What is a CBDC?
In the very near future, countries around the world will be launching their very own CBDCs.
This is an Article on CBDCs.
It is important you briefly understand what they are and how they will impact the world of crypto & #DeFi as we now know it.
The term CBDC is short for Central Bank Digital Currency and as you may guess it is a digital currency that has been created by a central bank.
CBDCs are set to replace physical money as we know it. The Bank of England is a prime example which is currently creating the Digital Pound (£). The huge question we’re all asking is, how do they differentiate from cryptocurrencies?
Well, firstly let’s start with the fact cryptocurrencies like Bitcoin & Ethereum are completely decentralised and are privately issued digital assets. Secondly, banks want to make every CBDC a stablecoin. They don’t want assets that can go up or down in price.
Myself, I have a theory that I want to share. For every country/continent that introduces it, may have a law which will require CEXs and off-ramps to implement CBDCs as the withdrawal/deposit asset.
E.g. Say I made $10k on a memecoin in my DeFi wallet, which I now want to put the profit in my bank. I would send it to Binance where I would then withdraw it into my local currency, but that local currency would now be digital and tracked by my local authorities.
Essentially, anything that goes in or out of DeFi (Decentralised Finance) will have to go through Central Banks and their Digital Currencies (CBDC). As crypto regulations tighten, the introduction of CBDCs gets closer.
That’s it! Thanks for reading! Have a look at our Guides section for more!
If you’re interested in learning more about Web3 and getting free crypto alpha, be sure to follow me on Twitter – @AltCryptoGems.