The difference between CBDC and crypto

[Suba]

To date, more than 106 countries have studied and explored using a regulated digital currency, controlled by a central bank that we know as the Central Bank Digital Currency (CBDC). Many countries have launched CBDCs, including Nigeria, the Bahamas, the Eastern Caribbean and many countries in the process of developing CBDCs. Each country carries out a different exploration stage process.

What is CBDC?
Central Bank Digital Currency (CBDC) is a digital currency that runs on a private blockchain and is issued and its circulation controlled by a country's central bank which aims to be a legal tender and function as a substitute for currency. Because of that CBDC also has three main basic functions of money, such as store of value, medium of exchange and unit of account.

Keep in mind, CBDC is not a cryptocurrency, CBDC is not pseudonymous and regulated by a country's government or central bank. Here are more specific differences between CBDC and Crypto.

anonymity
Even though the anonymity in crypto is starting to fade as some wallets and exchanges ask KYC for account verification, the identities of CBDC users will be easily traced by the government via banks.

Blockchains
Cryptocurrencies run on public blockchains so anyone can see transactions on the ledger. Meanwhile, CBDC uses a private blockchain that can only be accessed by authorities or central banks.

Decentralization
On crypto networks authority is delegated to crypto users via consensus (PoW and PoS). Whereas in CBDC the central bank has full authority.

Utility
Crypto is often used for speculative (investment) purposes and also as a means of payment. While CBDC is only used as a means of payment and monetary transactions.

 

[Holicent]

Cryptocurrencies are the digital assets that enable peer-to-peer transactions without the need for a central authority.
Central bank digital currencies (CBDC) are defined as "central banks' digital currencies which can be used to pay for goods and services." There is no single definition of CBDC, but it generally refers to a digital currency issued by a central bank that is designed to be used in its domestic economy.

While cryptocurrencies are decentralized, CBDCs are not decentralized. They are issued by central banks, which means they do not rely on blockchain technology or smart contracts. They also do not have the same credibility problems that cryptocurrencies have been facing lately — namely, how can they be trusted when they are issued by a centralized institution? Cryptocurrencies are peer-to-peer currencies like Bitcoin, Litecoin and Ethereum; they’re not backed by any government or central bank. The best way to think of cryptocurrencies is as an alternative to traditional fiat money like the dollar or Euro.