As cryptocurrencies prove themselves a viable and efficient alternative to current payment systems, winning over ever more sectors of the economy, it\u2019s only natural that arguably the most powerful player wouldn\u2019t want to be left out: government. That\u2019s where central bank digital currencies come in.<\/p>\n\n\n\n
CBDCs are not cryptocurrencies, nor are they Stablecoins – but they include elements of both. They are \u201cstable\u201d, since a CBDC is nothing more than a reengineered form of a national currency that incorporates some of the features that make cryptocurrencies so powerful.<\/p>\n\n\n\n
It\u2019s worth mentioning that, apart from a few small scale pilots – particularly in China by the PBOC – no nation has implemented a CBDC yet. Therefore, existing projects vary wildly in form, technology, and monetary structure.<\/p>\n\n\n\n
In many ways, it\u2019s useful to think of CBDCs as a hybrid between Bitcoin and a fiat currency.<\/p>\n\n\n\n
The main feature used by most CBDC proposals is the use of a blockchain or other distributed ledger system (DLT) to keep a single ledger of payments and transactions. <\/p>\n\n\n\n
The advantage of this is that it enables more efficiency, and allows central banks to use a single ledger to account for money supply. This also reduces central bank reliance on commercial banks to control the issuance of new money into the economy.<\/p>\n\n\n\n
Even if each country exploring a CBDC has its own approach, one thing that most governments aren\u2019t particularly known for is for their being keen on giving up control.<\/p>\n\n\n\n
Therefore, it\u2019s very likely that most – if not all – CBDCs will be permissioned networks, as opposed to Bitcoin\u2019s open nature. <\/p>\n\n\n\n
Transaction validation will probably remain under the control of regulated entities, although it\u2019s unsure if these will include the private sector as well as government.<\/p>\n\n\n\n
Finally, also unlike Bitcoin, both money supply and monetary rules will probably remain under full control of the currency\u2019s national – much like fiat currencies today, but allowing for more direct control by the central bank.<\/p>\n\n\n\n
However, given the highly experimental (and sometimes secretive) nature of CBDC projects, and given that no central bank digital currency has been rolled out yet, it\u2019s too early to know with any certainty how any of this will play out.<\/p>\n\n\n\n
While this happens, stablecoins are doing a very good job of bridging the gap between fiat and crypto.<\/p>\n","protected":false},"excerpt":{"rendered":"
As cryptocurrencies prove themselves a viable and efficient alternative to current payment systems, winning over ever more sectors of the economy, it\u2019s only natural that arguably the most powerful player wouldn\u2019t want to be left out: government. That\u2019s where central bank digital currencies come in. CBDCs are not cryptocurrencies, nor are they Stablecoins – but […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[394],"tags":[],"_links":{"self":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/8043"}],"collection":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/comments?post=8043"}],"version-history":[{"count":0,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/8043\/revisions"}],"wp:attachment":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/media?parent=8043"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/categories?post=8043"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/tags?post=8043"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}