A CBDC would replicate the fiat currency model, according to Grayscale. The firm considers that forcing the use of CBDC would highlight the advantages of Bitcoin.
There is an increasingly widespread interest by central banks in issuing their own CBDCs (digital central bank currencies). Official fiat currency issuers have seen the public’s increased interest in the so-called stablecoins or cryptocurrencies anchored to other assets, while Bitcoin continues its course of adoption and recognition in the world.
This interest and the possible launch of digital currencies in various countries could open a new gateway to Bitcoin, according to the cryptocurrency investment firm Grayscale.
A study, titled “Central Bank Digital Currencies [CBDC] Highlight Bitcoin’s Value Proposition,” notes that any hypothetical CBDC would have to deal with various challenges in the face of mass adoption. However, its success could benefit the increased use of Bitcoin and other cryptocurrencies.
If CBDCs are successfully launched, the infrastructure and education that would accompany the use of these bearer assets could serve as a gateway to further adoption of Bitcoin and other digital currencies.
A possible mobilization of fiat currencies to the digital infrastructure would highlight the fact that Bitcoin is special, not because it is digital, but because it is a scarce, uncompromising, and apolitical cryptocurrency open to be used by anyone. In summary, the contrast would be clearer and would highlight the advantages of Bitcoin.
However, the report makes it clear that, despite those possible advantages, “Bitcoin is not waiting for CBDCs.” According to Grayscale, the cryptocurrency, created just over 11 years ago, is rapidly gaining visibility on its own.
CBDCs Have No Resemblance to Bitcoin
The study, which Grayscale published on its website on May 27th, also highlights the differences between these centralized digital currencies and the main characteristics of Bitcoin and other decentralized cryptocurrencies.
Among these differences, the firm notes that any central bank would have full control over all the aspects of CBDCs. These would include their issuance, the tracking of transactions, and even the possibilities of censoring the latter. They would also be able to veto their use outside their jurisdiction and impose restrictions on them, as is currently the case with fiat currencies.
Grayscale argued in their report that CBDCs would probably increase the government’s ability to monitor transactions. The firm concludes that these currencies are intended to be digital versions of fiat currencies and represent many of the same characteristics.
The growing interest that Grayscale refers to is based, among other data, on a survey by the Bank for International Settlements (BIS). In that consultation, which 66 central institutions answered, almost 60% said that they were exploring the possible impact of stablecoins.
Central banks, such as those of China, France, England, and South Korea, have performed tests or have the issue on their agenda. Sweden is another country that has already started testing the digital version of its currency. Regarding the case of China, probably the most prominent, the Asian nation has not yet defined the schedule for the launch of its digital currency.
By Willmen Blanco