{"id":11814,"date":"2023-07-31T10:34:05","date_gmt":"2023-07-31T08:34:05","guid":{"rendered":"https:\/\/affidaty.io\/blog\/?p=11814"},"modified":"2023-07-31T12:09:38","modified_gmt":"2023-07-31T10:09:38","slug":"cbdc-blockchain-fiat-currencies-central-bank","status":"publish","type":"post","link":"https:\/\/affidaty.io\/blog\/en\/2023\/07\/cbdc-blockchain-fiat-currencies-central-bank\/","title":{"rendered":"FIAT currencies, digital, CBDC, Blockchain: how currency is changing"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-introduction\">Introduction.<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Blockchain<\/strong> and cryptocurrencies are changing our perception of money, but what we know today as money hasn&#8217;t always existed in the same form. Money has undergone various evolutions, such as bartering goods and services, which was later replaced with different forms of currency, including those based on metals and banknotes. In this decade, we are witnessing the evolution of money once again, but this time it&#8217;s entirely digital.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-evolution-of-money\">The Evolution of Money.<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Bitcoin and Ethereum are the leading cryptocurrencies by market capitalization, and they are the first ones to revolutionize the concept of money. They are entirely digital, not just electronic, but also based on a specific underlying logic that enables their precise functioning. Bitcoin is appreciated for its limited supply and decentralization, while Ethereum is known for its innovation, particularly with Smart Contracts and NFTs, contributing to the evolution of the internet (referred to as Web3).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Thanks to technological advancements and their growth, even <strong>central banks<\/strong>, like the European <strong>Central Bank<\/strong> (ECB), have been attracted to these new currencies and have studied their operations.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><img decoding=\"async\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/affidaty.io\/blog\/wp-content\/uploads\/2023\/07\/Schermata-2023-07-31-alle-09.57.00.webp\" alt=\"\" class=\"wp-image-11822 lazyload\"><noscript><img decoding=\"async\" width=\"274\" height=\"361\" src=\"https:\/\/affidaty.io\/blog\/wp-content\/uploads\/2023\/07\/Schermata-2023-07-31-alle-09.57.00.webp\" alt=\"\" class=\"wp-image-11822\" srcset=\"https:\/\/affidaty.io\/blog\/wp-content\/uploads\/2023\/07\/Schermata-2023-07-31-alle-09.57.00.webp 274w, https:\/\/affidaty.io\/blog\/wp-content\/uploads\/2023\/07\/Schermata-2023-07-31-alle-09.57.00-114x150.webp 114w\" sizes=\"(max-width: 274px) 100vw, 274px\" \/><\/noscript><\/figure>\n<\/div>\n\n\n<p class=\"wp-block-paragraph\">A picture of the European <strong>Central Bank<\/strong> headquarters with the Bitcoin logo projected, along with the words &#8220;study bitcoin.&#8221; Source: The Nation View.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-new-currency-called-cbdc\">The New Currency Called <strong>CBDC<\/strong>.<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Central Bank<\/strong> Digital Currencies (<strong>CBDCs<\/strong>) are the new currencies we will soon encounter. Each nation is developing its own <strong>CBDC<\/strong>, from the Federal Reserve (FED) to the Bank of England and the European <strong>Central Bank<\/strong>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-but-why-is-there-so-much-interest-in-changing-money\">But why is there so much interest in changing money?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Many might answer that Bitcoin and other cryptocurrencies have frightened <strong>central banks<\/strong>, but in reality, it is entirely normal for money to change and adapt to new circumstances and societal needs. In the book &#8220;The New World Order&#8221; by Ray Dalio, it is explained that approximately every 100 years, the monetary and financial system undergoes changes. World orders shift due to wars, pandemics, climate changes, as well as high inflation and excessive national debt. These factors lead to the downfall of the existing &#8216;money&#8217; and the rise of a new one based on a tangible asset. An example of this is the Bretton Woods Agreement, which required a collateral in gold for every printed dollar.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-how-will-cbdcs-work\">How will <strong>CBDCs<\/strong> work?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Unlike Bitcoin, which is a cryptocurrency based on a decentralized ledger system (permissionless <strong>blockchain<\/strong>), <strong>CBDCs<\/strong> will be controlled by a central authority, such as the European <strong>Central Bank<\/strong> for the Eurozone.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>CBDCs<\/strong> will utilize Distributed Ledger Technology (DLT), but not necessarily <strong>blockchain<\/strong>. Another system under consideration is the TARGET Instant Payment Settlement (TIPS), currently used in Europe for electronic payment settlements. It&#8217;s important to note that the new currency will not be a cryptocurrency but a liability that will coexist with and eventually replace the current fiat money.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Central banks<\/strong> have also mentioned that the new currency will be fully programmable, which raises concerns that it might lead to a system similar to China&#8217;s &#8216;Social Credit&#8217; system, where individuals&#8217; actions determine their access to various financial possibilities (receiving or withholding money, credit opportunities, and more). This has sparked fears among many that their privacy might be compromised with this new currency.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-what-are-the-advantages-and-risks-of-cbdc\">What are the advantages and risks of <strong>CBDC<\/strong>?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">As an investor and regular user of fiat currencies, it is natural to wonder about the advantages and risks of <strong>CBDCs<\/strong>. The new currency will be equivalent to the national fiat currency, thus it will have consequences like devaluation and inflation. Below are some deduced advantages and disadvantages.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Advantages:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Lower opening and management costs of bank accounts; <\/li>\n\n\n\n<li>Faster transaction speeds due to the absence of intermediaries.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Risks:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>No potential for appreciation as an asset since its value is tied to the national currency (subject to decisions by the controlling <strong>central bank<\/strong>);<\/li>\n\n\n\n<li>Possible encroachment on the privacy of users.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-when-will-the-new-currency-be-available-in-europe\">When will the new currency be available in Europe?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">According to Fabio Panetta, a member of the ECB and head of the Digital Euro project, the release of a European <strong>CBDC<\/strong> could happen around 2026. Before that date, a legislative proposal for a three-year testing period, starting in 2023, should be presented.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><img decoding=\"async\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/affidaty.io\/blog\/wp-content\/uploads\/2023\/07\/Schermata-2023-07-31-alle-09.48.17.webp\" alt=\"\" class=\"wp-image-11821 lazyload\"><noscript><img decoding=\"async\" width=\"563\" height=\"209\" src=\"https:\/\/affidaty.io\/blog\/wp-content\/uploads\/2023\/07\/Schermata-2023-07-31-alle-09.48.17.webp\" alt=\"\" class=\"wp-image-11821\" srcset=\"https:\/\/affidaty.io\/blog\/wp-content\/uploads\/2023\/07\/Schermata-2023-07-31-alle-09.48.17.webp 563w, https:\/\/affidaty.io\/blog\/wp-content\/uploads\/2023\/07\/Schermata-2023-07-31-alle-09.48.17-560x208.webp 560w, https:\/\/affidaty.io\/blog\/wp-content\/uploads\/2023\/07\/Schermata-2023-07-31-alle-09.48.17-150x56.webp 150w\" sizes=\"(max-width: 563px) 100vw, 563px\" \/><\/noscript><\/figure>\n<\/div>\n\n\n<p class=\"wp-block-paragraph\">The timeline of the European Central Bank&#8217;s CBDC Project. Source: European Central Bank | Eurosystem<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Blockchain, cryptocurrencies, FIAT coins, CBDC: we are riding the wave of the evolution of money, but this time it is entirely digital.<\/p>\n","protected":false},"author":267,"featured_media":11849,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jnews-multi-image_gallery":[],"jnews_single_post":{"subtitle":"","format":"standard","video":"","gallery":"","source_name":"","source_url":"","via_name":"","via_url":"","override_template":"0","override":[{"template":"2","single_blog_custom":"","parallax":"1","fullscreen":"0","layout":"right-sidebar","sidebar":"default-sidebar","second_sidebar":"default-sidebar","sticky_sidebar":"1","share_position":"float","share_float_style":"share-normal","show_share_counter":"1","show_view_counter":"1","show_featured":"1","show_post_meta":"1","show_post_author":"1","show_post_author_image":"1","show_post_date":"1","post_date_format":"default","post_date_format_custom":"Y\/m\/d","show_post_category":"1","show_post_reading_time":"1","post_reading_time_wpm":"300","show_zoom_button":"1","zoom_button_out_step":"2","zoom_button_in_step":"3","show_post_tag":"1","show_prev_next_post":"0","show_popup_post":"1","number_popup_post":"1","show_author_box":"1","show_post_related":"1","show_inline_post_related":"0"}],"override_image_size":"0","image_override":[{"single_post_thumbnail_size":"no-crop","single_post_gallery_size":"crop-715"}],"trending_post":"0","trending_post_position":"meta","trending_post_label":"Trending","sponsored_post":"0","sponsored_post_label":"Sponsored by","sponsored_post_name":"","sponsored_post_url":"","sponsored_post_logo_enable":"0","sponsored_post_logo":"","sponsored_post_desc":"","disable_ad":"0"},"jnews_primary_category":{"id":"","hide":""},"jnews_social_meta":{"fb_title":"","fb_description":"","fb_image":"","twitter_title":"","twitter_description":"","twitter_image":""},"footnotes":""},"categories":[601,525],"tags":[794,800,170,804,175,62,183,177,844,147],"coauthors":[935,1176],"class_list":["post-11814","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-real-applications-en","tag-ai-eng","tag-bitcoin-en","tag-blockchain-en","tag-crypto-en","tag-ethereum-en","tag-ledger","tag-pos-en","tag-smart-contracts-en","tag-speed","tag-transaction"],"_links":{"self":[{"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/posts\/11814","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/users\/267"}],"replies":[{"embeddable":true,"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/comments?post=11814"}],"version-history":[{"count":0,"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/posts\/11814\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/media\/11849"}],"wp:attachment":[{"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/media?parent=11814"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/categories?post=11814"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/tags?post=11814"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/affidaty.io\/blog\/wp-json\/wp\/v2\/coauthors?post=11814"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}