The report, titled “State Sponsored Cryptocurrencies,” noted several differences between bitcoin and government-issued CBDCs. It states that with CBDCs, the government will not have to adhere to any limits for issuing currency. Some difficulties have also been given in the report regarding bitcoin. “As the use of bitcoin increases, it must ensure compliance with government regulations on anti-money laundering and trafficking. In addition, there will be potential fluctuations in value and difficulties in use,” it added.
The report also noted that governments that issue CBDCs early may benefit more as this is likely to increase their currency’s influence in the international market. Many countries are preparing to launch CBDC. However, their success will depend on how much their use increases. On the prospects of bitcoin, the report said that it could replace existing payments systems and is expected to become faster, more secure than before, as well as reduce its cost.
CBDC is built on the blockchain network and is like a cryptocurrency. However, CBDCs are regulated by central banks and transactions involving them are centralized and traceable. Transactions of cryptocurrencies are decentralised. In an executive order on digital assets in the US, the Federal Reserve has been asked to consider whether it should issue its own digital currency. The digital currency of the Caribbean country Jamaica is launching soon. The initial one lakh users of this digital currency, called Jam-Dex, will get the benefit of an additional $ 16 (about Rs 1,200). The government of Jamaica has made a strategy of giving incentives to increase the popularity of this digital currency.
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