a CBDC, for one, they claim that a CBDC would be less expensive in terms of operational cost, which is questionable considering the computing power required to keep the systems up and running for all transactions happening around the whole country and even outside it using the digital dinar. Assuming it would replace real money, imagine how many transactions are made by you alone daily, times 45 million citizens, to include even children and elders who would also be buying milk and bread with the digital dinar.

Governments also say that this currency would make money accessible to people with no bank accounts and those who can’t access physical money because they live in remote areas. But is this an issue relating to the physical nature of money? Or is it a deeper issue involving the fair distribution of wealth in this country and others around the world? Let’s not open that can of worms.

Another upside of a CBDC is that it’s programmable, governments could make use of smart contracts to give out subsidies to citizens in need of them, it could facilitate the acquiring of micro loans and even offer a lower interest rate on essential products for low income citizens… There are many scenarios where this feature might be useful.?

So what’s the catch?

Unlike cash, a CBDC requires an intermediary, which means you’re not truly in control of your money. With cash you can buy anything anytime, you can stash it, spend it or give it away. It’s physically yours, you only have to find someone who’s willing to take it in exchange for whatever service you want to get. But with a digital currency, the government controls your every move.?

Since the currency is programmable, governments can do a myriad of things with it, they can decide which products you’re “allowed” to buy, what kind of transport you’re “allowed” to get into (it’s already happening in China), they can even make you spend your money by giving it an expiry date or adding a negative interest rate to it in attempts to revive the economy and encourage spending. The possibilities are endless.

The financial freedom and privacy you had with cash would be a relic of the past, forget when you could hide your money in your closet for a rainy day, or when you could boycott products for political causes that you stood by, now governments would know exactly how much you have, where you spent it and whom you gave it to, and they can make you buy what they want you to buy at whatever time they choose.

Imagine that much control in the hands of governments, the same governments that are infringing on freedoms of speech and surveilling their citizens. Money is the most efficient tool to control populations, even first world countries aren’t exempt from this, so what chance do we have as a third world country?

Can we do something about it?

The CBDCs seem like a very tempting piece of chocolate for the power hungry governments of the world, and no one likes to be left behind, so CBDCs are most likely going to become a reality, and there isn’t much we can do about it.

We can’t choose to boycott the digital dinar since a big portion of Algerians are government employees, which means they would surely be paid using the digital dinar and would therefore be obliged to use it in their daily transactions.

But as individuals, we can choose to vote for representatives who have a more balanced view on this matter, ones that are willing to consider incorporating privacy by design into these currencies, where the government won’t be able to look into people’s private data even if it wanted to. Meaning, it would only be keeping records of transactions above a certain cap and keeping other data out.

Authors note

This is not an attack on the Algerian government and its efforts to keep up with the trend of CBDCs, unfortunately, this is a global issue. The fight for individual freedoms and privacy against government surveillance is an ancient struggle, one that seems to only get more and more complex by the day.

Knowledge is power, we have to be informed citizens in order to be able to make the right decisions with our votes. Also, consider stashing some crypto for a rainy day.

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