“Crypto has a big head start over CBDCs“–Paul Ebeling
Central Bank Digital Currencies (CBDCs) have become a concern for governments all over the world. Every central bank is either talking about them, trying to create them or trying to launch them.
The subcontinent’s central Reserve Bank of India could roll out its digital rupee as early as this yr.
China is piloting its digital RMB Yuan in 11 major cities including Beijing, Shanghai and Shenzhen they have begun onboarding its biggest commercial banks and tech firms to the new token.
The United States, the world’s biggest economy is reading a digital greenback launch, an American CBDC “inevitable.”
Some say that the advent of crypto has forced central banks’ hands – pushing them to create their own answer to digital tokens like Bitcoin and Ethereum.
The Big Q: What difference between CBDCs and coins like BTC?
The Big A: Many central banks are building their pilot tokens on existing public blockchain protocols.
The masterminds behind the leading CBDC projects say they will make use of blockchain and distributed ledger technology.
But unlike crypto, which is decentralized, CBDCs do not have to use blockchain. As, CBDCs are the epitome of centralization, cryptos are the just the opposite
Governments abhor cash because it is the de facto currency of the black market. They also hate the fact that tech firms currently have a stranglehold on payment platforms because big IT companies operate across borders and can grow extremely powerful.
Skeptics argue that CBDCs, if successful would let them kill 2 birds with 1 stone. By making a centralized digital currency that has no elements of anonymity built into it, they could do away with black markets, freeze criminals’ funds, and claw back control of payments from IT companies.
Centralization would reposition central banks, currently at the fringes of daily economic activity, as the central, controlling bodies at the heart of domestic finance. Crypto seeks to do the opposite.
Crypto has a big head start over CBDCs.
Have a prosperous Day, Keep the Faith!