There is a huge buzz these days about CBDC (Central Banks Digital Coins). Many governments around the world plan to introduce the digital version of their fiat currency.
Just to name a few:
- China's digital yuan.
- Russia's digital ruble.
- Euro's CBDC.
Oddly, the Bahamas (a notorious tax haven) has been the first country in the world to implement a full-working version of its currency. More info about the digital Sand Dollar can be found here.
All of these plans have often been considered a threat among crypto-users. Especially for those dealing with stablecoins, like Tether or Neutrino. It may seem that such CBDC could replace crypto-coins as a whole.
But that's not the case and I'll show you why.
First and foremost, let's consider this:
- If you buy something using PayPal, isn't it digital money?
- If you purchase an item on an e-commerce website using a Visa/Mastercard, isn't that digital money?
- If you use your online banking platform, don't you deal with digital money?
As we can see, money is already digital for the most part. Not to mention Chinese payment systems like Alipay or WeChat. So what's the point for governments to introduce CBDC?
There are 2 main reasons:
- First, they wanna remove cash from society. No more banknotes or physical coins are allowed nowadays. Governments wanna track all the transactions.
- Second, they would like to earn more fees and control citizens even more than what happens today.
So, in short, they are not fighting against Bitcoin; rather, they actually would like to replace commercial banks, credit card providers, e-wallets like PayPal, and apps like WeChat. Stealing market share from such huge companies would make the government earn a lot of money because of fees and, also, have more control over users' transactions.
This has nothing to do with Bitcoin, despite mainstream media and even crypto-users often believe that.
Furthermore, never forget that central banks' monetary policies are inflationary, while Bitcoin is deflationary by default. This makes BTC a more viable investment for long-term holders.
So, keep calm and be sure Central banks' digital coins are not a threat to Bitcoin.
