CBDCs: The next frontier for Blockchain Investment and Adoption
The Coronavirus pandemic has boosted our shift towards a virtual realm, with everything our know and love becoming digital in some way or another. Payments make a perfect case for this since mobile and contactless payments are already widely in use.
Apart from all these innovations and transitions, the global central banks are increasing their efforts to prepare the fundamental groundwork for digital cash — CBDC (Central Bank Digital Currency). Their responsibility focuses on delivering price and financial stability while gaining the power to achieve it.
In fact, central bank funds have many unique upsides, such as safety, liquidity, integrity, and finality. These advantages must be continuously utilized as the global financial system and economy are becoming more and more digital.
With this changing landscape, the money of central banks will have to evolve as it is the heart of the system. It will keep being issued and managed by trustworthy and accountable institutions which rather than having elaborate profit objectives, have public policies.
Younger demographic getting used to online reality
With the increasing adoption of digital technologies, the younger demographic is engaged in the virtual world way more than any other demographic. Undoubtedly, the speed of information transfer is fast and extremely cost-effective.
This generation has grown up with smartphones and computers. Such devices have become somehow an extension of their bodies and perhaps their lives.
Nowadays, the younger demographic doesn’t want to go through seemingly tiring processes involved in various important processes, including payments and settlements. They aim to achieve everything faster, cheaper, and better, whichis why digital cash makes so much sense to them.
In recent years, the financial and banking services sector has witnessed significant levels of digital transformation, with new processes, such as e-KYC, e-trading, and mobile products and services.
All in all, with constant innovation in digital services and technology, the younger demographic and others have come to show a lot of love and attention to such new innovative creations and technology adoptions.
Actually, CBDCs is one of the hottest areas of innovation for digital technology and their adoption. The advantages offered by Central Bank Digital Currency are crucial examples of the use of creative technologies for developing a new form of money.
A new face for Money with Traditional functions
For years and years, money has been a core aspect of the economic landscape of civilizations worldwide. We have come to see various different phases, such as coins, bartering, and then paper-based money.
Now, we are witnessing the impact and adoption of digital money or e-money, which is redefining money with old conventional functions, such as access to legal tender, economic, financial, and monetary stability, etc.
A majority of the money we see today is in the form of coins, paper-based bills, and digital equivalents, also referred to as fiat currencies. Central bank funds generally include cash, usually in the form of digital reserves kept at the Federal Reserve Banks.
The reserves aid banks in settling and clearing any obligations among each other. They are also useful for the Federal Reserve as a tool for implementing monetary policies.
Commercial or private bank money is also available in digital forms, such as deposits among insured depository institutions.
Introduction of Cryptocurrencies, Stablecoins and other private Initiatives
The adoption of various forms of money has led to the focus on the upsides of digital currencies CBDCs. The providers of unique payment services offering digital money are capable of addressing the demands of people and the needs of the economy.
This pushes them to respond to the requirements of convenience and extended financial inclusion. On the other hand, money issued by private payment providers does not take the liability of central banks.
The introduction of cryptocurrencies, stablecoins, and other private initiatives has substantially changed the financial landscape worldwide. Therefore, central banks need to strengthen their place with respect to these up-and-coming alternatives to money.
Central banks would have to investigate and review the possibilities of positioning themselves competitively in a constantly changing financial landscape. They have the primary authority over money and a pertinent involvement in spreading a new type of central bank-backed digital money.
That is why CBDC is considered to be a new form of central bank money with numerous traditional concepts and functions surrounding it.
Advantages of CBDC (Central Bank Digital Currency)
CBDCs offer clear and significant benefits for the future of finance and hold the potential for radically transforming the financial industry that we usually know. Therefore, it is essential to fully realize the advantages of CBDCs.
Here are some of the most notable upsides of Central Bank Digital Currency that you should keep in mind.
Expanding Financial Inclusion
One of the biggest advantages that CBDCs bring to the table is the expanding scope of financial inclusion. Currently, a large portion of the global population cannot access financial services properly.
In developing countries, remote areas make the perfect case for this, as they clearly show restrictions on bank account access. Also, the possibility persists that many banks are not being fully eager or optimistic to reach such regions with their services.
For such cases, CBDCs could easily ensure easy and complete access to the financial system and its services, with better efficiency and lower cost assurance.
The cost-effective payment system enables transfers between customers and individuals to businesses via smartphones and similar electronic devices without holding a bank account. CBDCs ensure people with new perspectives and experiences for accessing financial services.
Increased efficiency in Payment Services
The next big upside that comes with Central Bank Digital Currencies is the increased and improved safety and efficiency of retail and large-value payment systems. For retail payments, CBDCs improve the efficiency of payment-making processes.
For instance, P2P (Peer to Peer) and POS (Point Of Sale) payment systems are some great examples that could benefit from CBDC transformation. The advantages offered by Central Bank Digital Currencies in large-value payment systems and wholesale are also quite interesting.
CBDCs could empower faster and better settlement in large-value payment systems which have longer settlement times. Also, they can support the exclusion of low-value coins through the delivery of electronic change.
Let’s take for example, the case of the Bank of Korea, where they introduced a coinless society trial back in April 2017, enabling customers to deposit their change in prepaid cards instead of accepting minor modifications from buying. This resulted in substantial saving benefits for the country, which amounted to more than 36 million Euros.
The shift towards Cashless Societies
Transitioning towards a cashless society is also one of the most significant benefits of Central Bank Digital Currency alternatives.
In fact, cashless societies take apart the dependence on notes and coins for financial transactions and replace them with digital alternatives. As we gradually turn towards digital transactions and cash withdrawals through ATMs decline, CBDCs would come in as a favourable alternative.
Since CBDCs are fundamentally digital currencies that are backed by central banks, individuals are more likely to trust and adopt them.
BlockX: Digital Assets & CBDC Settlement, Payment Blockchain, and Tokenizer Platform
The advantages offered by CBDCs can easily pave the way for a better and brighter future for the current financial system. They make a crucial milestone in the ongoing progress and evolution of the financial world that surrounds us.
BlockX is driving this movement by offering digital assets settlement and payment blockchain for global finance, including CBDC, Digital Securities, Real Estate, NFTs, and much more.
Their blockchain network is created with the principle of transparency in mind, and they offer built-in compliance features, including a public ledger and a wide network of global anchors that empower transparency and safety.
BlockX allows global access to USDC and other stablecoins, easy cash in and onboarding, and access to additional financial services for the underbanked. In addition, it allows tokenization of real-world assets with the help of BlockX native token, BCX.
Recently, they have commenced with the Initial Exchange Offering of their utility tokens — BCX, and they invite you to participate in it by following this link.
Join the whitelist for the upcoming token sale by signing up on the BlockX Dashboard for the pre-sale of the tokens.