In recent years, signals have been indicated by the central banks for launching their central digital currencies. Following this scenario, the governments such as India, China, and others have begun threatening independent cryptocurrencies like Ethereum and Bitcoin. The government of the United States, after being concerned about the matter, has initiated conversations about a native digital currency.
Central bank digital currencies: a burning subject
Growing momentum for centrally controlled digital currencies is quite alarming for the consumers of the independent cryptocurrencies due to enormous efforts done by the governments to wipe out the latter. Formerly, the replacement of cryptocurrencies by means of CBDCs (central bank digital currencies) has been intended by a majority of the officials from several governments that may endanger the general cryptocurrencies.
Recently, the chairman of the Federal Reserve of the United States, Jerome Powell, suggested that while the U.S. authorities had yet to resolve the launch of a CBDC shortly, the incorporation of one might eliminate the general digital currencies such as Bitcoin (BTC) and the other stablecoins.
Although it has been seen in the previous years that the exertions for putting a dismissal on the digital currencies have constantly been ineffective, yet will be no wonder in noticing the utilization of energy in the execution of CBDCs.
Ray Dalio, a billionaire investor and founder of Bridgewater Associates (the biggest hedge fund across the globe), had expressed that a hard time had also been faced by gold in a struggling substitutive stock of value in the past times of the 1930s. He added that cash was a very ineffective type of investment, so the community moved to invest in the other things and abandoned cash; however, the authorities forbade those things as a response. In a counter-strike, people abandoned the use of gold. Similarly, he stated, the ban over Bitcoin is a fruitful probability.
CBDCs or BTC: a dilemma
In the meantime, Ray mentioned, there is an increasing adoption rate of crypto assets, including Ethereum and Bitcoin; nonetheless, some people doubt that consumers will conveniently abandon Bitcoin adopting the CBDCs. He disclosed that a greater difficulty would befall the governments when they are unable to manage the supply and demand levels; thus, BTC will again come as a substitute for CBDC.