CBDC's influence on crypto CBDC is rooted in the development of crypto, although they are fundamentally different. Cryptos such as Ethereum (ETH) and Bitcoin (BTC) are decentralized and independent. Therefore, it is not controlled by central bodies and/or governments. As Bitcoin increasingly becomes a form of legal tendering, such as in El Salvador, these CBDCs and Bitcoins are seen as competitors.
The big difference here is the principle of scarcity. With only 21 million Bitcoins in circulation, an unlimited number of cryptocurrencies can be created.
The use of central bank digital currencies also reduces the barriers to the crypto market. At this moment, it was not known to many, and they were hesitant. but still takes time Only when the use of the digital euro becomes normal We will become more familiar with digital wallets. but for this We have to look at the long-term development first.
The fact that governments around the world are developing or launching their own digital currency is a very powerful message for the crypto world. Blockchain and crypto are here and we are still in the early stages of this revolution.
CBDC is what?
The name CBDC stands for Central Bank Digital Currency, and it can be translated into the digital version of fiat that we all know and use for years. For example, the US dollar, the euro and the British pound. To give just a few examples since inception Cryptocurrency Of course, every country has its eyes on this. We have seen many times that a country has announced a ban on crypto. We have seen numerous reports from China that all crypto has been banned. All because they see crypto as a direct competitor to the current financial system. El Salvador has now become the first country to legalize Bitcoin. There is a need from other countries for alternatives to recall regulations. And many countries have already begun to develop their own CBDCs, so they do this primarily to regulate monetary policy.
DIGITAL DOLLAR / EURO
in every country where you have a central bank. They give credit and spend money through affiliated organizations. In Europe is the European Central Bank (ECB), which is similar to the US Federal Reserve system in America. It is important to know that the funds you have are only used by the ECB/Fed. Your
bank account funds are not issued by the ECB, but by your own bank. This may have advantages. But there are also significant disadvantages. What if your bank goes bankrupt? Yes, you may lose all the money in your bank account. Not a good idea, right?
all banks are working hard too. That is, we see less and less cash flow. Remember, Cash is King! Nothing can be tracked with cash. Everything can be tracked electronically, however, electronic payments have grown exponentially. And there are more possibilities in digital payments. Look around you and register all payments for yourself that you make digitally. Then you will find that there is not much cash left. are you a debit card, credit card, phone or smart watch only? You're not the only one! And that is why central banks are investigating the possibility of using digital currencies.