Crypto Revolution: Why Banks Will Stick to CBDCs
Bitcoin Revolution:
• Bitcoin is gaining traction as a financial revolution, providing individuals and enterprises with financial independence and autonomy.
• Its rise has sparked a pushback from governments who are concerned about the potential threat posed by decentralized cryptocurrencies.
• Central Banks are now pushing for their own National stablecoins or Central Bank Digital Currencies (CBDCs) to maintain control over monetary policy.
Advantages of Bitcoin
Bitcoin offers several advantages that have contributed to its growing popularity. These include:
• Price Appreciation: Due to its limited supply, Bitcoin’s value may climb over time as demand increases.
• Self-custodial Method: Allows users to fully control their money and reduce the possibility of theft or fraud.
• Dollar-cost Averaging (DCA): Involves buying a fixed amount of Bitcoin at regular intervals, regardless of market price – El Salvador recently adopted this strategy after legalising Bitcoin as legal tender.
Central Bank Response
In response to the potential threat posed by decentralized cryptocurrencies, Central Banks are developing their own digital currencies in an attempt to maintain control over monetary policy. For example, China is currently testing and retail trials of its national stablecoin known as the ‘Digital Yuan’ with PNB Paribas recently partnering with the Bank of China to launch a digital yuan wallet for corporate clients.
Secured Wallets
In order to ensure investments are stored securely and managed effectively, blockchain protocols such as AllainceBlock have developed secured wallets that allow users to store their crypto holdings securely.
Conclusion
Although utilizing Bitcoin has many advantages, governments are increasingly concerned about the potential threat that decentralized crypto innovations pose to their sovereignty. As a result, Central Banks are pushing for their own CBDCs while developers create secure wallets in order to help users manage their investments safely and effectively.
