In fact, since the creation of the first cryptocurrency, Bitcoin, efforts have been made to regulate cryptocurrencies. In recent years, they have also been pushing for their own digital currencies. Mostly on the suggestion that digital currencies like Bitcoin are threats in their view. Let’s take a look at what central bank digital currencies could mean for cryptocurrencies.
Similar technology, different intent
To properly understand CBDCs, it is important to remember that digital currencies are able to function thanks to the blockchain. Central bank digital currencies would most likely operate on the blockchain, albeit modified. The growing noise around CBDC is worrying cryptocurrency users. Mainly for the reason that they have been called a cryptocurrency substitute by banks since the beginning. However, the reasons for the creation are clear and there are not a few. Cash, which many people are used to today, does not quite perform well in hard times, as the pandemic has confirmed, for example.
It is also worth noting that for many years governments and central banks have tried to suppress or even eliminate cryptocurrencies, especially Bitcoin. These efforts have been ineffective and unsuccessful. However, it should also be added that in the event of the introduction of CBDC, force will be exerted on cryptocurrencies. Gold, for example, also has a history with bans and is now seen as a commodity suitable for investment.
Creation with clear territories
With the recent release of a whitepaper from China on e-CNY, it is clear that CBDCs are already beginning to demarcate their territories and this trend will continue. These indications suggest that CBDCs are set to be a direct competitor to cryptocurrencies, and perhaps even a direct liquidator. Another possibility will be for banks to allow investment and trading in cryptocurrencies so that they can be direct competitors to exchanges.
Everyone who has been around cryptocurrencies for a while and has heard of CBDCs is mostly of the same opinion with concerns about what these digital currencies could mean for cryptocurrencies. Is this just another step towards a more centralized society? What is your opinion about CBDCs creation?