Thursday, May 23, 2024

Future of relationships between crypto and CBDCs under debate

Cryptocurrencies have come a long way and are set to grow even bigger in the near future. However, their growth has triggered concerns as well, as many experts fear that in the long run, they are much riskier than traditional finance options. But at the same time, they know how popular cryptocurrencies are becoming as well, which has led to a dilemma in the world of finance. At its core, the dilemma is simple – to create a world where crypto and centralized finance can co-exist or create a world where there’s one dominant force.

At this point in time, it seems that the former sort of world is being created, with governments around the world exploring the possibilities of CBDCs.

CBDCs or Central Bank Digital Currencies are all about going digital with real-world currencies such as dollars and pounds. While these CBDCs are set to provide some of the conveniences that cryptocurrencies offer, they have some stark differences as well. For instance, CBDCs are centralized, unlike cryptocurrencies, which are decentralized. Simply put, the concepts have similarities but are essentially different.

This has led to numerous questions being asked regarding the future of cryptocurrencies and CBDCs. It seems only time will tell whether they will function together as collaborators or work against each other to establish dominance. CBDCs too have their own set of pros and cons. For instance, CBDCs would allow instant payment processing, which would result in a drastic reduction of transaction costs. However, they are also likely to destabilize the financial order that exists. Involving financial intermediaries would also involve a lot of risks as far as CBDCs are concerned.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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