Central bank digital currencies (CBDCs) were once an idea confined to small talk meetings among economists. But last week, former President Donald Trump pushed the CBDC debate to the forefront of his campaign. At an event on January 18, he promised his supporters: “As President, I will never allow the creation of a central bank digital currency. This is a dangerous threat to freedom, and I will stop it from coming to America.” The crowd roared.
So what is a CBDC? Why is Trump suddenly talking about it? And what does the digital dollar have to do with Bitcoin and the future of money?
In a nutshell, a CBDC is a digital dollar created by the federal government. This may sound good at first. However, giving governments de facto digital control over consumers’ bank accounts has significant privacy and freedom implications.
The advantages and disadvantages of CBDC are that CBDC is a type of programmable currency. The programmability of CBDCs allows governments to fine-tune stimulus targets and transfer funds more efficiently. But it’s also possible that the government will be able to control how we spend our money, how we spend it, and even whether it turns our money on or off.
The threat of government-controlled digital currencies is most evident in China, which became the first major economy to launch a CBDC. China is currently exploring ways to leverage the “programmable features” of CBDCs. This would allow Chinese Communist Party bureaucrats to set expiration dates on money, limit spending to specific areas, and even tie it to people’s social credit scores.
In China, CBDC would enable the kind of central planning that Karl Marx dreamed of. No wonder, then, that Democrats and Republicans alike despise the idea. Looking at the social experiment taking place in China, many people have legitimate concerns that a CBDC would allow the federal government to control people’s money and track spending. That’s why, according to a recent Cato poll, nearly 75% of Americans oppose a government-backed digital dollar that would allow for such tracking.
President Trump seems to have sensed that CBDC is the undiscovered third rail of American politics. So he has railed against the policy in hopes of galvanizing liberty-minded Republicans in the primary and generally turning to privacy-minded Democrats and independents. With this strategy, Trump is aiming to contrast himself with President Joe Biden, who signed an executive order in March 2022 to “urgently research and develop a potential U.S. CBDC.” Mr. Biden has failed to realize how controversial a CBDC would be among his own supporters, but Mr. Trump hopes to capitalize on this mistake.
By opposing CBDC, President Trump hopes to win over new bases of support, particularly among experienced voters who are tired of government overreach. But beneath that well lies an even greater reservoir of political energy, waiting to be unleashed. It’s a younger, more diverse Bitcoin vote.
For many people, recognizing the risks of CBDC is the first step to accepting Bitcoin. That’s because Bitcoin is an anti-CBDC technology. While a CBDC is a type of programmable currency that can be manipulated by governments, Bitcoin is a decentralized currency that no one can control and is resistant to both central bank manipulation and government censorship.
So what does this mean for the 2024 campaign? To strengthen his anti-CBDC legitimacy, President Trump’s next logical step may be to embrace Bitcoin. This will not only solidify his support among privacy-friendly Americans, but also boost his support in the crypto vote, which ranks as one of the most important constituencies this November.
In 2020, there were almost no people voting for digital assets. Bitcoin was just beginning a historic bull market. Many Americans still didn’t understand it, considered it a “scam”, or had concerns about its relationship to the US dollar.
Let’s fast forward to today. An astonishing 52 million Americans own digital assets, including 18% of Republicans and 22% of Democrats. Coinbase reports that the number of owners is larger than the number of Americans who directly own stocks or use rideshares each month. Owners tend to be young and span ethnic and political demographics.
In light of this population boom, several presidential primary candidates have outlined policy agendas to protect the right to own Bitcoin and other cryptocurrencies. And top financial institutions like BlackRock and Fidelity just launched the first spot Bitcoin ETF.
In summary, digital asset enthusiasts have become a political force to be reckoned with.
Just last month, a coalition of industry-aligned super PACs announced they had raised a total of $78 million. They aim to increase that total to $100 million this quarter to support pro-innovation candidates. At the grassroots level, voters who own digital assets are also poised to play a powerful role, especially in key battleground states.
Consider New Hampshire, Nevada, Ohio, and Pennsylvania. According to a Morning Consult poll, 18% of voters in these four states own digital assets. And 55% of these voters said they would be less likely to support a candidate who would hinder the value of cryptocurrencies. These values include a desire to create an ownership economy, along with a distrust of the current economic system run by government agencies and large financial institutions.
In other words, these issues are top priorities for up to 1.9 million voters in these four battleground states alone. In a state decided by just a few thousand votes in 2020, this new coalition of digital asset enthusiasts could be enough to sway the election.
The question is whether Trump cares.
Although he has been critical of digital assets in the past, there is growing evidence that he is changing his mind. Before sounding the alarm about the dangers of CBDCs, Trump dipped his toe into cryptocurrencies, raising millions of dollars through the launch of his own NFT collection.
Mr. Trump has already embraced cryptocurrencies to rally support among voters, and endorsing pro-Bitcoin policies could help him do so again. Doing so could win converts among a group of voters the Biden administration has openly opposed. And he would have instant access to millions of new voters and tens of millions of dollars in financial support from powerful super PACs.
Here are the benefits of adopting Bitcoin. As a financial investment, Bitcoin has historically been considered high-risk, high-return. But as a political strategy, it’s low risk, high return. Just like opposing CBDC, supporting Bitcoin and the right to own cryptocurrencies is a deal maker for millions of Americans and a deal maker for almost no one. there is no. And if there’s anyone who can recognize a good deal, it’s Donald Trump.
Brian Morgenstern is Director of Public Policy at Riot Platforms, one of the largest publicly traded Bitcoin mining companies in North America. He served as senior advisor and deputy assistant secretary of the Treasury Department from 2017 to 2020, and served as White House deputy press secretary and deputy director of communications in the Trump administration from 2020 to 2021.. The opinions expressed in Fortune.com commentary articles are solely those of the author and do not necessarily reflect the author’s opinions or beliefs. luck.