‘Open‐​Source’ CBDCs Aren’t Going to Protect You from Government

by Nicolas Anthony | Cointelgraph

People are taking notice more each day that central bank digital currencies, or CBDCs, are not worth the risk. Yet, to combat these concerns, some policymakers have been increasingly looking toward open‐​source coding as a way to offer transparency and perhaps win the public’s trust. But make no mistake, while transparency is welcome, it’s no silver bullet.

For those familiar with cryptocurrency, the concept of using open‐​source code needs no introduction. However, for those that might not be familiar, the concept simply refers to publicly publishing the source code behind a project instead of locking it away as confidential or a trade secret. For example, the code behind Bitcoin is free and open for all to see.

Making a project open source has many advantages. For instance, doing so opens the doors for external audits. After a careful review, someone may find a vulnerability that wasn’t apparent to the original designers. Or, perhaps more concerningly, someone may find something nefarious embedded deep within the project.

Turning back to the example of Bitcoin, having the code be freely available allows people to verify that the 21 million supply cap is more than just an advertising slogan — it’s embedded within the design. In effect, publishing the code behind a project helps people know who they can (or can’t) trust.

Yet, open‐​source coding is no silver bullet — especially when it comes to the problems that plague CBDCs.

Consider what happened in Brazil last year. Brazil’s central bank published the source code for its pilot CBDC and it took just four days for people to notice that the CBDC had tools for surveillance and control embedded within its code. Were this the case with a decentralized cryptocurrency, people could carve out a new path and fork the chain, or simply not use it. But what recourse is there for CBDC users when a CBDC is the epitome of centralized money under government control? Read Full Article >