In 2022, there was volatility in traditional financial markets, yet even more volatility in crypto markets. The high volatility occurred in an environment of high inflation, low growth and high debt. The price of bitcoin peaked in November 2021, and since then, all cryptocurrencies have fallen dramatically, experiencing a turbulent year in 2022 as they lost more than $2 trillion in value. The high volatility of cryptocurrencies may indicate the emergence of the central bank’s decisive role to play for digital currencies.카지노사이트
Although the Federal Reserve has not made any decisions on whether to pursue or implement a central bank digital currency, it would be helpful to explore the potential benefits and risks of digital currencies from various angles. Central Bank Digital Currency (CBDC) is a new form of money that can exist in digital form. Instead of printing money, the central bank issues widely accessible digital currencies so that digital transactions and transfers become simple.
Whether it is the current conditions where there is a growing belief in the potential of the technology or the desire not to be left behind in this innovative exploration, the message is clear from the central banks: digital currency is a top priority. Central Bank’s Digital Currency efforts are growing worldwide for many reasons. The COVID-19 crisis has caused a shift in payment habits towards digital, contactless payments and e-commerce, which has accelerated the decline in cash usage. Also, Cryptocurrencies developed by private organizations or informal communities (e.g. Bitcoin) have evolved significantly. Eighty-seven countries are now exploring central bank digital currencies, while nine have fully launched a digital currency.
Pros and Cons
In the decentralized approach, the central bank sets rules and requirements to settle digital currency transactions. Users or financial intermediaries, or both, then record transactions. A clear advantage of Central Bank digital currency is that while conventional money requires many intermediaries in the payment chain, resulting in less efficient and secure payment experiences, digital currency could find solutions to these issues by developing a more efficient, fast, safe and dominant form of the payment process.
Privacy with adequate data protection is considered the most crucial feature of a digital currency by both citizens and professionals. Enhancing privacy will require the ability to anonymize the payment process with digital currency; however, it will require improving how anonymity is introduced throughout the payment process allowing for auditing to prevent money laundering and combating the financing of terrorism and tax evasion.바카라사이트
Particular attention will be needed in data collection in the hands of central banks. And that’s because if all citizen’s payment data were collected in a central bank’s databases, this could create incentives for cyber-attacks. In the event of a cyber-attack and breach of data with illegal access to it, the systemic risk of widespread surveillance would increase significantly.
Another critical parameter for digital currencies concerns the design of digital payment software. The design should be such that sensitive information should not be disclosed. Sensitive information that would, for example, allow a person’s credit rating to be assessed or that would enable cross-selling initiatives.
The lack of security is also critical as it can become a severe lack of trust from digital currency users. In digital currencies, security expectations are high, and a security breach could lead to a very significant loss of confidence from users.
Improving global financial infrastructure
In the turbulent times we live in, the exploration of digital currencies will remain valid as they could contribute to a more robust and resilient financial future.
There are more than 100 digital currencies worldwide in the research or development stages. Αs geopolitical and economic instability intensifies, each country has a different incentive to implement digital currencies while, the growing push is to issue a digital currency that will dominate the world.
However, what is needed to see, is not which digital currencies and cryptocurrencies will dominate. What is required is to see digital currencies as an opportunity for global cooperation to ensure that new digital currencies based on encryption and decentralization, even if issued by central banks, will not be interoperable and improve the global financial infrastructure.온라인카지노