BDC stands for Central Bank Digital Currency. There are many crypto investors who believe that bitcoin is real, and others who think it’s a fluff theory. This blog will focus on the battle between Bitcoin and CBDC.
What is CBDC and
CBDC, also known as Central Bank Digital Currency (or Central Bank Digital Currency), is a virtual currency that can be used to represent a country’s fiat money. Fiat currency refers to a country’s own currency. It can be INR for India, USD or SGD for Singapore. It is controlled and managed by the country’s government. CBDC has a monitory body. In India, the RBI is that monitory authority. Right now, we have fiat currency. Now, the government wants to create digital money. That will be CDBC.
Let’s say you have one crore rupees. There are twenty thousand rupees in cash. Eighty thousand remain in your bank accounts. Because the eighty thousand does not represent cash in your hand, it is actually in a computer node. You can access it easily by using any payment app. RBI now says that India has a lot if fiat currency. Therefore, RBI launched CBDC.
Why was CBDC launched by India and not other countries?
Sweden will launch their own CBDC. It is called e krona. They are doing this as a lot of the country’s young people use virtual payment instead of cash. To make it easier, they launched CBDC.
Let’s look now at us. Interestingly, Us does not have a strong digital currency like India. India pays almost nothing for digital payment, other than NEFT or RTGS and IMPS. For example, if you pay via Google Pay, you will pay around zero fees. It is not like this in Us. They have to pay higher transaction fees for digital payments. We are launching CBDC in an effort to lower transaction costs.
RBI stated that India would launch its own CBDC to help it penetrate more Indians into digital payments. This will be in the fiscal year 2022-2023. The year begins on April 1. A 30% tax was also imposed by the Reserve Bank Of India on all other cryptocurrency. It will be in effect during the fiscal years 2022-2023.
Final decision: Who will win between BITCOIN or CBDC?
Let’s look at each one. As we all know, the internet is a network. We need more software engineers to create more useful software in this network. Both the creators and users win.
The government will say that they are making CBDC. This is essentially a way to build a network. The network will be useful if there are software developers and users who use the software.
Each network is distinct. These networks are used by many applications. DAO and NFT marketplace are just a few examples. This is a great opportunity for developers, who are now developing software on these networks. It’s the reason why companies such as Nike and Microsoft are coming to this market. The government should not launch CBDC without having a use case. If it does, no developer will come nor will CBDC grow.
The blockchain narrative has a concept called centralization or decentralization. People prefer to see, or developers prefer to develop, a decentralization network. Mark Zuckerberg, Facebook’s CEO, created Libra cryptocurrency. Mark Zuckerberg launched Libra cryptocurrency, which was the most popular app in the world, along with Instagram and Facebook. However, Libra failed because it was a centralized project. He eventually stopped.
Similar to Mark Zuckerberg, the government wants to establish a centralized network. Mark Zuckerberg was unable to sustain a centralized network despite having all the money and power. So it is a question of how government will support CBDC. If every country has its own CBDC, it will be very convenient for all countries to transact from one country into another.
CBDC will not have any utility if the government does away with cryptocurrency. It will lead to the duplication of many things that are already on the market.