This is an opinion editorial by Peter Bistoletti, a Bitcoiner living in Sweden since 1971.
Sweden is the terrible example of a state that destroyed financial privacy, won the money war and has control over all financial transactions. Sweden has almost completely eliminated anonymous cash transactions and, as a result, its regulators have control over all financial assets. Since at least 1971, when I moved to Sweden, bank assets must be reported annually to the tax authorities, who can also request documentation for all bank transactions. Since 2020, Swedish police have the right by law to gain access to locked iPhones and computers by using force.
In such a poor privacy environment, one should consider Bitcoin as a better alternative.
Introducing The E-Krona
In the early days of Bitcoin, one could buy BTC anonymously through platforms like LocalBitcoins, which is impossible today. In order to buy BTC through most of the platforms available today, one must follow strict KYC and AML regulations. Sweden also has no Bitcoin ATMs. Swedish banks, politicians and the media have a very hostile attitude towards BTC.
Sweden is currently moving towards a central bank issued, digital, national currency. Since 2017, the central bank of Sweden, Sveriges Riksbank, the issuer of the economic science prize in memory of Alfred Nobel, has promoted the e-krona as a complement to, or a substitute for, physical money. Proponents of e-krona argue that it prevents money laundering and criminal activities, facilitates the financial system and improves financial and monetary activities. Critics argue that it is the ultimate tool for financial censorship, control and surveillance. The development of the e-krona took place in cooperation with other central banks and the Bank For International Settlements (BIS).
E-krona is, at the moment, a pilot project, testing the technical platform and the cooperation of banks, companies and end users. The e-krona will preserve many functions of money but not anonymity. The number of e-krona created will not determined by mining (like Bitcoin), but by the central bank. Positive or negative interest rates are also determined by the central bank. In a deeper sense, e-krona without functions like Bitcoin mining is just a central database controlled by the central bank.
Designed To Limit Freedom
The technical basis for e-krona is based on a form of blockchain technology through the Corda platform, developed by the software company R3, and running a February 2020 technical pilot project in cooperation with Accenture, a large, global technology company. The e-krona is programmable and only the central bank can create and destroy the e-krona, which will be distributed through banks to the public. The end user can exchange e-krona for bank money in an account and can execute and accept transactions.
- A “riksbank node” to create and destroy e-krona.
- A “notary node” at the Riksbank to prevent the double use of e-krona.
- The “participating nodes” of banks, and payment service providers for checking the authenticity of e-krona.
- “Nodes for end users” for deposits/withdrawals with the help of digital wallet.
- Mobile bank IDs, which have been used in Sweden for many years, are necessary for personal identification.
With e-krona, the Swedish government can see, in real time, every money transfer made by anyone. Access to the e-krona can also be reduced, for example, through a social credit score or if one does not comply with climate change propositions. With e-krona, the government can freeze a person’s financial resources and the Swedish state can directly tax customers’ accounts. As an outfit that pretends to stimulate spending, negative interest rates result in people losing money in their e-krona accounts and the programmable capacities of e-krona can mean that people are prohibited from buying certain things. There are many ways to program the e-krona, which opens the way to a dystopian, Orwellian surveillance and control state.
The e-krona is centralization and central planning as it existed in the banking system of the Soviet Union.
However, central planning never worked, and large, centralized bureaucracies were often inefficient. Central storage of financial information can also pose a problem for authorities. In a cyber attack, the entire network can be disabled.
Bitcoin, on the other hand, provides decentralization. It is more difficult, perhaps impossible, to attack the Bitcoin network. The Bitcoin network has also become more stable over time.
We Must Be Vigilant
However, e-krona can be a competitor to Bitcoin because common people prefer to trust and use e-krona instead of bitcoin. A main purpose of e-krona is price stability. Bitcoin has, at the moment, high price volatility. Bitcoin price stability is influenced by supply and demand, investor sentiment, trading activity, regulation and media hype. As of this writing, the most recent 60-day estimate for bitcoin volatility is 2.48%; while for gold, the historical average volatility is around 1.2%; and for large currencies, it is between 0.5% and 1%.
Financial privacy should be a human right, but central bank digital currencies (CBDC) and the e-krona lead to the destruction of financial privacy and the centralization of authoritarian state power. Therefore, we must fight and prevent the creation and use of CBDCs and e-krona. The vision of Satoshi Nakamoto, the inventor of Bitcoin, was built on three fundamental values: security, privacy and decentralization. Bitcoin can provide all these benefits, which CBDC and e-krona cannot do to the same extent.
This is a guest post by Peter Bistoletti. The opinions expressed are their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.