The Cryptomise Sunday

Author: Mansi Patodi

02-Oct-2022

Is CBDC a Cryptocurrency?

Crypto is going nowhere. It is emerging as an inspiration for many big economies, and CBDC is the outcome of that inspiration. According to the data from an unknown source, a total of 105 countries are exploring CBDC, including Russia, India, China and Nigeria.
Central Bank Digital Currency (CBDC) is the concept of digital currencies built around cryptocurrencies to replace paper currency.

In the conflict regarding violating the actual properties of cryptocurrencies, experts say that CBDCs are not cryptocurrencies.

Let us understand the arguments against CBDCs being cryptocurrencies.

Are CBDCs Decentralized?

Issued by the Central Bank of the country, the central authorities and government regulate the supply and functioning of CBDC. The government can anytime issue new currencies and can even hinder the circulation of existing currencies to control economic growth. Unlike decentralized cryptocurrencies that have no regulatory body, whose supply is predefined and cannot be altered.

Is blockchain important for CBDCs?

Since blockchain's primary intent is to provide trust to parties by not involving the middlemen, some central bank executives agreed that retail CBDCs do not necessarily require blockchain as they will require the information of the transactions to cut out illicit activities and unauthentic transfers.
The executives also added, "Like, for instance, Bitcoin. I think it is a very good use case for blockchain." This statement has given.
the clarity that CBDC might lack properties to be true to cryptocurrencies.

Why CBDC?

Government views CBDC as digital money. The grounds for introducing CBDC are safeguarding the growing demand for digital currencies and controlling and monitoring unlawful transfers. However, many crypto lovers seem unhappy with CBDCs; the exciting thing to wait and watch is how its adoption will turn out.