Is CBDC a Cryptocurrency?
If you’re thinking that CBDC or Central Bank Digital Currency is a cryptocurrency, you’re somewhat wrong as they’re only identical but have differences. CBDCs and cryptocurrencies are both examples of digital currency, although they differ significantly. Some of the distinctions are as follows:
- CBDC, unlike cryptocurrencies that use blockchain as its underlying technology. It can’t employ distributed and decentralized public ledgers like blockchain for its implementation.
- CBDCs are centralized and managed by national central banks, whereas cryptocurrencies are unregulated and decentralized. As a result, the issuing authority can monitor and restrict the flow of CBDC.
- CBDC’s architecture emphasizes its stability, robustness, and low volatility, making it a safer alternative when compared to extremely volatile cryptocurrencies.
What is Central Bank Digital Currency (CBDC): How Does It Work?
CBDC, or Central Bank Digital Currency, has been in development for some time now. The main reason why private cryptocurrencies have gained popularity is due to the fact that they seek to replace centralized financial institutions with decentralized ones. So, what exactly is CBDC?