Digital currencies promise a brave new world of financial innovation. But let us not get carried away with the techno-optimism. These things are not just magic internet money—they come with a tangled web of risks, from eye-watering scams to dystopian surveillance features. Especially when central banks start sniffing around with programmable money and “policy precision”.
Beneath the glossy marketing and breathless whitepapers lies a simple truth: digital currencies, while technically clever, may be socially and economically catastrophic if adopted blindly. This is about governments reengineering the monetary system with a fine-toothed comb and far too much enthusiasm.
A breakdown of what could possibly go wrong.
Dangers of digital currencies
Lack of legal protections and irreversible transactions
With your bank, if something goes wrong—say, you pay the wrong person or someone pinches your card—there is at least the faint hope of recourse. You ring a hotline, fill out a form, and maybe, just maybe, get your money back. In crypto, however, there is no hotline. There is no desk. There is no human. There is just a cold, indifferent blockchain telling you: “tough luck.”
Every transaction is final. Accidentally sent your life savings to a scammer? That is a you problem now. Your best bet is to tweet about it and hope the internet takes pity. Meanwhile, fraud has become endemic. In 2024 alone, crypto scammers ran off with $12.4 billion (€11.4 billion). That is billion, with a “b.” The scams are getting cleverer, too: fake influencers, AI-generated girlfriend-boyfriend combos, investment platforms with slick interfaces and zero actual assets. The promise of decentralisation has unfortunately extended to accountability—there is none.
Extreme volatility and investment risks
Crypto markets make traditional financial markets look positively sedate. The value of a coin can jump 30% in a day based on a tweet, a rumour, or Elon Musk deciding he is bored again. It is a volatile mess dressed up as “disruption.” Behind the memes and moon emojis lies a brutal truth: this is not an investment; it is speculation on speed.
And then there is leveraged trading—the financial equivalent of juggling chainsaws while on fire. People borrow huge sums to bet on price movements, often with catastrophic results. When the market moves (which it always does), it does not just eat your investment. It devours your margin, your optimism, and anything else not nailed down. We now have entire subcultures dedicated to coping with the emotional wreckage.
Security vulnerabilities and cyber risks
The crypto space is a treasure trove for hackers. With no central oversight and billions sloshing around in digital wallets, it is a target-rich environment for every cybercriminal from bedroom teenager to North Korean cyber unit. Phishing attacks, malware, exchange hacks—it is all on the menu. Once your wallet is emptied, there is no magical undo button. You are out of luck and likely out of rent.
Even the so-called “safer” side of the ecosystem—stablecoins—has proven anything but. These are digital tokens supposedly pegged to real-world currencies like the dollar. But that peg can wobble or snap entirely. When TerraUSD collapsed in 2022, $18 billion went up in digital smoke. In 2023, a hiccup in the banking system saw USDC temporarily depeg. And unlike actual bank deposits, these things are not insured. You lose, you lose.
Privacy concerns and surveillance risks
Crypto was supposed to liberate us from surveillance capitalism, but it turns out most of it is about as private as shouting your bank balance in the middle of the supermarket. Public blockchains record every transaction. Forever. Anyone with time, motivation, or decent forensic software can trace your financial activity right back to you, especially if you have ever linked your wallet to a centralised exchange.
CBDCs take the surveillance game to a whole new level. Imagine a system where every transaction you make is visible to the central bank. Not just the big purchases, but the coffees, the subscriptions, the late-night kebabs. All recorded, all analysable, all potentially weaponised. This is not just financial infrastructure—it is the architecture for behavioural control. And once it is in place, you do not get to opt out.
Financial system instability
Digital currencies are not just disruptive in a hip Silicon Valley way—they threaten to destabilise the financial system itself. If people start pulling deposits out of banks en masse and plonking them into CBDC wallets or stablecoins, banks lose access to the cheap, stable funding that underpins their lending. Less money in, less money out. Cue credit crunch.
In some parts of the world, especially where local currencies are about as stable as a soggy stool, foreign-backed stablecoins are already gaining traction. Sounds helpful, until you realise it means surrendering monetary policy to another country. That is not financial liberation. That is economic colonisation via blockchain.
Expanded powers of central banks with CBDCs
Direct control over money supply
CBDCs let central banks bypass commercial banks and interact directly with the public. Great for financial efficiency. Less great for checks and balances. When central banks have direct control over the digital cash in your pocket (or app), they can tweak the economy with a surgical precision previously reserved for science fiction.
Want to inject stimulus? No problem. Want to apply negative interest rates directly to consumer wallets? Also not a problem. What used to take years of policy nudges could be done with a few lines of code. It is all very exciting until someone with terrible judgement gets hold of the controls—or worse, someone with excellent judgement and no accountability.
Enhanced surveillance and policy enforcement
The public narrative is all about preventing crime, catching tax cheats, and protecting us from economic bad actors. But let us not be naïve. CBDCs make it possible to track every transaction in real time. Governments can trace who gave money to what, when, and why. That kind of power is tempting, and once installed, rarely scaled back.
And then there is programmable money. It is not science fiction—it is in the design docs. Money that expires. Money that only works in certain shops. Money that shuts off if your carbon footprint’s too high. Sounds like dystopia? That is because it is. When your money starts making decisions for you, we have passed the point of financial autonomy and entered the era of algorithmic paternalism.
Lender of last resort for digital finance
In a CBDC world, central banks could respond to crises by injecting funds directly into citizens’ wallets. No middlemen, no delay. On the surface, this looks like resilience. But over time, it breeds dependency. Why bother fixing structural economic issues when the digital helicopter money will always arrive?
We have already seen the political headache of pandemic-era stimulus. Now imagine a world where those payments can be fine-tuned to political loyalty or consumer behaviour. It starts with good intentions. It ends with money as a behavioural nudge. Welcome to central banking, rebranded as social engineering.
Influence over financial inclusion (or exclusion)
CBDCs have been marketed as a tool for inclusion—giving digital wallets to people who have been left out of the traditional banking system. Sounds good. But this utopia is full of caveats. Without a smartphone, a data plan, or the right documents, many will still be locked out. The same systemic exclusion, now on shinier infrastructure.
And worse, inclusion can flip to exclusion with a policy update. A flagged account. A missed ID verification. Suddenly, your CBDC wallet freezes, and you are back to bartering biscuits. We have seen this with traditional financial institutions; CBDCs just make it faster and harder to contest.
Global monetary competition
The world is not waiting. China has already launched its digital yuan and is rolling it out with purpose. The EU and US are scrambling to catch up, each viewing CBDCs as geopolitical tools. It is not just about domestic efficiency—it is about power projection. The currency that dominates international trade in the digital age will carry influence beyond economics.
If multiple CBDCs start vying for supremacy, we are not looking at a smooth transition to a globalised future. We are looking at monetary Balkanisation, with capital controls, cyber attacks, and economic nationalism baked into the system. The 21st-century currency wars will not be fought with guns—they will be fought with code, consent, and coercion.
Digital currencies are not toys, trends, or tech upgrades. They are instruments of economic transformation—and, potentially, control. Cryptocurrencies have already shown us the chaos that emerges when financial systems are unmoored from regulation, law, and reason. CBDCs threaten to bring order to that chaos—but the kind of order you get in a high-security prison.
This is about more than money. It is about autonomy, transparency, and the future of civil liberties in a digitised economy. Yes, innovation matters. But not if it leads us down a path where every pound/euro/dollar/currency is tracked, every transaction controlled, and every citizen treated like a node in a machine. Proceed with caution. And maybe keep a few coins in the mattress—just in case the algorithm decides you have misbehaved.
Transaction history (of thought)
- Commodity Futures Trading Commission (CFTC) – Whistleblower Alert: Digital Assets
- Atlantic Council – Central Bank Digital Currency Tracker - hover over a country to see its status. Click on a country to learn more.
- BIS – Project mBridge: Experimenting with cross-border CBDCs (Brochure, PDF)
- European Central Bank – Digital Euro project - and where I discovered parts of the site can not be seen when not accepting cookies!
- IMF – The Rise of Digital Money - a paper marking the launch of a new IMF series, Fintech Notes on the subject.
- Chainalysis – 2024 Crypto Crime Report - research and analysis on the latest trends in cryptocurrency-based crime.
- MIT Digital Currency Initiative – Research Library - on “decentralizing trust, empowering individuals, and disrupting power structures with cryptographic peer-to-peer exchange”
- Bank of England – The digital pound: A new form of money for households and businesses? - This consultation was open for response until 30 June 2023. The Bank of England and HM Treasury published a response to this consultation paper on 25 January 2024.
- NBER – Central Bank Digital Currency: When Price and Bank Stability Collide - Linda Schilling, Jesús Fernández-Villaverde & Harald Uhlig on the existence of a central bank trilemma.
- Bank of Canada – On the programmability and uniformity of digital currencies – a June 2025 staff working paper exploring the trade-offs of programmable money, including liquidity issues and the social costs of different programming models.
- Li & Shen – Programmable money, welfare state, and the legal construction of CBDC – a Spring 2025 legal analysis arguing that law must limit programmable features in CBDCs to preserve citizen autonomy.