Should Crypto Investors Worry About the Rise of Central Bank Digital Currencies?

  Should Crypto Investors Worry About the Rise of Central Bank Digital Currencies?   With the arrival of the new financial revolution, it is expected that the biggest enthusiasts of the cryptocurrency will be disappointed. Invented by Satoshi Nakamoto in 2008, Bitcoin (CRYPTO:BTC) was imagined as a standalone electronic cash payment system. This independence was a peer-to-peer payment system that was not in the hands of central banks and governments. Today, this system has begun to cause inconvenience. So, for example, the US Federal Reserve is on track to develop its own cryptocurrency with a research paper coming out this summer. Moreover, even the central bank of China is already on the verge of launching its digital currency (eYuan).   So what does this mean for the future of decentralized crypto?

Attack On Empire

However, as it is known, CBDCs have the potential to revolutionize the economy, for better or worse, so the results are hard to predict. Let's say that when the Federal Reserve goes ahead and launches the digital US dollar (eUSD) cryptocurrency, it will have taken control by recording all consumer transactions on the network like other cryptocurrencies. Thus, the FED will have the opportunity to calculate the fed funds rate correctly and adjust incentives (ie, a financial crisis, deadly pandemic, alien invasion, etc.) according to current conditions in order to balance the economy. The corporate world would also benefit greatly from such a system. For example, a blockchain analytics company can leverage these insights to calculate transactions, quickly derive its market, and share this information with industry players to develop business strategies for the year.

Should Crypto Investors Worry About the Rise of Central Bank Digital Currencies?

In this way, the Fed's eUSD will gain the opportunity to create good synergies with law enforcement and the IRS. Thus, wallets suspected of involvement in illegal transactions or criminal activities can be suspended until their owners are no longer relevant persons. Additionally, tax evasion will be much more difficult as the IRS can cross-reference wallet transactions with the information they require from taxpayers to identify any discrepancies.

What does this mean for Bitcoin (and other cryptocurrencies)?

Also, the revolutionary potential of a CBDC network, combined with the legitimacy of government support, makes most people face the choice of their own coin. This puts it in direct competition with Bitcoin and other cryptocurrencies. Second, many cryptocurrencies may struggle in the face of this fierce competition, as sustained price appreciation requires increased user adoption. Decentralized cryptocurrencies may face increased regulations and restrictions as they are not part of the government-approved system. These can cause a situation against cryptocurrencies.  

Source: The Motley Fool

 

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