Issuing CBDCs would pave the way for institutional interest in digital currencies, according to Barry Silbert.
The creation of central bank digital currencies around the world would benefit Bitcoin according to the founder of the world’s largest digital asset manager.
Barry Silbert, CEO of blockchain venture capital firm Digital Currency Group (DCG) gave his opinion about Bitcoin and the current market that could change with the appearance of central bank digital currencies.
Silbert recently spoke about “The State of Digital Currencies”. He mentioned many important digital asset-related issues such as Bitcoin’s role in the generational shift in wealth, stablecoins, decentralized finance and central bank digital currencies (CBDC).
The Use of Central Bank Digital Currencies
CBDCs are virtual currencies that are issued and controlled by a federal regulator. Central banks considered creating their cryptocurrencies since different companies and governments around the world issued their digital currencies to offer and exchange them for products or services.
These CBDCs are different from Bitcoin and altcoins. They are similar to fiat money but in the digital form. This is due that CBDCs are controlled by regulators whilst cryptocurrencies are not.
One of the countries that are preparing projects related to central bank digital currencies is China. The Asian country will launch a digital currency called Yuan which would be the first real-world test of its CBDC.
A new survey conducted by the Bank of International Settlements revealed that at least 10 % of central banks are likely to issue a CBDC for the general public in the short term.
How CBDCs Could Be Good for BTC?
Silbert, who also is the founder and CEO of the digital currency asset manager Grayscale Investment, considers that central banks that develop their own fiat currency-backed digital currencies might be providing more power to Bitcoin. The expert says that this would pave the way for institutional interest in digital currencies such as Bitcoin.
According to Grayscale CEO, Bitcoin and other non-central bank cryptocurrencies could eventually benefit from the same infrastructure that is used by the widespread adoption of CBDC.
“So at one point in the future, we might have 80 different CBDCs. And if that happens, it would trigger a tremendous amount of investment in operators of financial systems where essentially every financial institution would then have to be able to safely store and transact CBDCs and, guess what, if they build that infrastructure, that same infrastructure could be used for non-central bank digital currencies like Bitcoin”, he said.
Besides, the CEO of Digital Currency Group hopes that central banks will not be capping the supply of Bitcoin or other cryptocurrencies. He thinks that central banks will eventually require users to get involved with the existing digital financial systems.
The founder of DGC also commented that CBDCs are important for the current market because they contribute to the future value proposition of digital money.
Japan is considering issuing its digital currency since China is working in its Yuan project. But the truth is that the benefits of CBDCs for Bitcoin would be seen when there are other central bank digital currencies in the market of current digital assets.
By María Rodríguez