The crypto environment and cryptocurrencies have evolved over the years. From wanting to become a competitive and highly demanding environment, they now focus on providing a fairer environment. Therefore, the question that must be faced is whether the digital currencies of the banks will allow this goal of the crypto environment to be fulfilled in a positive way.
For the speakers of the main panel, this topic is directly related to the performance of Bitcoin and the other cryptocurrencies in the ecosystem. Well, they consider that “stablecoins” play an important role in the acceptance of Bitcoin in society.
And although they seem like two totally alien actors, the truth is that stablecoins and cryptocurrencies are part of the same interconnected financial universe.
The application of CBDC is a natural evolution of the crypto ecosystem
The CBDC or Central Bank Digital Currency (in Spanish, Banks’ Digital Currencies), is the new face of fiat money. Well, it is the digital money issued by the central bank of a country. And for that reason it has legal tender value in that nation.
For the speakers on the second day of laBITconf, CBDCs are part of the evolution of the crypto ecosystem. Likewise, Amber Scott, Gabriel Kurman, Joey García, Ezechiel Copic, Nevin Freeman and Pawel Kuskowski discussed the impact that this will have for Bitcoin and cryptocurrencies from the unique point of each of them.
For Amber Scott, who is in charge of regulating Bitcoin companies in Canada, the need to prioritize CBDCs over cryptocurrencies should be the starting point for the future of digital finance.
However, he added that comparing both developments, both for Bitcoin and CBDC is a bit wrong. Well, each milestone has evolved and must evolve according to its own purpose.
That is, Bitcoin was created for decentralization, while CBDCs are intended to be regulated and legitimized by a central banking entity.
Finally, Amber believes that a combination of transparency of fiat money transactions, and intergovernmental involvement of transactions, would allow tremendous future possibilities for CBDCs.
Could these coins then replace Bitcoin?
For Ezechiel Copic the answer to this question is simple: a definite no. Well, for him, Bitcoin and CBDC have different perspectives. Since when you talk about CBDC you are only talking about digital fiat money. And they are basically the digital version that banks no longer want to print.
In this way, Copic added that despite that, he does not want to completely dismiss the CBDCS. Well, he accepts that this mechanism gives room to a clear improvement of the financial system. In addition to being cheaper, safer and avoids many negative effects that fiat money causes in economies.
Likewise, it allows central banks, which have been isolated from the cryptocurrency environment for many years, to become part of this ecosystem in a somewhat rigid way.
Ezechiel finalized his idea by clarifying that he sees these advancements more as an evolution of technology. And not as a cluster of factors that could affect the crypto ecosystem.
Were banks’ digital currencies created to benefit the private sector?
When this technology was built, part of the focus was to clamor for the attention of potential users who would pay for these services. This given the idea that a private entity would provide them with more guarantees.
Likewise, the panelists explained that there should be a partnership between the private and public sectors. In addition to those independent, which allow a transparent and wide use of the CBDC. Well, it would not make sense for private entities to benefit the most from these digital currencies. A plus that Bitcoin and other cryptocurrencies do not allow at all.
Since it is not a novelty that the private sector tends to focus on a sector of the population that benefits its own interests. This instead of allowing each sector to be part of this ecosystem and feed it.
In the case of Nevin Freeman, he agrees that private entities have no interest in including small clients who cannot provide growth for these CBDCs.
Since, the cost of the complexities of these individuals, outweighs the risk that the entities decide to take with the amount of regulations they handle. Well, these regulations are greater than the amount of profit that can be obtained by serving these clients.
Finally, Freeman concluded that as long as these government and private entities are in charge of offering these services, the doors will continue to be closed to many clients who could be candidates for these services.
So could society really require this technology?
For Pawel Kuskowski, CBDCs are a necessary technology. Well, these digital currencies would be able to end two of the biggest problems for money and the global economy: Money laundering and corruption.
Kuskowski explained that he believes that cryptocurrencies and CBDCs are taking the first steps to solve these problems quickly. And for the first time in the history of mankind, he sees it possible to end these problems. This from the hand of these two actors of the financial digital ecosystem.
Well, society needed cryptocurrencies and CBDCs. Since the concept of protection and transparency of due processes has become a priority for banks with these digital currencies. Since it is almost impossible to hide transactions with this modality.
But aren’t the banks responsible for turning money into an inflationary and depreciating factor?
One of the biggest debates today is whether money works to support governments, or works for the benefit of individuals. And many consider that the dollar today, rather than serving as the world’s determining currency, also functions as a geopolitical tool in finance.
For Joey García the digital currencies of the banks prevent this from happening. Since banks through these mechanisms could regularize, for example, taxes in countries like Venezuela. Where the economic disaster seems to have no solution.
In addition, it could allow a mechanism to track and mark this money, decreasing the opportunities for corruption to take place.
Likewise, he added that these digital currencies could provide efficiency in inflation rates that can still be controlled, as is the case in Argentina.
Finally, he asserted that by cutting off the cash flow in these types of economies, the corruption indexes would disappear since it has been proven that cash is the cause of criminal mechanisms such as money laundering, also known as money laundering.
It is worth mentioning that the speakers concluded that, although there is still much ground to be defined, they affirm that allowing cryptocurrencies and CBDCs to coexist will bring great benefits to finance and the global economy as we know it.