Can stablecoins and central bank digital currencies (CBDCs) co-exist later on, or might it be either-or? Do blockchain protocols actually matter with regards to the worldwide adoption of digital currencies? And what exactly are a number of the concerns linked to these technologies? These topics were discussed in the Banking Unblockchained? webinar hosted by the Polish Blockchain Association earlier today, featuringTokenizedCEO James Belding and nChain Director of Commercial and Strategy Simit Naik.
Also joining the discussion were moderator Marcin Rzetecki and Vodafones blockchain lead David Palmer, who has been considering ways blockchain technology can integrate with cellular devices via SIM cards.
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The primary question in the webinar was whether blockchain tech can offer benefits for cross-border payments when it comes to cost and speed/efficiency. All participants agreed it really could.
We need to realize why these payments are so expensive now, Naik said, arguing that it had been due mainly to overhead costs at the many intermediaries mixed up in processes. While blockchain wouldnt necessarily eliminate those intermediaries, it could certainly reduce them by automating them. This changes what sort of economy works, he added.
Belding agreed that there have been currently way too many silos, way too many resources of truth and that blockchain may be the endgame for clearing settlement which could, subsequently, create economies of scale as weve never seen before.
Vodafones Palmer focused more on adoption, such as for example obtaining the necessary technology into everyones hands. He said a workable digital ID system will be key for this, and he prefers to speak about applications instead of have debates over which blockchain protocol is most beneficial.
About CBDCs and stablecoins
The discussion then shifted to its main focus: the role of CBDCs andstablecoinsin another digital economy. CBDCs have already been discussed so much that theyre almost an inevitability, but their advent can be marked by concerns over freedom and privacy, and how governments and central banks would exercise control over their use.
Would they be just a digital version of the fiat currencies we use today, with minimal recognizable difference to consumer users? Even though mobile technology is widespread, it doesnt reach each and every person on the planet. Just how could they guarantee financial inclusion? Are CBDCs a trap?
One issue with CBDCs, and discussing them is that people dont have anyreal-world CBDCsyet. As Belding said, their usefulness and/or threat to freedoms depends greatly on local policies, and the knowledge could change from jurisdiction to jurisdiction.
For stablecoins, its not certain whether any current offerings exist within their ultimate form either. Weve seen widely-adopted but legallyquestionable offerings like Tether/USDT, and disastrous attempts at algorithmic stablecoins likeTerraLuna.
Knowing that, a lot of the conversation surrounding these technologies is hypothetical and speculative.
Palmer suggested that CBDCs (if modeled on todays fiats) dont automatically solve problems like quantitative easing and inflation. Also, there will be privacy concerns if daily-use currencies were digitally associated with individual IDs.
Belding said he doesnt see CBDCs as a trap by itself, but believes different jurisdictions would exercise different degrees of control over their use and how private they might be. Stablecoins will persist, however they wont be called stablecoins, he added, saying there will be numerous digital debt instruments people could hold instead of todays interest-bearing bank accountsinstruments that may be easily swapped for a national CBDC when needed. Rely upon the way the issuer of a stablecoin manages real asset reserves, and you will have marketing on all sides to win that trust.
Naik also said that privately-issued stablecoins may be an improved option for everyone, as long as theyre properly backed by real assets. Todays stablecoins, he said, arent really created for spending, and there isnt much existing infrastructure for that. Theyre mainly utilized to park value for exchange traders.
If we just copy legacy systems well make yet mistakes, Naik said.
The group also discussed whether regulation was hindering blockchain adoption and whether stablecoins could possibly be attacked later on (presumably by the bad actor, or perhaps a government who saw a specific asset as a sovereign threat).
Much like most of the above points, the answers were mainly of that time period will tell variety. We havent seen how governments will handle CBDCs yet or balance ID, privacy, or usage limitationsand indeed, the partnership between governments, central banks, and the direction they issue currencies already varies. While some companies (such as for examplenChain) are examining the thought of utilizing the BSV blockchain because the base platform for issuing CBDCs, its also uncertain whether governments will ultimately opt for a blockchain at all.
BSVs blockchain definitely gets the most attractive technology to supply a universal way to obtain truth that could eliminate silos and create interoperability between any services that utilize it. But a lot more people still have to be educated and convinced before currency-issuing authorities pick the best option.
Watch: The BSV Global Blockchain Convention presentation, Virtual Events & Blockchain
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