Bitcoin Forum

A lot of countries are releasing/ contemplating to release their own digital currencies. EU is contemplating digital euro, Jamaica is thinking of digital Jamaican dollar.. India has already launched digital rupee..
How these currencies will affect the bitcoin/crypto ecosystem?

The title should be changed so that it is easier for people to understand and describe what you are trying to talk about.


Even if all countries use digital money, inflation will still be the same threat as they still use paper money. It won't have any impact on Bitcoin, because Bitcoin remains in the realm of being on the line of freedom and a suitable deflationary alternative. After all, Bitcoin is not against digital money of any country, they can still be compatible with bitcoin both in paper money and digital money or what we are more familiar with CBDC.

I may understand it wrong, but aren’t these two things fundamentally different? Behind all those digital currencies you mentioned in here is a regulatory force lead and controlled by a state/bank whereas cryptocurrencies are independent and not regulated. The only thing I could think of, that maybe could affect the ecosystem of crypto is that some people (mostly those who are first interested in crypto but still afraid of having not enough knowledge) might prefer the digital version of their all-day currency over crypto currency. So it seems to be kind of an alternative (though it actually is something different) what might lead to a lower demand of crypto by newbies… at least that’s what I’m thinking.

The existence of fiat does not affect bitcoin or other cryptocurrencies. They both serve different markets and function differently, rebranding fiat using the blockchain would not do much to change this. Core bitcoin users would not flip bitcoin for digital fiat, non bitcoin users would not understand the need to apply the blockchain to fiat.

You can sell all kinds of things to people today, it is important that they are only attractively packaged and that the government says they are legitimate. The digital currencies of central banks are nothing that can be compared to Bitcoin, but some will certainly be confused when this option is available to them because we only need to go a little into the past and see all the nonsense written and talked about Libra coin. I still remember well when I walked into my local store and looked at the newspaper shelf, I read the headline "Libra, the Bitcoin killer is coming".

I don't know why some people see so much fascination with CBDC, so a simple bank card allows you to never physically touch a banknote, and mobile banking allows you to see a visual presentation of what you have on screen.

IMO, it's just a movement to lessen the creation of plastic cards. Credit cards, ATM cards or whatever card they use now.
Fiat going online. That's it. It's way different with Bitcoin and altcoins. Plus, it will also speed up the process of online purchasing instead of looking for different options like PayPal, or something near that kind of services. They will use their own traditional money "online" believing it might enhance their economy, their respective countries individually. Don't forget the centralization.

We can rephrase the question to 'how will fiat affect bitcoin and crypto ecosystem'. All I know is that the reason government created nation's digital currencies has nothing to do with bitcoin and cryptocurrencies but they are means for us to spend locally. Only what I know that will be happening is that government will be controlling their fiat and digital currencies but decentralized currencies like bitcoin is the real asset someone should have. The connection bitcoin has with the government currencies is that bitcoin value is increasing when compared.

Unfortunately the enhancement is not really what this is and the economy development or boost is the primary aim. The anti btc countries are at the front of this agenda because this is far different with the purpose of bitcoin. The traditional money is merely within the locality and don't have any decentralised feature. Btc isn't  centralised so fiat is only taking care of the centralised system, the struggle is not for bitcoin as it already has a place that no country will put down.

I'm thinking of the positive that there will be another pair for bitcoin from these CBDCs once they release. All of them will eventually come and will buy bitcoin.
That's the only thing that I can think of if it's about the contribution of these CBDCs because honestly, there's really no effect at all to us if we'll try to find one.
What only matters with them are that they're government-backed.

The key word is "contemplating". Nothing has really happened yet and crypto users are in a panic state about this because of unknown outcomes.

Please correct this. No such thing has been launched yet. It is also being "contemplated".

They will not. The use of these currencies is a government affair. In order to sell/buy cryptocurrencies from local exchanges in your country you might need to get through them. Because of lack of information and the normal persecutory nature of human mind, people are over-thinking this and making up things that they dont understand. While things that happen are mostly for the better outlook, if people dont accept this mode, there will develop a counter-approach too. So I dont think there is anything to panic about but watch how governments make their move.

It won't? It's kind of similar to a rebranding, but that's it, rebrand. Nothing of note actually changed at its core, it's still backed by a central organization, aka the government, and regulated. It's still fiat, regulated, controlled, and I highly doubt it being digitalized would actually change anything in the crypto ecosystem since well, it doesn't even influence or touch it. They also operate in different systems, crypto being in blockchain and fiat being on a government-controlled system.

It all depends how they will be implementing these currencies.

If the governments "outlaw" all other Crypto currencies to force people to use their digital currency, then it will have a bad influence on the adoption of Bitcoin.

If the governments define Bitcoin as a "Commodity" and not as legal tender, then obviously Bitcoin adoption as a payment system will suffer as a result. (This is how most governments are currently protecting the Fiat currencies)  ::)

I want Bitcoin and these digital currencies to have a level playing field, to see which one will win in the end. (Centralized or Decentralized)  ;)

That is true but with all the nations that banned Bitcoin, Bitcoin adoption is still going on, few countries banned Bitcoin but some countries that banned Bitcoin are still having citizens that are using it for p2p transactions. It also depends on the type of ban.

What is most important is adoption, Bitcoin can serve a nation as commodity or a currency, both or one out of it will help in Bitcoin adoption. If Bitcoin is made a commodity, nothing is stopping people to send it to one another.

Not sure about the short term effects of all these digital currencies, but long term it should have no real impact on crypto currencies. Investors are going to realise that there is no real difference between fiat money and digital fiat money. In both cases a government or instituon backed by multiple countries sits behind them. When it comes to crypto currencies, most of us are interested in the independence and anonymity of cryptos. All that will be lost if we go for government controlled digital currencies. The government's are trying to become part of the crypto world, but investors will likely not buy into it.

Imho the effect should not be much more different than printing more fiat, if any, since there CBDCs may not even be new money, may replace some of the fiat in circulation.
The effect on crypto should be minimal to 0 (or may even help a little).

You should, however, read the other discussions on similar topic, whether some are afraid whether Will central bank digital currency (CBDC) make bitcoin worthless? (https://bitcointalk.org/index.php?topic=5382234) or they try to explain that CBDC will make Bitcoin MORE valuable (https://bitcointalk.org/index.php?topic=5382985). The existing discussions may give a wider image and some ideas...

The interest for cryptocurrency will still be retained despite maybe government introducing different digital currency. They are both different and the independence of crypto still have no comparing nature with fiat or digital currency and that won't affect each other. The Chinese have their yuan close to a year and India too has rupee but none is taking anything out from bitcoin. Bitcoin drop is not relating to digital currency.

Let's just have to wait and see what these people or investors would do when some countries introduces their own digital currency. I'm sure not all would choose the digital currency if they have had an experience of owning a Bitcoin but for some people who doesn't have enough knowledge about crypto currency might choose the digital version of fiat thus, making a digital currency is no different from printing more money. People should have to decide whether they like to be part of it but of course, if these certain countries would follow what China did to Bitcoin then there might be a problem with adoption on that country.

All this digital currencies would just be the digital version of their fiat currencies exactly the same effect as compared to fiat just like every other CBDCs we already have in circulation. Bitcoin is a decentralized currency of it's own kind and has impact in its own uniqueness and it's effect is different from what CBDCs would offer

actually does not have much effect on the bitcoin ecosystem, because basically people's views about bitcoin have started to change from a means of payment to a store of value asset. but the impact of currency digitization is to create a better crypto ecosystem. this will trigger regulations that make crypto clearer and possibly fully legalized like in el salvador. so broadly speaking it will be good in the long run.

That is true, Bitcoin is not centralized, but exchanges are now holding substantial amount of Bitcoin which is owned by their customers, there are also custodial wallets and some organizations that are providing custodial means Bitcoin can be held or used. What I am trying to imply is that Bitcoin is decentralized but some people are fooled and used it in a centralized way that they do not have full control over their own coins.

What I noticed is that most Bitcoin users are not using it for a means of exchange, means of exchanges is just an added advantage for them, they prefer to use Bitcoin for store of value, that is why many people are buying Bitcoin.

Well, there might not be that much effect but I think there will be another source that shall add to the market cap of bitcoin. We can imagine that after USDT and other stable coins, there goes the cbdc's that will also be helping bitcoin to push its price to the top.
And that's because there will be an added cap to the current cap that bitcoin has. Those cbdc's are already under the regulation but even if they'll be hard on it, they can't regulate bitocin.

You forget about China as well and Russia who had their CBCD already.

It doesn't have any effect to the bitcoin/crypto market because obviously it is very different. These CBCD's are in the control of the government so it's fully centralised. These government are just taking advantage of the situation and uses the blockchain technology for their advantage. So this is like the local fiat, only this time it is in digital form. And you can't even trade it on exchanges so that's another main difference.

Yeah, someone already suggested this but I think the reason why he title it like that is because he is in the economics board and I think money is also related to economics?

And lastly to turn heads for the reader but moving on I think there is an effect if countries started to create their own version of digital currencies because it is more legal and they can market it easily and maybe they are also easier to use than a regular cryptocurrency but die hard crypto supporters are still there. They wont leave crypto just for this because in the end this digital currencies created by the governments are still under their control. Only the appearance have changed, nothing more.

There will be no impact on bitcoin, it will continue to serve the same purpose it has for the previous 60 years (decrease in purchasing power) with all the massive printing.
I was so determined to see how my country's digital currency (Enaira) would go when at the first launch, the download and ratings were low and was taken down but came back again and after some weeks, and today, it's one of the failed projects my country has launched last year. The low rating, review, and dissatisfaction were so much.

It all depends upon how much trust people retain in traditional financial institutions and how well central banks are able to incentivize the rapid development and adoption of their assets.

Initially, they could incentivize CBDCs offering excellent options and terms to the public. Then later those options could dry up, if they succeeded in achieving a monopoly. Which could in turn spawn more alternative assets and currencies in something resembling a financial arms race. That would appear to be the normalized trend we've witnessed throughout history.

Who do people believe in, and who do they trust? Both are great questions I would not mind knowing the answer to.

On one hand, I think public distrust of the state could be at an all time high due to corona lockdowns and general discontent. On the other hand people can certainly have short term memories at times. It is possible most have already forgotten events of the past 2 years? Its hard to say which direction the wind is blowing, many aren't being as vocal about their thoughts as they have in the past.

I get the impression many do not remember the 2008 financial crisis. Perhaps the COVID crisis will be the same? Or perhaps it will be different?

Even if every country have their own digital currency it doesn't change anything and it can't be the same as bitcoin because bitcoin is fully decentralised and can't be manipulated by anyone.  If every country decide to have their digital currency am not sure if the currency will be volatile in nature. I have been following the nigeria government who launched a kind of digital currency call E-naira , since then this currency was launched I have not heard anything concerning it, even if one decides to get some E-naira I don't think if it will add any value by getting some profit. Governments that are trying to make a digital currency are doing it for selfish reasons.

Almost all countries that will have their own digital currency, I believe, will have some regulatory agency, such as banks and other financial organizations, that will operate as a task force to oversee digital currency transactions. However, Bitcoin transactions are decentralized; there is no third-party, no middleman, and no government or financial institution can regulate them.

CBDCs will not help in any way to push Bitcoin price to the top, they are just the same as fiat and nothing more than fiat. The price of Bitcoin is used to compare the price of fiat, fiat do devalue, also demand of Bitcoin increasing is not because of CBDCs or Fiat or stable coin, it is because people see the value in Bitcoin and buy it.

Outlawing cryptocurrencies will probably be impossible this time because of the countries adopting BTC. There are lots of them already which even the politicians in the US are already protecting and proposing legislation for the use of BTC. Because of these, the governments will just be forced to regulate cryptocurrencies which is what they are currently been doing. The effect is the trust to cryptocurrency or BTC kept going up.

I'm sure the implementation of government back digital currencies and the laws being created from then on will just be to make the transactions of market participants be transparent in the CBDC platform.

There's not much effect, if at all. These central bank-issued currencies, after all, are not in any way similar to Bitcoin except their being digital currencies.

And this is not really a huge transformation. As a matter of fact, there's not much difference between the current status of fiat and the new digital currencies. Even before this idea of a CBDC is thought of, fiat is already developing toward digitalization.

But if there's a good effect of this, it would be on the side of governments. If all of fiat is issued digitally and on a transparent blockchain, then public spending and budget allocation is easily monitored. 

Many countries are busy developing their own central bank digital currency but in the latest development, International Monetary Fund made a statement concerning the stability and sustainability of the CBDC which is a big drawback to the government's quest to create a contender for cryptocurrency through the CBDC.

I think transparent spending by the government in fiat currency can help reduction of inflation in this time of high inflation they have to avoid certain recurrent expenditure. Budget should not be padded but made free from manipulation of figure, the government including so much of padded expenses that is not reflecting on the economy is corrupt practice which does not help the economy.

The countries are just following the latest technology in the finance world. They have the digital version of their currency. The value of the digital version is the value of the physical version. Since it does not appreciate it does not compete with bitcoin. If the value of their physical currency depreciates, the value of their digital token will depreciate also.
My country also has their own e-naira but many people are not using it.

To be honest, if I could remember correctly about 29-35 countries ought to have created their own digital currency since the year 2019 when the IMF boss advise them about thinking of creating their own CBDC which will serve ease of payment and possibly reduce the level of fiat printing. They were all serious about it then but they later throw it away and it will be nice if they are serious about it now crypto is extremely trending.

It is all a work-in-progress and the uncertainty about it is way more than that people need to think of. So lets not think about what is going to happen in future but get ready with bitcoin buying as much as we can whenever the price falls. If things go out of hand, we have nothing to do with it and have to cope with it. These are opportunities when there is a war like situation and bitcoin falls including stocks, keep money at hand and buy.

Forget what CBDC comes in, it will be for the better only, if not people will protest and governments will be forced to make changes. The governments always want new methods to tax its people, so it will be such that we can use it with some advantages not disadvantages.

- They are pseudo cryptocurrencies, people already know that they would take over some use from fiat by reducing the cost that goes in exchange but that's about it

- Government will try and ban cryptocurrencies as well so that they have investor pooling in their digital currencies

- They might be subjected to limited use since the government might not consider the people who are actually not equipped enough to handle virtual applications

I don't think it will affect cryptocurrencies as long as the government does not come in between the normal functioning of them.

India didn't launched their CBDC so its a wrong information which should be edited.

All the countries are thinking now and if you have sense then think why they are trying to create their own instead of an actual decentralized controlled by none?

Because they never want you to spend your money, they just keep everyone as slave and few as rich by keep inflating the value which decrease the purchase power of your currency gradually.

Governments like the idea cryptocurrencies are trackable, but they don't like its decentralized nature, so they are going to fixe it by creating their own centralized cryptocurrencies that aren't different from traditional fiat currencies in value, purpose and usage. I believe their impact on crypto market will be zero, because people who are investing in bitcoin and altcoins aren't interest in fiat currencies, especially from third world countries. Moreover, there is already stablecoins which follow dollar price, the best option of its kind and the only one needed to avoid cryptocurrency market's volatility.

Yeah, as someone who is a cryptocurrency trader all you’re going to need is the stable coins that we already have here in the cryptocurrency market, such as DAI and USDT, and nothing more. You don’t need CBDC because you won’t be able to trade with any of those.

When I researched on CBDC to understand what it really is, and to know whether it’s going to have any features at all that will differentiate it from the original fiat, but there isn’t. If you install the CBDC wallet from the Central Banks, you will see that only thing you can use this to do is simply just to send and receive money in your country, and it is not like Bitcoin where you can send and receive money from anywhere around the world. So it’s of no use. If I wanted to do local transactions, I can use my online banking.

It’s not all about countries creating their own digital currencies, the question is whether there is anyone who even cares about the CBDC? Is this the first time that a country has made an attempt in creating their digital currency? There have been other countries before now that have created their own digital currencies, but they never really gained any much adoption, and no one is talking about them this time around.

People really don’t have interest in making use of CBDC, just like some people have pointed out, CBDC is literally just the same fiat, there isn’t any difference and it’s also same banks that are offering this service to you.

Oh, there will be for sure. I mean we are talking about something that would replace the USDT and USDC and BUSD of the world. We are talking about something that is both digital dollar but also being able to exchange with the crypto at the same time. If places like Coinbase and Binance and all of that end up accepting the level of it then we are going to end up with something a lot better in the long run compared to USDT type of stuff.

I would definitely prefer that for sure, why? Because if we end up with something like Tether company stealing all of our money, how could we even stop them? We can't and that is why I prefer governments to do it. This is stablecoin anyway, not the real cryptocurrency, so I would be fine with it.

I think later what distinguishes bitcoin and digital currencies from those countries is a clear supply. they will only adopt blockchain for their transaction system. but I don't think it's completely decentralized like bitcoin, so I don't think this will interfere with the development of bitcoin itself

CBDC cannot affect the Bitcoin ecosystem directly.All these countries could do is banning Bitcoin/crypto in the lands,which are under their jurisdiction.Such crypto/BTC bans have been proven to be not-so-effective.
The people who use Bitcoin would most likely use digital fiat currencies as well.There's no reason for anyone to be required by the law to pick between two options.
CBDCs are still a bunch of projects.I don't know why they are being viewed as a threat for the existence of the cryptocurrency world.

Dont take the people running the government to be fools, the politicians are fools, but the ones who work in background are way more knowledgeable than the average forum user here. ;D

Now the governments already know this, so they will try to coerce people into using their CDBC than cryptocurrency. How they will do that, it will be seen with time.

Stablecoins are not a solution to this, they are an intermediary system to avoid the volatility of bitcoin and similar currencies and multiply your assets over the market movements. Beyond that I doubt how much actual usage they get. But if governments allows that then their use will increase.

Dont forget that the users on this forum are a small chunk of the entire population out there. We are a minority there.

There is no need to think about it, if they are forming the digital currencies then obviously it will have proper protocol and thus it will be completely controlled currency. The control however would be on the investment, how much being transacted and from to where to would be the prime thing. So definitely it would be just the normal local currency only in the digital format and will be accessed for its integration and usage over the blockchain.

I dont think it will be much of interest to the common man or even to the peeps like us who are playing in the crypto verse. I mean why would I go and publish the available assets in my wallet to these guys? They will wreck my earnings if it does not fit in their criteria. Lolz.

Digital currencies tied to nations are not a bad idea. People keep acting as if "we want decentralization!!! governments shouldn't get in!!" but they are forgetting that they are buying USDT from a company called Tether, and buying BUSD from a company called Binance, and USDC from a company called Coinbase.

So, basically the stablecoin world has been centralized since its start, it was never really a decentralized thing. It means, would you prefer that some guy being a CEO of a company be in charge of all the money you are holding, or do youw ant that to be a nation? I would prefer the nation part because even though we dislike governments, they are more trustworthy then "some guy" at the top of a company.

Yeah why will they be interested on to something that they cannot own directly like bitcoin when they can just create their own digital currency? they can chose to make it more centralized or regulated so they have full control over it.

If there will be effect I think that is because some crypto users will try those new digital currencies and maybe some will transfer with them completely leaving cryptos behind, this is unlikely but it can be possible for some reasons like cryptocurrencies are too anonymous and they cant track the criminals if ever one of them got victimized or cryptos are too unstable that they can lose the value of their money easily.

There is no means whereby digital fiat can be the same as cryptocurrency, all you have mentioned were just the digital form of the fiat currency issued by banks under the auspices of the CBDC but for someone who want something different could go for cryptocurrency if truly concerned with transaction speed, time, cost, security and privacy.