CBDCs: Good or Bad for Crypto?? ๐Ÿค”

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– TIMESTAMPS –
0:00 Intro
1:56 What are CBDCs?
6:31 Implications of a successful CBDC
11:04 Could CBDCs be key to digital currency adoption?
12:58 CBDC challenges
15:07 My thoughts on the future of CBDCs
22:27 Final thoughts

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โ›“๏ธ ๐Ÿ”— Useful Links ๐Ÿ”— โ›“๏ธ

โ–บ What is a CBDC: https://www.pwc.com/gx/en/financial-services/pdf/the-rise-of-central-bank-digital-currencies.pdf
โ–บ 70% of central banks involved in CBDC research: https://cointelegraph.com/news/bis-70-of-central-banks-involved-in-cbdc-research-only-several-have-concrete-plans
โ–บ FED researches CBDCs: https://www.bankingdive.com/news/fed-central-bank-digital-currency-Lael-Brainard/583631
โ–บ Chinaโ€™s digital Yuan: https://cointelegraph.com/news/chinas-digital-yuan-cbdc-is-close-but-many-details-remain-unknown
โ–บ Swedenโ€™s digital e-Krona: https://www.europeanceo.com/finance/the-risks-and-benefits-of-swedens-proposed-e-krona/
โ–บ CBDCs & de-dollarisation Cambodia: https://www.centralbanking.com/fintech/cbdc/7649541/cbdc-can-boost-de-dollarisation-and-inclusion-cambodia
โ–บ Marshall Islands SOV CBDC: https://www.businesswire.com/news/home/20190910006125/en/The-Republic-of-the-Marshall-Islands-Announces-Timed-Release-Monetary-Issuance-of-the-Marshallese-Sovereign

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โ“What are CBDCโ€™s โ“

In short, they are digital payment tokens which are issued and fully backed by a central bank. Another key distinction is that they are considered legal tender.

Incredibly, 70% of all Central Banks in the World are conducting some sort of research into CBDCs right now!

That includes countries like the US, China, Sweden, Cambodia and many more.

But why all the hype? There are three main reasons:

โ–บ Efficiency: increasing the ease of deploying monetary policy.
โ–บ Increasing financial inclusion: this is particularly salient in emerging markets where access to ATMs might require a walk spanning several days.
โ–บ To create or protect a form of monetary sovereignty.

But hereโ€™s the question; why use blockchain for CBDCs? In a nutshell, blockchain offers a good balance between the privacy characteristics of cash and the security characteristics of deposits.

๐Ÿ‘ Implications of a Successful CBDC ๐Ÿ‘

We need to distinguish between the benefits for Central Banks and the broader public. In emerging markets, cash can be very hard for many people to access and involve a mammoth journey to the nearest cash machine. That can be dangerous and put people at risk of being robbed.

With CBDCs, they actually have an immediate convenience and security benefit for users. To access them, all you need is a phone.

I go further into the benefits of CBDCs in my vid.

๐Ÿ”‘ Could CBDCs be key to digital currency adoption? ๐Ÿ”‘

One of the key things holding back digital currency adoptions seems to be the lack of interfacing with the existing financial system – after all, the vast majority of people are not in crypto.

That is why people claim that for any digital currency to be widely adopted, it needs to be accepted by the current financial system. The easiest way of doing that is actually by issuing a CBDC from an official actor.

The Marshall Islands might be an interesting case study for that. I explain that in the video.

๐Ÿ‹๏ธ CBDC Challenges ๐Ÿ‹๏ธ

CBDCs might seem like a no-brainer, however, there are challenges.

The first is usability. This is a problem particularly in countries in an emerging market context; what happens if one of the people trying to transact doesnโ€™t have a smartphone?

How can you make payments digital for people with just a bog standard phone?

The truth is that most people in the World donโ€™t have a smartphone and this makes this challenge key if CBDCs are truly going to be widely adopted.

The second, big challenge is privacy. The privacy paradox is that Central Bankers quite like the privacy preserving nature of cash as it provides resilience against the state. On the other hand, there is a bunch of AML and KYC regulation for larger payment amounts.

๐Ÿ”ฎ The Future of CBDCโ€™s ๐Ÿ”ฎ

Watch the vid to hear my thoughts on the future of CBDCs and what all this means for crypto!

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๐Ÿ“œ Disclaimer ๐Ÿ“œ

The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading cryptocurrencies poses considerable risk of loss. The speaker does not guarantee any particular outcome.

#CBDC #crypto #blockchain #banking #eyuan #fed #euro

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