Bitcoins and NFTs may be losing value, but a new kind of cryptocurrency is gaining traction throughout the globe and revealing a different side of the blockchain. Digital currencies issued by central banks are managed by governments much as paper currency is, making them the antithesis of Bitcoin's decentralized, untraceable nature. Numerous lesser-populated countries including, as of October 2021, Nigeria, have adopted central bank digital currencies, while several more populous countries are preparing to get on another crypto hype train.
The Atlantic Council's Central Bank Digital Currency Tracker indicates that CBDCs were introduced in the Bahamas, Grenada, Dominica, and Saint Lucia even before they were in Nigeria. After its debut in 2019, the Sand Dollar of the Bahamas became the first central bank digital currency in the world, paving the stage for its quick adoption among the region's tiny countries.
News of the Chinese digital Yuan pilot project made news in April 2019, however the initiative has since stalled. China, like Nigeria, has an advanced system for accepting digital and mobile payments. Digital payment solutions, whether app- or text-based, have become very popular in both nations, with large portions of the populations skipping card payments entirely and going directly from cash to digital. The potential for digital currencies to reach the unbanked is something central banks in developing nations think about.
Some governments support official digital currencies in part because they provide a convenient means of collecting tax and other relevant information from their citizens. As a result of the widespread use of digital payment methods and the stringent monitoring by the government, Chinese officials have access to a wealth of information on financial transactions. Although the central bank of the nation claims that the introduction of the digital Yuan would minimize traceability and provide what it terms "controllable anonymity," the information of how individuals spend money will increase. Every Yuan in circulation after the debut of the digital currency would exist only as digital money. There is speculation that the Chinese government would increase the supply of digital money in the future, reducing the need for real cash. Some even speculate that China has intentions to convert all Yuan to digital form in the future.
Russia, Thailand, Malaysia, South Korea, Sweden, the United Arab Emirates, and Saudi Arabia are among the other nations conducting CBDC pilot projects. Nonetheless, the next initiative that potentially have a successful launch is not yet known. The source found evidence of countries including Canada, Australia, Brazil, and India making concrete preparations to start a CBDC. There are plans to test out the digital Euro in a few of countries by 2023.
Via Statista
