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The main catalyst for the transformation of traditional finance, bitcoin is now in the sights of most governments around the world. Several central banks are working to deploy their respective CBDCs which incorporate the characteristics specific to cryptocurrencies. Will BTC fall from its pedestal? Considering the growth of initiatives linking tokenized bank deposits, CBDCs and stablecoins, should we expect to see bitcoin bow in the new economy?
War on bitcoin: the hidden objective behind the creation of CBDCs
Why are central banks scrambling to create their respective CBDCs if the digital version of the currency already exists?
Representatives of central banks and governments talk about financial inclusion and security. They also highlight payment efficiency and transaction reduction.
The Biden-Harris report released by the Biden administration states that “CBDCs should promote equitable access to the financial system.”
However, anyone can guess the hidden motivation that supports the development of central bank digital currencies. Indeed, with CBDCs; governments want to regain control over the currency and fight the hegemony of bitcoin.
CBDCs will allow them to control issuance and regulate the money supply according to their economic policies. With these centralized cryptocurrencies, bitcoin, which shakes up the order, therefore has a major competitor.
Imagine, for example, wholesale CBDCs that function like bank reserves held by commercial banks at the Federal Reserve.
Imagine again the American Federal Reserve creating a crypto wallet. Americans will thus be able to use their retail CBDCs like traditional cryptocurrencies.
This would cause a total reconfiguration of the digital economy and a major blow to bitcoin. However, is this scenario really realistic?
BTC remains essential on the digital currency scene
With the rise in its price over the previous decade, bitcoin has continued to confirm its status as a store of value. This decentralized currency, which offers a significant level of anonymity, now brings together several million users around the world.
Unlike bitcoin, CBDCs offer governments exclusive control over citizens’ bank accounts. The latter will thus be able to censor any transaction at will. Retail CBDCs will also remove the intermediaries of commercial banks.
Governments thus become lenders instead of commercial banks. For businesses and civil servants, this is not necessarily good news.
The public and investors therefore have enough arguments against CBDCs which cannot overshadow bitcoin. Moreover, with the recent insurrection by American legislators, the American CBDC is not close to seeing the light of day.
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A graduate of Sciences Po Toulouse and holder of a blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I took the commitment to raise awareness and inform the general public about this constantly evolving ecosystem. My goal is to enable everyone to better understand blockchain and seize the opportunities it offers. I strive every day to provide an objective analysis of current events, to decipher market trends, to relay the latest technological innovations and to put into perspective the economic and societal issues of this revolution in progress.
The comments and opinions expressed in this article are those of the author alone, and should not be considered investment advice. Do your own research before making any investment decisions.