Central Bank Digital Currency sees a rise in its adoption
The arrival of the Covid-19 pandemic has enhanced digital currency adoption across different corners of the world. Interactions, shopping, and education are all included. One segment in specific that has gained major attention is payments – these are done digitally by customers, no matter their background and profession.
Cryptocurrencies gained traction, too, while carefully informing all their holders about market volatility. That was fun, but times have changed, and digital currencies must have stability for people from across the world attempting to make a seamless transition. Hence, the concept of CBDC – Central Bank Digital Currency – has started taking shape.
The future predictions for CBDC speak volumes about how well they can do by the end of 2030. Making this evident is the reports published by Juniper Research, concluding that CBDC is estimated to touch the mark of $213 billion before this decade ends.
What makes CBDC a potential winner in the race of digital currencies is the fact that they are backed by Central Banks of different countries. They can be easily integrated with mobile applications, enabling users to benefit from the elimination of third-party banking fees.
A lot of the growth of CBDC is based on the testing and merit pilot to establish reliability and trust. Since they are under the Central Authorities, they remain in a better position to monitor, control, manage, and trace transactions for safety.
Ripple, specifically, is making advancements with its offerings of CBDC. The crypto venture has partnered with the Central Bank of Montenegro. Their aim is to pilot a project together. Needless to say, this reflects positively on the future of XRP, which is predicted to touch $0.98 by the end of this year. The mark is understandably over-optimistic, and hence a lower cap is fixed at $0.40.
Another region that is seeing the rise of CBDC is Brazil, where the Central Bank is planning to bring its digital currency sometime in the next year.
The Universal Monetary Unit has already taken shape under the Digital Currency Monetary Authority. Its objective is to boost transactions that happen across the border. The European Union and Bank of England can also be seen moving forward with their respective plans.
If launched, and when launched, CDBC is expected to give benefits like:
- Better security for transactions executed on the network
- Basic financial services
- More digital transactions
- Reduced energy consumption
CBDC, once a vision, is not moving forward to becoming a reality. They are blockchain-based and better provide the ability to track and trace a transaction. Nations can then ensure that digital currencies are not being used for money laundering. Ripple, the crypto venture, is working with the Royal Monetary Authority of Bhutan, the Republic of Palau, and the Central Bank of Montenegro.
A strong technology is required to back the mechanism of CBDC. However, it is hoped that by 2023, there will be better and more advanced technology that will boost the adoption of digital curries at a lower cost of basic financial services. Furthermore, there will be advanced and better security.
Hence, an extended timeline to implement it for the people. Nonetheless, CBDC has a better chance of making it to everyone’s lives before this decade ends.