With the Government’s consultation on a UK central bank digital currency (CBDC) or digital pound closing today, new research released today by Trezor, the original bitcoin and crypto hardware wallet company, reveals widespread alarm among the UK public about its potential for abuse:  

• 73% of people are concerned about UK authorities being able to control access to their funds 

• 67% are concerned about the ability to impose time conditions on spending 

• 59% think it likely that UK authorities would use a digital pound to block specific individuals from using money 

“The Bank of England and HM Treasury judge that it is likely a digital pound will be needed in the future,” announces the consultation paper. Given the potential significance of a digital pound or ‘Britcoin’, Trezor wanted to gauge the level of public understanding, and to assess attitudes to putting the powerful and unprecedented capabilities of a CBDC into the hands of the UK Government and financial authorities.

Lack of confidence in UK authorities

Irrespective of a digital currency, there is a distinct lack of confidence in the ability of UK authorities to effectively manage the pound and safeguard the value of Brits' savings. Forty-two percent of respondents are dissatisfied with UK authorities’ management of the pound while almost half (47%) lack confidence in the ability of UK authorities’ ability to protect savings over the next three years. 

Little or no knowledge about the digital pound

When it comes to the digital pound, only 55% of people have heard of it, and among this group, almost half (49%) have little knowledge or know nothing at all about it  

CBDCs offer the prospect of programmable, trackable money that it is possible to control access to and impose conditions on — for instance, by setting time limits on when money has to be spent. There is a danger that CBDCs could restrict personal financial autonomy.  

Public unease at potential of Government abusing capabilities of CBDCs 

When people start to understand more about the power and control that CBDCs could hand to UK authorities, their unease grows: 73% of people are concerned about ruling authorities being able to control access to their funds; two-thirds (67%) are concerned about the ability to impose time conditions (e.g. spend it or lose it); 62% about controls on which goods and services can be bought; and 59% about the ability to cut off specific individuals from the UK’s financial services.

And, once these powers become viable, the UK public thinks that regulators would use them — 59% of respondents think it likely that UK authorities would block individuals from using digital money if they could (compared to 13% who think it unlikely). Almost half (46%) do not trust UK authorities to use the powers and abilities of CBDCs responsibly, against 28% that do.  

Josef Tětek, Bitcoin Analyst at Trezor, commented: “It’s clear that the vast majority of people are not comfortable with financial authorities having the kind of powers that a CBDC could grant them. Once this technology and the infrastructure are in place, they become open to abuse. Before the UK, or any other country for that matter, goes too far down the path to roll-out, we need a comprehensive, society-wide debate with ordinary people being made aware of the long-term implications of what the introduction of programmable, trackable, government-controlled money could mean.”

Cybersecurity risks  

When considering the merits of a digital pound, cybersecurity risks are another aspect to consider. And yet again, UK residents are sceptical about the competence of UK regulators — half of people lack confidence in UK authorities’ ability to keep the digital pound safe from fraudsters, compared to 26% who view their abilities positively. 

The digital pound — a solution in search of a problem

In an increasingly cashless society, consumers already benefit from a broad range of digital payment options, and the research reveals that they are content with existing options: 77% of people are comfortable with using digital money with only 9% not comfortable; 61% believe that existing digital payment methods are more convenient than using cash.

Tětek continued: “The digital pound is a solution in search of a problem — the public is already well served by convenient digital payment options. CBDCs are a tool that benefits only politicians and central bankers. The fact that China is at the vanguard of CBDC adoption says a lot about the utility of CBDCs for state surveillance and control. The civil unrest caused by the introduction of the eNaira in Nigeria should give governments everywhere pause for thought.”

Research respondents seemed to agree. “I think it’s a horrific thing to impose on the public, it has zero benefits to the public and gives the Government access to everything they should have zero access to”, said one anonymous comment with another seeing it as, “leading to tyranny and control.”

A rush to alternative assets 

The deployment of the digital pound could prompt a rush to alternative assets — more than a third (36%) are likely to consider moving at least part of their savings into other holdings with stocks and shares the most popular choice (selected by 43%) followed by gold (35%) and bitcoin/crypto (34%). Nearly half (47%) of 18-24 year olds’ would opt for crypto.  

Tětek commented: “We should guard against governments and central banks seeking too much control over how we use our money. In our view, Bitcoin is the perfect defence against such encroachment because it cannot be manipulated and is truly neutral, as money should be.”