Adam Back Advocates Against CBDCs
The OG cypherpunk and founder of Blockstream discusses constructing a Bitcoin-oriented financial structure and explains why government-issued digital currencies diverge greatly from BTC. Adam Back will be a featured speaker at Consensus Hong Kong held from February 18-20.
If you were to inquire with a cypherpunk from the 1990s regarding their most pessimistic outlook on the future of monetary systems, they might outline a scenario eerily resembling Central Bank Digital Currencies (CBDCs). The struggle against financial surveillance was a core principle for Bitcoin’s founders, and CBDCs directly oppose the ideals of privacy, decentralization, and individual sovereignty.
In “The Cypherpunk Manifesto” (1993), Eric Hughes posited that cryptography should defend personal liberties rather than serve as an instrument of central oversight. Bitcoin emerged from a context of resistance against financial oppression and systemic instability, offering an alternative to conventional economic frameworks. While central banks usually maintain a certain degree of autonomy from governments, CBDCs pose challenges to financial privacy and carry the risk of heightened state scrutiny over financial transactions. Consequently, CBDCs are fundamentally at odds with the principles of Bitcoin.
CBDCs, which are currently being evaluated globally, are portrayed as vehicles for financial inclusivity. Yet, many Bitcoin enthusiasts perceive them as a guise for enhancing governmental control, rather than genuinely empowering users with financial independence. They embody the exact authoritarian systems that cypherpunks have strived to counter.
This is why Adam Back — a pivotal figure in Bitcoin’s history, the creator of HashCash, and the founder of Blockstream — has openly expressed his concerns about CBDCs and the involvement of the World Economic Forum (WEF) in endorsing them. He interprets this as an attempt at power consolidation by global elites, many of whom are either misinformed about or in direct opposition to Bitcoin. Where Bitcoin was designed to diminish state authority, CBDCs aim to restore it.
As articulated by Back, a keynote speaker at Consensus Hong Kong, CBDCs did not naturally evolve from existing monetary concepts; they are a reactive measure taken by regulators — a response to the perceived threat posed by digital currencies from the private sector. He identified Facebook’s Libra as the pivotal moment that alarmed central banks during a recent discussion via Google Meets.
“Regulators noticed that a company with over a billion users could introduce corporate electronic cash, which threatened their control. As a result, they sought to preempt this by launching their own government-backed electronic cash,” Back noted. “The core issue is that it’s fundamentally challenging for them to devise something appealing to the average consumer due to their controlling mindset.”
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Back is not merely critiquing CBDCs from a theoretical standpoint; he is actively working on a Bitcoin alternative. Over the past year, Blockstream has introduced the Jade Plus hardware wallet — a Bitcoin-exclusive wallet designed for users valuing privacy, serving as an open-source alternative to Ledger and Trezor — along with Greenlight, a non-custodial Lightning-as-a-Service platform that simplifies Bitcoin transactions for developers.
In addition, Blockstream has broadened Bitcoin’s financial landscape with new substantial investment funds that offer regulated Bitcoin-centered financial products for affluent investors. They are also advancing Layer 2 scaling solutions through the Liquid Network, a Bitcoin sidechain facilitating quicker and private transactions. These efforts are bolstered by Blockstream’s longstanding satellite network, enabling Bitcoin transactions without internet access, alongside its mining operations that promote decentralization.
Altogether, these initiatives signal a dedicated vision: a Bitcoin-centric financial structure, unbound by traditional banks and centralized governing bodies.
Concerns about increasing governmental influence over Bitcoin are valid. With Bitcoin ETFs gaining popularity, discussions about a U.S. Strategic Bitcoin Reserve, and institutions accumulating Bitcoin assets, is there not a risk that governments and large organizations will assert centralized authority over Bitcoin? Isn’t the essence of individual self-custody and sovereignty?
Back, a 54-year-old British cryptographer, who communicates with understated confidence that belies his significance, remains unfazed. Calm. Content. Focused. Thriving.
“ETFs and associated investment mechanisms surrounding Bitcoin merely provide individuals with an easier entry point,” he offered, embodying the determination of a man on a mission.
“I hope they eventually acquire physical Bitcoin and learn how to secure it. What matters most is that a significant portion of people retain Bitcoin in its bearer form of electronic cash, preventing it from becoming overly consolidated within ETFs or institutions, which remains true today — the majority is still held by individuals, some in cold storage and others on exchanges.”
Though predicting the future balance between self-custody and institutional ownership is difficult, Back thinks the overarching trend is unmistakable.
Having participated in Bitcoin from its inception, he has seen how adoption unfolds. His well-documented email exchanges with Satoshi Nakamoto indicate that he perhaps possesses greater insights into Bitcoin’s growth trajectory than most. He views the widening reach of Bitcoin’s community as a significant development. Certainly, with ETFs and institutional funds bringing Bitcoin into the public eye, this simply implies that a growing number of users will be introduced to the Bitcoin network. Ultimately, Bitcoin remains opt-in, censorship-resistant, and devoid of governmental interference, in stark contrast to CBDCs.
Currently, 44 nations are exploring CBDC trials, as reported by a tracker conducted by the Atlantic Council. While some claim to safeguard privacy, the truth is these attempts are just thinly veiled efforts to uphold centralized control over currency. For a time, the shift towards state-supported digital currencies appeared inexorable — until political resistance in the U.S. transformed it into a contentious issue. Reflecting the pronounced Republican opposition to CBDCs over the past 18 months, Trump has recently declared he will prohibit the development of CBDCs within the United States.
Back interprets this as a sign that momentum is swinging in Bitcoin’s favor. “Several individuals within Trump’s cabinet are Bitcoin proponents with applicable experience, so we may witness progress because many of the prior participants potentially wished Bitcoin had never surfaced,” he remarked.
He also pointed out the former SEC Chair Gary Gensler, who, despite his history lecturing on blockchain technologies at MIT, took a contentious stance against the industry. “In the future, I anticipate increased rationality and progressive regulations recognizing individual rights to self-governance,” Back suggested.
Financial Surveillance
For Back, his aspirations extend beyond merely wishing for Bitcoin to prevail; he seeks the demise of CBDCs. He contends that CBDCs represent not just a financial challenge — they form part of a broader agenda for financial oversight, societal credit systems, and governmental power. “The recent social media meddling in U.S. elections and the apparent interest in CBDCs within Europe, where they are evidently envious of China’s social credit systems, is quite dystopian. The WEF has propagated ideas that seem alarming,” he explained.
The WEF, in particular, leads the charge for CBDCs and various other methods of centralized governance. “Historically, they have been in support of numerous controversial initiatives such as CBDCs and the erosion of individual autonomy. They frequently propose ideas that sound dreadful, only to retract them when backlash ensues.”
Back is correct. The WEF has a record of proposing contentious concepts and retracting them under public pressure. For instance, in 2021, they suggested that the pandemic was “quietly enhancing urban environments” by diminishing air pollution. Following backlash over the implication that lockdowns were beneficial to the environment, the WEF deleted the claim.
Blockstream believes that high-net-worth individuals and institutions will be dissuaded from entangling their assets in a WEF-approved CBDC framework under the control of centralized organizations. For this reason, they have established a range of institutional-grade Bitcoin investment opportunities aimed at clients wanting to safeguard their wealth against arbitrary manipulations. Recent incidents like the collapse of FTX, Celsius, and other crypto firms in 2022 have only reinforced the necessity of this initiative, as trust in centralized institutions dwindles, both in traditional finance and the crypto space.
Back, however, is in stark contrast to Sam Bankman-Fried, the disgraced FTX founder, who showed little regard for individual privacy and was notoriously anti-decentralization. Similarly, he is not like Alex Mashinsky, the former CEO of Celsius, who irresponsibly leveraged user funds. Back is a cypherpunk who is steadfastly implementing the vision to ensure Bitcoin unfolds precisely as Satoshi envisioned: as a decentralized, trustless, and censorship-proof monetary network.
This struggle transcends mere competition between Bitcoin and CBDCs; it signifies a fight for freedom. “It’s a renaissance for cypherpunk philosophy,” Back conveyed, noting that once individuals delve into Bitcoin, they begin to comprehend its broader significance, particularly regarding privacy, autonomy, and control. He emphasized that during the time when the original Cypherpunk Manifesto was composed in the 1990s, its authors might not have fully anticipated how thoroughly digital technology would saturate every domain of existence.
“Thus, the concerns raised within the [Manifesto] are increasingly urgent now that virtually everything transpires online,” he remarked, his eyes gleaming with intensity.
