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How bitcoin and CBDCs differ in fundamental ways

How bitcoin and CBDCs differ in fundamental ways
  • Grayscale has recently explained some of the particular differences in the nature of central-bank digital currencies and bitcoin. 
  • Writing in a report, the company suggests that central-bank digital currency is an upgrade to the traditional digital payments infrastructure.

Grayscale, the biggest crypto fund manager in the industry has recently explained some of the particular differences in the nature of central-bank digital currencies and bitcoin. Writing in a recent report, the company suggests that central-bank digital currency is an upgrade to the traditional digital payments infrastructure. When discussing bitcoin, they say that it is an upgraded version of money itself as they further write:

“CBDCs are sometimes viewed as synonymous to, or as replacements for, digital currencies like Bitcoin, but they represent a meaningful departure from the decentralized protocols inherent to many cryptocurrencies. CBDCs attempt to upgrade payment infrastructure while Bitcoin is an attempt to upgrade money. If CBDCs gain traction, they may actually bolster the value proposition for Bitcoin and other digital currencies.”

You can find the report here.

Philip Bonello is the author of the report and explains that these essential digital currencies would be a virtual class of a Fiat currency. He even adds saying that they would retain many of the features of a traditional currency. 

But he does further say that if a central bank of digital currency is successful in what it does, it could significantly streamline citizen benefit distribution and provide an automated know your customer and anti-money-laundering compliance through a controlled digital ledger by a central body.

“Operationally, this sort of change would also require new policy and management practices at several different levels, including oversight of hundreds of millions of users’ digital wallets. This would represent a significant shift in managing the control, movement, and accounting of money.”

It will be interesting to see how this plays out. For more news on this and other crypto updates, keep it with CryptoDaily!

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