Everybody hates FIAT but physical FIAT is a wonderful thing. Only a few realize that. Once paper money is gone, we are fucked.
Cash (i.e. physical FIAT) has two essential properties
- Anonymity. In the general case it is not possible to find out who owns a given coin/banknote at the moment. Nobody knows what transactions are performs except for its participants.
- Zero cost and unblockable transactions. It does not cost anything for user A to give any amount of cash to user B and it is very difficult for a third party to block a transaction between A and B.
Both properties are nice to have but one might argue that the second one is more important. When the CBDCs are introduced they will not have anonymity but if they allow (almost) zero-cost transactions between arbitrary users A and B, then it is possible to allow conversion between CBDCs are real crypto (e.g. Monero) at (almost) zero cost and still keep the pure crypto transactions anonymous.
CBDCs are a big problem and the crypto community better start thinking how to work around that problem, otherwise in 10 years we will live in a totalitarian world with CBDCs and non-anonymous, KYCed, government-controlled "crypto".