Will CBDCs pose a threat to Bitcoin or will they help its role within the digitizing of the world, or will Bitcoin eventually become a threat to CBDCs? Let’s try and answer that in today’s bitcoin latest news.
Even since Facebook announced plans to create a digital payment currency Libra, central bankers tried to counter the project by inventing their own coin. While Libra is still facing regulatory troubles, a BIS report indicated that more than 80% of the world’s central banks that are currently developing a central bank digital currency. The idea of a central bank digital currency is different than anything Bitcoin stands for as the community has been speculating on possible consequences for the main cryptocurrency. So, the question remains, Will CBDCs pose a threat to Bitcoin in the online world, or will it just set the stage for a grand entrance?
The CBDCs will represent the cash bills that we use today but they will be well, digital. They are still many unknown factors that surround the developments of these coins. Authorities have justified the potential constant surveillance by claiming that they will be able to reduce and to eliminate illicit activities like money-laundering. The concerns emerged in the community that the launch of CBDC will harm the industry and as well as Bitcoin. Binance CEO Changpeng Zhao, predicted that a CBDC with a good design will become a threat for the first-ever cryptocurrency as he outlined that most of these currencies will be centralized and will not provide the same freedom as BTC does.
Also, the world governments will push their own inventions even further so they will have to be inclined to reduce the role of a decentralized platform. Bitcoin’s whitepaper described it as an electronic peer-to-peer cash system but having tons of competition that are backed by superpower coins, will decrease its role. It could be more harmful if the CBDCs enable cheaper and faster transactions than Bitcoin does at the moment. Their value will not fluctuate as much as Bitcoin’s because people prefer sending or receiving a currency that will not lose any value once the transaction is complete.
On the other hand, there’s a narrative that CBDCs come to the market, they will open the door for Bitcoin. Grayscale Investments argued that once launched, CBDCs could “accentuate Bitcoin’s role in the global economy.”
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