Are we entering the era of CBDCs?

[pooya87]

Surprisingly enough the Chinese altcoin (digital yuan) seems to be doing fine as they reported a little less than $10 billion worth of transactions recorded on their chain (if we can call it a chain!). There are also at least 2 new ones coming out in the coming months.

Suddenly it seems like the central banks jumped on board of the Bitcoin train but only took the blockchain technology and ran away.

I personally don't care how many of them are created as long as they don't try to ban bitcoin or restrict its adoption in any way (like closing bank accounts of those who dump fiat for bitcoin).
There may even be some silver lining that these CBDCs could replace the stable-coins in the market in the near future and we end up even seeing Atomic Swap capabilities added where you could easily swap one CBDC for another or for bitcoin without the risk of centralized stablecoins (issued by shady companies). That would definitely simplify things for traders while significantly reducing the risks they take.

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[Bttzed03]

Yes, we are.

I'll just use our own Central Bank's move as an example. Here's some part of their report on CBDC:

1 Introduction

Central bank digital currency (CBDC) has elicited immense interest among central banks in recent years. This is evident in the increasing number of central banks engaged in some form of work on CBDC. Many are undertaking conceptual research while some have progressed to proof-of-concept experiments. A smaller number of central banks have already developed and implemented pilot tests of their CBDC. Various factors underpin the interest in CBDC. These include: i) rapid technological innovations in the financial sector; ii) emergence of new entrants into payment services and intermediation; iii) decline in the use of cash in some countries; and iv) increasing interest on privately-issued digital tokens (BIS, 2018)

Recommendation: Take a closer look at the technology

With the fast-evolving technology that drives the emergence of alternative payment instruments in the medium to long term, the BSP may need to keep abreast of CBDC developments and the underlying technology issues. Following the strategies of peer central banks, the CBDC TWG recommends for the BSP to learn the technology behind CBDC.

That report was 2020 and then just last month, they announced this:

The BSP targets to roll-out in the near term, a pilot CBDC implementation which we call Project CBDCPh. The project aims to build organizational capacity and hands-on knowledge of key aspects of CBDC that are relevant for a use case around addressing frictions in the national payment system,

India's Central Bank also plans to launch their own CBDC by 2022-2023.

Maybe members from Nigeria could also give us a feedback about the eNaira.

[avikz]

The mainstream finance is slowly moving to CBDC era for sure. It provides a number of benefits to the government,

1. No more money printing. Governments don't need to maintain mints across the country to print notes. Just need IT infrastructure.
2. Complete surveillance on our finances. No more money laundering is possible.
3. Can't hide your income from the income tax department which means higher tax collection
4. The counterfeit money circulation will be effectively stopped.

Fiat currencies still offers a certain degree on anonymity which will be completely gone with CBDCs. Yes, I personally will not be bothered if they don't disturb the crypto ecosystem though.

[Ozero]

It is too early to talk about the era of CBDC, but this may well happen. Almost all states have recognized the revolutionary nature and indisputable advantages of blockchain technology in the financial sector, and not only in it. The digitized currency of states works more efficiently than the non-cash currencies of these states. However, many states are not yet in a hurry to introduce their CBDCs, because finances do not tolerate haste, and in such a serious matter.
However, the Chinese digitized yuan does not even use blockchain technology, so so far we have very little actual data on the operation of the CBDC.

[tbct_mt2]

CBDCs will be a future of fiat currencies and central banks will use it in order to facilitate their works. With CBDCs and centralized chains (?) which controlled by central banks, they don't have to cope with challenge from money printing factories, oil supplies and other production cost.

I don't like CBDCs but I don't see why governments and central banks don't launch such in their nations and for their monetary governance.

https://cbdctracker.org/

[cryptoaddictchie]

However, many states are not yet in a hurry to introduce their CBDCs, because finances do not tolerate haste, and in such a serious matter.
However, the Chinese digitized yuan does not even use blockchain technology, so so far we have very little actual data on the operation of the CBDC.

Probbaly some delaying it due to its potential of avoiding such launders. Just a guess! But of course everyone a fair shot on having a business using their own CBDC.

Thats the thing. Its not blockchain related so technically can we even called it a coin? Community should be educated by it and avoid confusion on the idea of cbdc.

[tbct_mt2]

Probbaly some delaying it due to its potential of avoiding such launders. Just a guess! But of course everyone a fair shot on having a business using their own CBDC.

Thats the thing. Its not blockchain related so technically can we even called it a coin? Community should be educated by it and avoid confusion on the idea of cbdc.

They have to consider many things. They have to make strategic plans from technical development and implementation of their national CBDCs, and prepare infrastructures to support the actual usages of CBDCs in their societies.

It does not help for CBDC adoption in their nations if they simply code and launch their CBDCs while other infrastructures are not ready to support CBDC transaction, payment, tax, etc.

[Zilon]

I think we need this CBDC to help reduce the fear of using Bitcoin for money laundering. My reason is because since this CBDCs will stand to replace paper fiats moving  within heavy brief cases every single transaction will  be carried out on the Blockchain making the local banks even less relevant except to monitor transaction and ensuring accounts keep up to regulation terms.

Since Bitcoin value will no longer be tied to a paper currency but rather a digital one. The issue of paper money printing will reduce and the case of using Bitcoin to fund illegal transaction as well since there will be moderate CBDCs in circulation limiting the abuse of fiat currency

[Dunamisx]

Surprisingly enough the Chinese altcoin (digital yuan) seems to be doing fine as they reported a little less than $10 billion worth of transactions recorded on their chain (if we can call it a chain!).

One thing with China is that it knows how to control it system alongside with the people, imagine in the first scenario whereby they ban every cryptocurrency activities from operations, they realize it will alter their own system, they have made such regulation that their citizens has no choice than to go by what their government offers and we all know how business and financial economy is fast growing in China. And as a matter of fact, i think China has been the only country doing well with CBDC amidst other countries that implemented same.

There may even be some silver lining that these CBDCs could replace the stable-coins in the market in the near future

The only stable coin is see trending is the USDT and BUSD and CBDC has a different case scenario because it not a cryptocurrency, but if such services is made available for the conversion of CBDC to Atomic swap and then to stable coins then i think China will perform well here the more with the economy system than any other CBDC.

[lornadane]

Maybe other countries have started to enter the era of CBDCs.
But if you're in Asia, maybe you haven't or there are still many other considerations.
Everything also depends on the holding of the central bank or the head of the paper bank because it is all also involved in the crypto world Of course there are risks too.

[pooya87]

Probbaly some delaying it due to its potential of avoiding such launders. Just a guess! But of course everyone a fair shot on having a business using their own CBDC.

The problem is that most countries looked at the technology as a joke and had some small research done and decided not to move ahead with creating a CBDC. Some others decided to let others be pioneers and see if it fails for them then jump on board.
Lets not forget that Venezuela created their Petro and it didn't take off. That may have changed some decisions in other countries.

[cryptoaddictchie]

The problem is that most countries looked at the technology as a joke and had some small research done and decided not to move ahead with creating a CBDC. Some others decided to let others be pioneers and see if it fails for them then jump on board.
Lets not forget that Venezuela created their Petro and it didn't take off. That may have changed some decisions in other countries.

China seems to pulled it off even though they arent actually using blockchain. Maybe those countries should start seeing blockchain differently. I am more inclined towards a new system as long it can be useful and not being used on launder. Anyway, those waiting for it to be succesful before doing it could actually realize it when its too late already.

[Dave1]

Probbaly some delaying it due to its potential of avoiding such launders. Just a guess! But of course everyone a fair shot on having a business using their own CBDC.

The problem is that most countries looked at the technology as a joke and had some small research done and decided not to move ahead with creating a CBDC. Some others decided to let others be pioneers and see if it fails for them then jump on board.
Lets not forget that Venezuela created their Petro and it didn't take off. That may have changed some decisions in other countries.

Petro though was a complete scam, if I'm not mistaken, it was supposedly back up by oil and by the Russian, however, they debunked it already and all the money that was raised was nowhere to be found. So this is a case of CBCD failure in my opinion. And maybe other countries that follow learn by Maduro's mistakes that's why countries like China (Digital Yuan) can be considered as success because they are very careful on their decision to roll out. There was a time that they just roll it out to some small provinces in China just to test the viability of it.

[NeuroticFish]

I would not yet say that we've entered the CBDCs era. I'd wait for at least one democratic country with a strong economy also adopts CBDCs in order to be convinced.
On one hand, it seems to be the direction central banks are interested in very much.
On the other hand, I am afraid it will lead to unprecedented surveillance and censorship, with no benefit at all to us, common people.

Petro though was a complete scam, if I'm not mistaken, it was supposedly back up by oil and by the Russian, however, they debunked it already and all the money that was raised was nowhere to be found. So this is a case of CBCD failure in my opinion. And maybe other countries that follow learn by Maduro's mistakes that's why countries like China (Digital Yuan) can be considered as success because they are very careful on their decision to roll out. There was a time that they just roll it out to some small provinces in China just to test the viability of it.

I think that Petro was not imposed to own citizen. And the people knew better and stayed away from that political scam.
China handed out a lot of eCNY for free to show the system works. I think that this was not the case for Petro.

However, you're right: does anybody in China get his paycheck in eCNY yet? Because if not (or far too few)... then we're too early to even call eCNY a success.

[Lucius]

Surprisingly enough the Chinese altcoin (digital yuan) seems to be doing fine as they reported a little less than $10 billion worth of transactions recorded on their chain (if we can call it a chain!). There are also at least 2 new ones coming out in the coming months.

China is a specific country where the government does not ask people if they want something or not, but simply puts them in a situation where they have to use something. Their CBDC is just a continuation of what has long been popular in China, such as WeChat Pay, which they say has about 800 million users, which means that people are already very familiar with digital payments.

Suddenly it seems like the central banks jumped on board of the Bitcoin train but only took the blockchain technology and ran away.

Central banks have not recently started using blockchain, but have been doing so for years because they have realized that the potential is huge and the whole thing is completely free. There is information that China entered such research in 2014, and thanks to that, they already have a functional CBDC that is used by almost 300 million people.

China started exploring digital currencies back in 2014, at a time when few had even heard of cryptocurrencies and Bitcoin. Other countries didn’t even enter the global race to launch CBDCs up until 2020 when crypto adoption took the world by storm. Nevertheless, courtesy of China’s first mover advantage, the country is years ahead of other major countries.

There may even be some silver lining that these CBDCs could replace the stable-coins in the market in the near future and we end up even seeing Atomic Swap capabilities added where you could easily swap one CBDC for another or for bitcoin without the risk of centralized stablecoins (issued by shady companies). That would definitely simplify things for traders while significantly reducing the risks they take.

I don't have a very good opinion of stablecoins, but I'm not too thrilled to replace them with CBDC - because the question is which is less evil than the two, shady private companies or corrupt governments and their centralized anti-private digital fiat. I agree that this would simplify the matter, but at what cost when it comes to privacy?

[kryptqnick]

Honestly, I'm not surprised about yuan. China is an autocratic regime, and it pays special attention to the digital space of its citizens. So if the government says people should use something, they'll use it. And since CBDC is under state's control, it's not weird that people are using it. What's more interesting is how popular a CBDC can become in a democracy, where many criticize their government and are wary of its new initiatives. But we're, IMO, very far from CBDCs becoming widespread and the era of CBDCs. Also, I agree with the op that as long as there's no anti-Bitcoin legislation, I'm fine with such projects appearing. In my mind, they're a potential replacement of classic fiat, not a competitor of decentralized currencies.

[JayTrain]

China is now ahead of everyone with the development of CBDC, with which it operates at the state level and is supported by the state, and if the population of 1.4 billion people use it, then it will be useful for cryptocurrencies in general, now I understand why other cryptocurrencies were banned in this country.

[Gyfts]

I personally don't care how many of them are created as long as they don't try to ban bitcoin or restrict its adoption in any way (like closing bank accounts of those who dump fiat for bitcoin).
There may even be some silver lining that these CBDCs could replace the stable-coins in the market in the near future and we end up even seeing Atomic Swap capabilities added where you could easily swap one CBDC for another or for bitcoin without the risk of centralized stablecoins (issued by shady companies). That would definitely simplify things for traders while significantly reducing the risks they take.

Unfortunately this is the plan, at least for the authoritarian regimes that seek total control over their economies. CBDC's make it easier to control the money supply and offer an alternative to the traditional cash systems that we see. If the government can phase that out and eliminate intermediary processing services at the same time (credit card companies like Visa and such), they'll swap out CBDC's for their own currency and ban bitcoin to force adoption.

[The Cryptovator]

Yes, we are entering in a new era of CBDC. And I want to take it positively. If the central bank issue digital currency then we can reduce using stable coins. Its because likely most exchanges will accept that digital currency and it will be easier for us to convert our crypto to native digital currency issued by Central Bank. I think slowly every central bank will move toward CBDC.

[Pokapoka124]

It does seem that we are already there. CBDCs are becoming th order of the day, governments around the world are struggling to maintain power over the masses. I think they see Bitcoin as a threat, that's why they are intent on enforcing KYC regulations on crypto exchanges. Who's to say how thwell the adoption of CBDCs would go? At some point, I think it may become mandatory.