Central Bank Digital Currencies, or CBDCs, will likely affect Bitcoin in some fashion.
Central bank digital currencies gained traction all over the world in 2020, as all the world’s biggest economies considered producing their own digital money. But how will CBDCs affect Bitcoin (BTC) if every country comes out with its own? Dean Steinbeck, co-founder and chief operating officer of Horizen Labs, posited that Bitcoin’s core atmosphere would remain the same on the surface.
“There has recently been plenty of activity internationally with governments exploring the development of native virtual assets,” Steinbeck told Cointelegraph. Steinbeck also works as general counsel at Horizen. “A healthy, robust virtual assets ecosystem has the potential for broader financial inclusion, more efficient markets, and so forth,” he added.
China seemingly led the CBDC charge in 2020, and has continued its hot pursuit of such an asset. The United States, on the other hand, positioned itself more toward accuracy instead of rushing a digital cash option to the market, although it has recently expressed greater emphasis on CBDC focus.
“It’s hard to say how the growing interest behind CBDCs will affect bitcoin, or cryptocurrency in general,” Steinbeck said, adding:
“Bitcoin was always meant to operate outside of governmental control in a peer-to-peer fashion, so on the face of things not much will change for those attracted to bitcoin on principle. However, it remains to be seen if governments will begin attempts to crack down on digital assets operating outside of whatever system they have decided is ‘correct.’”
Bitcoin is a borderless asset run by people and code, with a value untied to national currencies. In contrast, countries will peg the value of their CBDCs to native fiat currencies, although exact specifications remain unclear at this stage. Stablecoins tied to the value of national currencies could see impact from CBDCs in the future, according to recent comments from Decred’s co-founder, Jake Yocom-Piatt.
“I believe the collective awareness of censorship — among many other variables — bodes well for the future of cryptocurrency,” Steinbeck said. “Broader awareness of the benefits of digital currency, like CBDCs, also has the potential to expose more casual users to the world of crypto.”
France continued its CBDC testing earlier today with a pilot interbank payment.