America needs all-digital crypto dollars and soon before it runs the real risk of losing out to China. Central Bank Digital Currencies (CBDC) have become a major talking point with many countries now looking at how they can roll out their own. That’s except the U.S. where cash and traditional bank transactions remain king.
Central bank digital currencies might sound a lot like cryptocurrencies, but they are not the same. Technically, cryptocurrencies like Bitcoin, are a form of digital currency, but the differences between them do define them. For example, a CBDC is a centralized currency - and that’s important as it means it comes with the same regulations and protections as physical money. It is money. Cryptocurrencies on the other hand, are not centralized, are transparent and self-regulated. From a country’s perspective, a CBDC is the safer, more reliable, and controllable currency. However, the U.S. remains hesitant about the launch of crypto dollars and that hesitation could place it at a disadvantage later in the game.
Right now, many countries have either started, or are preparing to start a CBDC pilot. For example, the Central Bank of The Bahamas started its CBDC pilot, and just before, it was China. It is the latter that’s likely to be the most concerning for the U.S. as there is the argument that the first major economy to go all-digital will be in the driving seat when it comes to establishing their CBDC as the global CBDC. With America’s dollar the dominant physical equivalent, and in a world that seems designed to eventually go digital, the power could shift to the CBDC that’s already (at the time) established and used by a growing number of countries. If China’s CBDC become the world’s choice for trade and finance, that won’t be great news for the U.S. If nothing else, maintaining that dominance is a real reason why America shouldn’t just be considering crypto dollars, but taking steps to make them reality.
Crypto Dollars Might Not Be Good For Americans
A real, and valid reason why America has held back on a CBDC is the country’s continued dependence on cash. While the trend seems to be that the U.S. is overall moving towards a cashless lifestyle, there are plenty of Americans who rely on cash every day. So much so that last year saw an increasing number of cities banning businesses from going cashless on the basis that a cashless society would be discriminatory towards some. If the U.S. still considers itself to be a cash-based society, then it is better for all Americans for it to still prioritize centralized physical cash over a centralized digital currency.
There’s also the issue of privacy. In a totally cashless world, absolutely nothing will be completely privacy-protected. Every financial transaction made will be documented, have a trail, and all those trails will be converging and correlating transactions back to the user. While the U.S. is almost there considering how many transactions are now accompanied by a digital footprint, there’s a big difference between choosing to pay digitally and not having the option to pay in cash when needed. That’s without even taking into consideration any security concerns that might be related to crypto dollars.
More: The Best Way To Buy Bitcoin For A Casual Investor
