Australia’s central bank announced its intentions to create an Ethereum-based CBDC. Through its partnership with the Commonwealth Bank, National Australia Bank, Perpetual, and ConsenSys Software, they will explore the implications of launching a CBDC.
This year, there has been a “boom” for cryptocurrencies. Among the many important concepts that members of the crypto ecosystem handle daily, one is trending: Central Bank Digital Currencies (CBDCs). These are digital currencies issued that the central banks of countries issue. They have the same value as fiat money, which makes them stablecoins.
As a result of the increasing adoption of digital currencies, a growing number of states are interested in taking advantage of the benefits of cryptocurrencies. For that reason, they have decided to launch their own CBDC to compete in the new financial system. Powers such as China, Japan, South Korea, Canada, and France are studying the possibility of an early launch of their CBDCs. Australia has joined the recent wave of announcements by these countries in this respect.
Australia Announces Its CBDC Project
Australia has a population of 25 million people and is one of the strongest gross domestic products (GDPs) in the world. The Reserve Bank of Australia announced an important partnership to study the possibility of issuing a blockchain-based CBDC. Those partners include the National Australia Bank Commonwealth Bank, blockchain technology company ConsenSys Software and financial services company Perpetual.
They will analyze the pros and cons of this type of asset and, but the authorities have not set very specific times, they speculate that the project will be complete by the end of 2020. They will conclude the first half of 2021 when they will conduct tests not specified yet.
Blockchain-Based Currency
ConsenSys, “the software engineering leader in the blockchain space,” is a valuable piece of the scheme that Australia considered. The company reported that this challenge “will involve developing a proof of concept (PoC) for the issuance of a tokenized form of CBDC.” They said that “wholesale market participants can use it for the financing, settlement and repayment of a tokenized syndicated loan.”
The local government explained that the digital Australian dollar will be based on the Ethereum network. It is also likely to be similar to Quorum, a blockchain protocol focusing on businesses and governments, which belonged JP Morgan. It has a good transactional performance, although it is not so decentralized, a key characteristic of this technology.
Ethereum Is the Base for Developing New Projects
Australia’s announcement is novel, but the support for Ethereum is even more so. After conducting research based on the analysis of Ethereum’s top 10,000 wallets, Adam Cochran reported that some of the world’s largest companies are investing in ETH. Cochran is a partner at Metacartel Ventures and an adjunct professor at Conestoga College in Canada.
His team found “wallets associated with major players like Amazon, IBM, JPMorgan Chase, Microsoft, Reddit, and Walmart.” This year, the investment of large companies in the Ethereum blockchain and DeFI projects have driven the blockchain’s price above USD 400 USD. Its value is currently around USD 381.
Growth of Crypto Market
Specialists expect and believe that the support of significant players will contribute to the performance of Ethereum. They consider that the same will happen to BTC after the birth and expansion of CBDCs in different parts of the world.
According to Raoul Pal, CEO of Real Vision and former manager of various hedge funds, CBDCs will proliferate. However, he thinks that Bitcoin will continue to position itself as a pristine reserve asset. Banks will compete at the payment level, while BTC will be the store of value that people need.
By Alexander Salazar
