Can CBDCs and Cryptocurrency coexist at this point in time? in the Era?

By Alex Larsdens

June 23rd, 2022



Can CBDCs and Cryptocurrency coexist in the Era?

As much as everyone enjoys using digital currency and payment systems like UPI transactions, NEFTs, (National Electronic Funds Transfers) and others, their structure hinges on the existing banking structure. While we send transactions from our apps back and forth, the banks who work at the back end need to exchange a ton of information for the transaction to be successful. Sometimes, you might even encounter different server or network issues which can leave you frustrated.

CBDC’s aims to bring all parts of the infrastructure together under one umbrella.

Out of the blue comes CBDC (Central Bank Digital Currency) and its conjecture due to its worldwide adoption. This piqued the interest of many investors who invested in many cryptos to understand and dig deeper into the realm by finding unexplored parts to show people with interest.

As opposed to current payment systems, where banks keep different databases of information and require constant monitoring and insight exchange for every two- or multi-party transaction, CBDC aims to bring all parts of the infrastructure together under one umbrella.

However, CBDCs are digital tokens that are backed and issued by the Central Bank. They can be termed as legal tender when people start using them for transactions.

CBDC and Crypto
A lot of you may wonder if CBDC isn’t anti-crypto but the answer remains it’s not. People with an understanding of how fiat and the digital payment sector work will understand that CDBC will bring about a more structured series of transactions. Moreover, CBDC will be built on blockchain technology which will help facilitate real-time funding.

That’s not all. Due to the blockchain framework, CBDCs will help the government to set up elaborate monetary policies and allocate stimulus packages cheaper and quicker without bearing the cost of heavy logistics.

With these services, CBDCs will have to rely on the authorized part of the blockchain. What this means is that the blockchain will have the right to modify a transaction if necessary. This sounds nothing like crypto, right? Probably not, but to achieve financial inclusiveness and monetary sovereignty for everyone, this might be what we need.

In addition to this, the security of transactions remain paramount for crypto platforms. Some of them even make use of Bitcoin Profit and other similar apps to help users make the most of crypto price volatility while helping them secure their transactions.

What does this mean for Crypto?
Even if the CBDC looks like it defeats the purpose of financial sovereignty which is what crypto is about, CBDC will have no negative impact on the position and popularity of cryptocurrency. The reason for this is that even though CBDC comes across as not favoring crypto, it uses the same technology to perform its duties. The idea of using digital currency through certain levels of transactional immutability, smart contracts, quick payments and more will always be possible.

In addition, it’s also worth noting that a majority of international CBDCs are looking into using the Ethereum blockchain to launch what is being envisioned as a new form of digital payment.

CBDCs will speed up regular payments and transactions

Can CBDCs and Cryptocurrency Coexist?
Yes, it’s very possible. With the growth of cryptocurrency and its continuous adoption especially by global leaders, investors have to be ready for government-backed CBDCs. However, CBDCs will add to the recent drive for crypto and cause the right to the digital realm.

Moreover, once people begin exploring the decentralized and private advantages of blockchain-based payment systems, they won’t take long to venture out and search for something similar. This will cause CBDCs to speed up regular payments and transactions and make the path to crypto acceptance clearer through palatial benefits and different use cases.

What are the benefits for investors?
With Ethereum being the choice of many rising CBDCs, investors can begin to look toward Ethereum Powered blockchains and their different tokens. On the other hand, there will be massive blockchain technology adoption due to the optimism that will come with CBDCs.

Bottom Line
The bigger picture suggests a harmonious coexistence of crypto currencies and CBDCs in an era when financial inclusivity and asset class diversification are key user requirements.

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