The Craze For CBDCs Is Becoming Alarming For Crypto Users: Here Is Why
For a long time now, various central banks all over the world have been working towards establishing central bank digital currencies, or CBDCs, for their respective countries. The main reason behind such an initiative by so many global participants is the rapid rise of the cryptocurrency industry. Many governments and financial institutions feel as if cryptocurrencies have gradually grown to represent a serious threat to the currently existing financial infrastructure. It is for this reason that the central banks, with approval from the relevant corresponding governments, have decided to embark on an initiative that will digitalize numerous pre-existing fiat currencies.
Among the nations currently at work setting up CBDCs, the main ones include China and India. China had recently put an end to Bitcoin (BTC) mining and continues its tirade of the crypto industry, whereas the Reserve Bank of India (RBI) is not exactly a fan of crypto either. Even the United States government had discussed the possibility of introducing a digital dollar. However, this initiative has yet to be granted full approval.
CBDCs
It is important to remember that investors had gotten involved with crypto primarily to no longer have to deal with banks and 3rd party individuals. However, governmental and financial institutions considered this to be an elaborate way of avoiding regulations and not having to pay taxes, which had prompted an aggressive response towards crypto by many authoritative figures. The idea of CBDCs was such a response, as central bank digital currencies have the potential to not only challenge the dominance exhibited by crypto but ultimately replace the industry, according to some.
Jerome Powell, the Chairman of the United States Federal Reserve, had stated that while his country is not ready to make a conclusive decision regarding a CBDC in the U.S, he nevertheless did admit that integrating such a digital currency into the economy may render Bitcoin along with various stablecoins obsolete.
Will CBDCs finish crypto?
It must be acknowledged that many have tried and failed to kill off Bitcoin and the crypto industry in the past. However, CBDCs are a bit different as these digital currencies offer a direct alternative to cryptocurrencies. What’s more, is that investors could feel comfortable with CBDCs as there will be no need to worry about regulatory crackdowns from the government.
We are nonetheless still very much in the era of crypto, though, and the adoption rate for highly valued digital assets such as Bitcoin and Ethereum is only growing with time.
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