Is CBDC a Threat to Cryptocurrency

[Shaf]

As cryptocurrency gets more popular, it attracts more attention especially from the government who have proposed, and some of them have implemented a CBDC (central bank digital currency) to facilitate digital payments.

Some people are of the opinion that the use of these digital could serve as a threat to the existence of crypto, and some believe it's not an issue.

Both have their advantages and disadvantages which could counter each other. One of which is decentralization. Users of crypto have grown used to not having any government being in complete control of their money, even though cryptocurrency is very volatile and they can lose it all regardless.

Having a centralized currency means there is no price and value fluctuation too, which is another thing people who invest in cryptocurrency for profits like about it.

The fact that a lot of illegal transactions are done with cryptocurrency doesn't work in it's favour against digital currencies though, and we may have to wait for a few years to see if there will be a benefit of having both CNDCs and cryptocurrency.

 

[Suba]

CBDC is not a type of cryptocurrency, even though CBDC runs on the blockchain but is private, only accessible by the government, CBDC is only a country's digital fiat money that is official and as legal tender, fluctuations in fiat money are only due to the influence of inflation, so people have CBDC only as a medium of exchange, not as an investment. Meanwhile, Cryptocurrency runs on a public blockchain that can be accessed by anyone and is transparent. Currently crypto is used as a medium of exchange as well as an investment instrument. Crypto price fluctuations are determined by supply and demand factors. So I don't think CBDC is a threat to cryptocurrencies.