Potential threats from CBDC to the decentralized crypto coins!
Many things have significantly changed after the evolution of cryptocurrencies like Bitcoin. Earlier, people used the traditional financial system to make transactions, but now, things are different. They can use something that the government does not even regulate, and therefore, the government is also worried about the same. However, recently, there were a lot of concerns raised by the government and international bodies regarding the spread of digital tokens. People are using more and more cryptocurrencies on bitcoin circuit, and therefore, the traditional financial system is at the mercy of crypto nowadays. So, regardless of what you think about it, cryptocurrencies are considered a threat from something that the government is about to bring in the future. Of course, we are talking about the central bank’s digital currencies.
Different nations of the world have launched central bank digital currency to counter the effect of cryptocurrencies on their country’s financial systems. The primary target of launching any such thing from the government is nothing else but to remove the effect of cryptocurrencies in the life of people as well as on the system of government. The government is already criticizing a lot of crypto coins like bitcoins as more and more people are turning to watch them for finance. Moreover, the government believes that cryptocurrencies like bitcoin threaten the financial system that has existed for a long time. So, they wanted to do something about it, and therefore, they decided to bring the central bank’s digital currencies into the market. These are the digital tokens that will function like bitcoins only, but they will work under the government of different nations.
- CBDC is controlled
The central bank digital currency that we are talking about today or partially controlled by the government makes them a tool for controlling the money flow in the nation. Yes, different nations are worried about bitcoin because any nation does not account for them. Also, the government cannot ask the company to take the project down because many people support the same. Therefore, to counter the effect of this kind of thing, the central bank’s digital currency is about to be launched. The government thinks that it can control the money flow in the nation with the help of the central bank’s digital currency. Also, with the help of these things, they will have better control over the things that people do with their money.
- Less volatile
Decentralized digital tokens, like bitcoin, are highly volatile. It is all because there is no authority over them. However, some people think this to be a positive factor, while others do not agree with the statement. Some people believe that the cryptocurrency’s quality is helping the people make money out of it and, therefore, it is the right thing. On the contrary, some believe that volatility is one of the most drastic things about bitcoins. Therefore, different people hold different beliefs about this, but the central bank’s digital currency thinks negatively about it. Therefore, the central bank’s digital currency will be less volatile than the cryptocurrencies. This is because they aim to counter the effect of cryptocurrencies, and therefore, they wish to provide a better environment for people to make transactions.
- Better investment
A very prominent reason the CBDC is considered better than the cryptocurrencies in the coming future is that they are a better investment option. A significant reason behind the same is that the government will control them, and therefore, the government is going to have some responsibility towards the holder. When it comes to digital tokens like bitcoins, the company does not promise anyone to provide them with the money they have invested in it. It is all at the mercy of the market. If the market is high, they will get the money, but their money is gone if the market is low.
Trustworthiness is also crucial for the central bank’s digital currency. Everyone knows that the government is something that exists physically and also will be held responsible for everything that happens in the central bank’s digital currency. On the contrary, cryptocurrency lacks any such mechanism. No one regulates them, and also, no one is accountable for when there is a makeup mishappening in the crypto prices. So, cryptocurrencies do not even stand a chance in front of Central bank digital currency projects.
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