CBDC stands for Central Bank Digital Currency† A CBDC is a kind of digital currency from a central bank. There are a number of central banks in the world that are currently developing their own currency. A CBDC is therefore a digital version of the payment methods that we know today. For example, there could be a digital euro or dollar.
CBDCs vs crypto, centralized vs decentralized
One of the biggest differences between a CBDC and cryptos like bitcoin (BTC) is the management/decentralization. To take Bitcoin as an example; no one is in charge of Bitcoin. This is different with CBDCs, because here the central bank has the power to influence the amount of money and also to program the money. In theory, for example, it can be set that you can only use your money for groceries, or that you can no longer buy drinks after 8 p.m.
So are CBDCs a threat to our financial freedom? One of Harm van Wijk’s concerns regarding CBDCs is that CBDCs could be used to curtail your freedom. It is currently difficult to say with certainty what CBDCs will mean for our finances and financial freedom. In the coming years, it will be important to keep abreast of this and to see exactly what the central banks will do with CBDCs.
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