Our synopsis and notes
Often we read news and articles that imply or portray Central Bank Digital Currencies (CBDC) as the ultimate substitute to private cryptocurrencies that would eventually diminish the importance of private cryptocurrencies or replace them altogether. Is it really so?
The CBDCs are simply digital version of their physical counter parts. They use blockchain technology but unlike the private blockchain they don't use permissionless blockchains, but instead use permissioned blockchain. It doesn't come with the token economy that is often the trademark of the private blockchains. Therein lies the main difference, which is actually a significant difference as it allows private cryptocurrencies to differentiate one from another and provide value propositions.
CBDC probably will take away some of the use cases and importance of stablecoins as they can perform the same function with less risk to the customer.
It allows governments to now compete with private cryptocurrencies on speed of transfer but not without government scrutiny and limits on transfer amount.
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