CBDCs Will Destroy Fiat
CBDCs move the world closer to peer to peer lending/funding of all debt, be it productive debt, consumer debt, financial/asset debt for asset purchases. Private banks, which are traditional money printers in the current system via new loans, will, in a CBDC regime, print less and less as central banks go direct with CBDCs. And those CBDCs will be used as political tools primarily, opposed to objective information and accounting systems--which is the true role of real money and real market pricing.
Once CBDCs are understood for what they are, political, manipulative extensions of government power and control, economic actors will seek payments and lend in objective measures of value. Peer to peer lending and payment networks are already on the rise, in both fiat and crypto currencies. But eventually the best peer to peer networks will only be in crypto, and most likely based on hard money like BTC. Peer to peer networks don't print new money via loans, and the networks act only as intermediaries. So the supply of money inside these peer to peer networks is capped. Also, the currency the networks use will be capped, as BTC is, by code.
Central banks, on the other hand, under a CBDC regime, will not be able resist the temptation to manipulate how and when CBDCs can be used, for what purposed, with controls based on user or type of use. Central banks in this way will continually debase and distort the CBDC's role as a money--which is as a true and accurate information system the reflects economic realities in markets. In fact, it's the government's increased desire to control, stimulate, manipulate and track that is leading to CBDCs in the first place. CBDCs will be sent out as reparations, as welfare, as free PPP type loans, as seed funding, as everything, according to political agendas NOT true economic information and pricing.
People interested in real exchange of real value, will choose better mechanisms for pricing, interest rates, returns and nominal value calculations--real economic information--to conduct trade. BTC, as a monetary network, is already big enough and robust enough to perform the role that money historically has served--as an accounting and information system of relative value. Peer to peer networks based on BTC have already popped up and are thriving. Sidechains the liquid and lightning networks, based on BTC to facilitate trade and transactions, are exploding exponentially.
Other cryptos, like Ethereum, as coded currencies, purport to perform a similar function as BTC does, but unlike BTC, all other cryptos are to one degree or another more centrally controlled and many merely mimic the problems of the Central bank dominated world. If managed well, centralized non-BTC cryptos could thrive. But, the temptation to wrest and concentrate control and use these other currencies for power and manipulation will likely lead their undoing in much the same way that CBDCs will lead to the final undoing of Central banks and the legacy financial system. Economic participants, looking for real measures of real value, will probably come to the same conclusions about Ethereum or other centralized coins as they will about CBDCs--that the pricing, which is supposed to reflect true economic value, aren't trustworthy because the measure sticks--the money--isn't sound. Evidence of this is the fact that the number one use case for non BTC cryptos has been to create "stablecoins"--cryptos pegged to fiat units. These stablecoins make moving money easier, but they're just digital version of the Central bank units. Non BTC crypto advocates claim smart contract capability make them superior. But why does a "smart contract" need its own coin? Contracts/transactions are dominated in certain currencies, but are separate from the currencies. Separate smart contract networks based on data providers or "oracles" seem to make WAY more sense that integrated contracts into a crypto coin blockchain, with each contract validated along with coin transaction itself. Eventually, contract networks will all be peer to peer, and separate from the measure of value (the money) even in these other crypto blockchains like Ethereum et al.
However the path unfolds, one thing is clear: Central banks, via CBDCs, are in fact bringing about their own demise, not consolidating their power. Economic actors will increasingly look elsewhere for true pricing and real measurements of value. If you want to get a bunch of the measuring sticks of real economic value, get some BTC now. Maybe other cryptos will rival BTC, but none will surpass it.