This could be as trusted as cash, as user friendly as a NextGen payment application, yet also derives the best of the same blockchain technology which reinforces cryptocurrencies. Unlike general crypto currencies in market, the CBDCs would be recognized by the law and fully powered by Central Bank. The aim now is to ensure that the new CBDCs would encompass all these desirable features. The answer to this crypto problem was simple for all Central Banks - Issue a digital currency of their own.Ĭurrently the Cryptocurrencies in the market like Bitcoin, Ethereum or Diem have multiple good features which can be utilized, and Central Banks do not deny these facts. This worries all central banks, what if there is a widespread adoption to these decentralized cryptocurrencies which have no legal or regulatory safeguards, they can in a way take control or weaken the financial structure built over centuries. How would you control a decentralized Currency Movement? Central Banks all over started realizing the threat, they understood the fact that this is hard to stop unless they join the club.īitcoin, is often referred as DIGITAL GOLD, but it has a theoretical mining limit, only a number of bitcoins can ever be mined, which creates a demand and supply chain with surging value appreciation unlike Central Banks who have been printing more money to contain the economic and pandemic situations.
Even Facebook, in 2019 announced, that it would develop its own digital currency, known at the time as Libra and now renamed as Diem. As on date there are 4000 Cryptocurrencies in the market. And do realize that cryptocurrencies, unlike normal currencies, are not issued by a central bank, but rather via a decentralized network of computers, using blockchain technology. The Bitcoins price graph surged by 6 times, with a theoretical market capitalization higher than the world's two largest payments processing companies: Visa and MasterCard. Following Tesla’s announcement, February 2021, that it bought $1.5 billion worth of bitcoins. The Big Blue Whale of this pod is Bitcoin with a growing market share of 56%.
Over Last one year, with pandemic and economic fallouts, we have seen a surge in the growth of Digital Currencies, we have 45 Digital Currencies with a Market Valuation of over 1 Billion Dollars. Most of us use Prepaid Wallets, Debit and Credit Cards or Payments Applications for transactions, then Why do we need central bank digital currencies and how is it different? The idea of digital currency has been there for quite sometime. Internal Buzz is that about 60% of Central Banks are already experimenting. About 90% of the Banks over last one year, have been toiling with the idea of making CBDC a reality. The Financial sector is buzzing with a revolution with a form of currency you cannot touch, feel, or even see. In last Three centuries, Many Central Banks followed, and their primary task was to keep their currency circulation and its price fluctuations in control, working on all parameters to ensure the foundation they laid stays stable.
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