Why do CBDCs Increase Bitcoin’s Value Proposition

What are Digital Assets?

The first “decentralized digital currency” appeared in 2008 when Satoshi Nakamoto gave its name to Bitcoin, the first digital asset that allowed you to transact and save value outside the current financial system. Its objective was to solve and improve some challenges that the current system failed to solve, and 11 years later it seems that it is on its way. Due to the volatility present in the asset — fully understandable if we take into account the long-term and current role expected of it — an asset that has to increase its market capitalization to globally relevant magnitudes must be volatile during this period. However, this volatility makes its adoption less interesting for people who want to benefit from the advantages of digital assets such as Bitcoin without the disadvantages of this volatility.

Stablecoin Market Evolution
Central Banks exploring CBDC

Main challenges of CBDC

Despite sounding like something very nice, the fact that the European Central Bank now issues a digital euro entails many conflicts and problems that must be solved first.

Differential value of Bitcoin against CBDC

In contrast, the most important characteristics of Bitcoin are contrary to what the CBDC offers: decentralization and its resistance to being manipulated or censored. Its users can transfer and save value without the risk of their payments being blocked, their funds being frozen or withdrawn, or without their accounts being seized or confiscated. As we have seen, CBDCs are the other side of the coin; All transactions can be analyzed and your funds can be confiscated or frozen at will. Let’s take the case of China, if in the following years China manages to generate its CBDC effectively, it will obtain unprecedented control over its population, already controlled today. CBDCs underscore Bitcoin’s value proposition, especially in democratic societies, where increased control and loss of privacy will raise many concerns.

Bitcoin VS CBDC

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arnau ramio

arnau ramio

Blockchain-Business Developer & DeFi Manager. Co-Founder & COO at Themar Solutions and Co-Founder of Cryptomaster Academy.