Thursday, June 1, 2023

With The E-Krona, Sweden Is Attacking The Virtues Bitcoin Is Built To Protect

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This is an opinion editorial by Peter Bistoletti, a Bitcoiner who has lived in Sweden since 1971.

Sweden is the nightmare example of a state destroying financial privacy, winning the war on cash and having control of all financial transactions. Sweden has almost completely abolished anonymous cash transactions and, as a result, its regulators have control of all financial assets. Since at least 1971, when I moved to Sweden, bank assets have to be reported annually to the tax authorities, which can also demand documentation for all bank transactions. Since 2020, the Swedish police have the right by law to acquire access to locked iphones and computers by use of force.

In such a privacy-averse 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 such as LocalBitcoins, which is impossible today. To buy BTC through the majority of accessible platforms now, one has to follow strict KYC and AML regulations. Sweden also has no Bitcoin ATMs. Swedish banks, politicians and the media have an overwhelmingly hostile attitude towards BTC.

Sweden is now moving toward a central-bank-issued, digital, national currency. Since 2017, the Swedish central bank, Sveriges Riksbank, the issuer of the prize in economic science in memory of Alfred Nobel, has been promoting the e-krona as a complement to, or replacement of, physical cash. Proponents of e-krona argue that it prevents money laundering and criminal activities, speeds up the financial system and finetunes financial and monetary activities. Critics argue that it is the ultimate tool for financial censorship, control and surveillance. The development of e-krona is happening in cooperation with other central banks and the Bank For International Settlements (BIS).

E-krona is, at present, a pilot project, testing the technical platform and the cooperation of banks, companies and end users. The e-krona will preserve several functions of cash but not anonymity. The volume of e-krona created will not be determined by mining (like it is for Bitcoin), but by the central bank. Positive or negative interest rates will also be determined by the central bank. In a deeper sense, the e-krona without a function like Bitcoin mining is merely a central database controlled by the central bank.

Designed To Limit Freedom

The technical underpinnings for the e-krona are based on a form of blockchain technology through the Corda platform, developed by the software company R3, and ran a February 2020 technical pilot project in cooperation with Accenture, a large, global tech company. The e-krona is programmable and only the central bank can create and destroy e-krona, which is distributed via banks to the general public. The end user can exchange e-krona with bank money in an account and can execute and accept transactions.

There will be:

  1. A “riksbank node” to create and destroy e-krona.
  2. A “notary node” at the Riksbank to prevent double use of e-krona.
  3. “Participants nodes” at banks, and payment service providers for checking the authenticity of e-krona.
  4. “Nodes for end users” for deposits/withdrawals with the aid of digital wallets.
  5. Mobile bank identifications, which have been in use in Sweden for many years, will be necessary for personal identification.

With the e-krona, the Swedish government will be able to see, in real time, every money transfer that anyone makes. It will also be possible to decrease access to the e-krona, for example, via a social credit score or if one is not compliant with climate change propositions. With the e-krona, the government can freeze someone’s financial resources and the Swedish state can directly tax customers’ accounts. As a guise pretending to spur spending, a negative interest rate would result in people losing money on their e-krona accounts and the programmable capacities of e-krona could mean that people are prohibited from buying certain goods. There will be numerous 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 Soviet Union’s banking system.

Nevertheless, central planning has never worked, and large, centralized bureaucracies are often not very efficient. Central storage of financial information might also pose a problem for authorities. In a cyber attack, the entire network might be disabled.

Bitcoin, on the other hand, provides decentralization. It is much more difficult, maybe impossible, to attack the Bitcoin network. The Bitcoin network has also become more and more resilient over time.

We Must Remain Vigilant

However, the e-krona could become a competitor to Bitcoin because ordinary people might rather trust and use e-krona instead of bitcoin. One main purpose of the e-krona is price stability. Bitcoin has, at present, high price volatility. The bitcoin price’s stability is influenced by supply and demand, investor sentiments, trading activities, regulations and media hype. As of this writing, the latest 60-day estimate for bitcoin volatility was 2.48%; while for gold, the historical average volatility has been around 1.2%; and for major currencies, it is between 0.5% and 1%.

Financial privacy should be a human right, but central bank digital currencies (CBDCs) and the e-krona are leading to the destruction of financial privacy and to the centralization of authoritarian state power. Therefore, we have to fight and prevent the creation and use of CBDCs and the e-krona. The vision of Satoshi Nakamoto, the inventor of Bitcoin, was built on three core values: security, privacy and decentralization. Bitcoin can provide all of these benefits, which CBDCs and the e-krona never can to the same extent.

This is a guest post by Peter Bistoletti. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Numisteamone.

Numisteamone

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