Central Bank Digital Currency hereinafter refers to as CBDC is an extension to virtual currency with legal tender.
Since the advent of digital currency in 2008, there has been many revolution coming up regarding digital currency.
Digital currency are currencies that can be traded virtually without any legal tender.
Cryptocurrencies are not backed by law of any jurisdiction but they are decentralized system of exchange.
Fiat currency as opposed to digital currencies are backed by law of a particular country and can only be accepted within such jurisdiction.
For instance, dollar ($) is accepted locally within the United States while Naira (#) is accepted within Nigeria.
Other countries also have their own local currencies which are accepted within their country.
In order to meet up with the current trend in money, central banks are now issuing a modified digital currencies(CBDC) which can be used within the country of issue.
Major similarities between CBDC and other digital currencies
CBDC and other digital currencies can be traded virtually.
Central Bank Digital Currencies like other digital currencies will have maximum supply.
CBDC also will be built on blockchain which can be a permissioned or permissionless.
Major difference between CBDC and other digital currencies.
CBDC are issued by the central bank of a country while digital currencies can be issued by any individual.
Other digital currencies are not backed by law of any country while CBDC are backed by law within the jurisdiction of issue.
CBDC are centralized and can be controlled by the government while digital currencies are controlled by the forces of demand and supply.
What does this imply for digital currencies?
The introduction of CBDC will foster the adoption of digital currencies which will be a push to the price.
Since the change in price of digital currencies are controlled by the forces of demand of supply, there is high probability that the price of digital currencies will increase if they are approved for trading within a country.
An instance is the press release of SEC concerning the adoption of Crypto assets in Nigeria. You can read more here
What else are you waiting for?
Get acquitted with cryptocurrency through the use of kurepay wallet for your transactions.
Also, join the telegram channel to learn more about cryptocurrency.