Grayscale Investments, a subsidiary of the Digital Forex Group (DCG), has revealed a report which argues that legacy banking infrastructure has made it troublesome to distribute stimulus cash, following the COVID-19 outbreak.
The report states:
“Central bank digital currencies [CBDCs] have the potential to streamline payments, but may compete with commercial banking, further politicize financial services, and fail to gain widespread adoption.”
It argues that Bitcoin (BTC), the flagship cryptocurrency, “isn’t waiting for CBDCs – it is rapidly gaining mindshare on its own.”
Nevertheless, the report notes that if CBDCs are profitable, then the infrastructure and training that may be provided and gained through the use of these bearer belongings may in the end result in the mainstream adoption of Bitcoin and different digital currencies.
The report explains:
“Moving fiat currencies to digital infrastructure would highlight that Bitcoin is special not because it is digital, but because Bitcoin is a scarce, uncompromising, apolitical currency that is open for anyone to use.”
The report argues that CBDCs may probably censor “non-ordained” addresses, and reserve banks may retain their agency management over financial coverage with central bank-issued digital cash.
CBDCs may enhance a authorities’s capability to observe customers’ transactions. Nevertheless, this may require “buy-in” from all individuals, together with a nation’s residents, retailers, or companies.
This is likely to be difficult, and means that CBDCs may lack the liquidity and acceptance of cash. A CBDC may truly “reduce user freedoms without providing monetary policy assurances – a combination which may hinder widespread adoption,” the report argues.
Grayscale, which is the biggest institutional holder of Bitcoin (BTC), states:
“The interest in developing and implementing CBDCs may be accentuating Bitcoin’s role in the global digital economy. Whether or not CBDCs are successfully introduced, they already strengthen the case for non-sovereign digital currencies, like Bitcoin, by forcing institutions to consider adopting digital currency infrastructure, while also educating users on digital bearer assets and the characteristics of good money.”
“Bitcoin is unique not only because it is digital, but because it is scarce and available for anyone to use.”
The total report could be accessed right here.