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CBDC vs Crypto – Can it Overtake Crypto Market?

The growing pains of the crypto market don’t appear to be stopping after LUNA tokens’ $40 Billion fall. Amidst such unprecedented volatility, the arrival of Digital Currencies is dearly awaited. But would such currencies hurt the crypto market further, or would the ownership between CBDC vs Crypto differ?

What is CBDC?

CBDC vs Crypto

CBDC is an acronym for Central Bank Digital Currency. It is the equivalent of a digital currency that is rumored to be launched by the Indian Government. While it will be created using crypto technology, and its applications will intersect that of popular cryptotokens, it’ll be governed centrally.

But, governance isn’t the only distinction that the CBDC possesses over the Crypto Tokens. The Centrally governed digital money may also feature classifications or protocols that limit its use to prevent criminal activities.

For instance, Digital Currencies stamped with food label protocol may not be exchanged for retail commodities other than food.

Hence, while the CBDC does seem like a less taxable type of crypto token, could it really overtake existing crypto giants?

CBDC vs Crypto – Who Overtakes Who?

Presently, not all countries globally accept or recognize crypto tokens, while others view them as virtual digital assets or not even them. Contrarily, nations like the USA and India are developing their own crypto-based central digital currency like ECash.

Thus, which cryptocurrency will outlast the other is not wholly dependent on their recognition or governance. It’s somewhat subjective to the legislation of the respective nations and their Securities Control and Exchange Board.

Still, the following scenarios can present a hypothesis regarding who gains the higher ground between the CBDC vs Crypto tokens.

1. DeFi Services

Presently, DeFi or Decentralized Finance applications within the crypto industry are charting newer heights, despite the crypto dips. For instance, the market cap of the DeFi transactions as of 13th May amounts to $63.3 Billion, boasting an enormous 2212.83% growth over the previous day.

CBDC vs Crypto

To expect the CBDC Crypto digital assets to attain these peaks, much less continue their climb shortly after their launch, seems unrealistically optimistic.

Also Read: DeFi Loans and DeFi Lending Platforms

2. NFT Retail Sales

The one strong positive for the former between the CBDC vs Crypto debate concerns retail sales industries. Among them, the NFT sales industry might see CBDC gain a higher ground even with BTC & ETH ruling the crypto space.

Several crypto artists would rather earn value for their services delivered in CBDC than cryptos. Two key reasons spring such a narrative: the first is the national acceptance of CBDC or ECash, and the second is less volatility.

Since Centralized Digital Asset Tokens will adhere to the regulations set by the respective Financial Institutions of the respective nation(s), regulating volatility becomes easier.

3. Global Trades & Economy Exchanges

The scenario where both CBDC Crypto tokens can thrive is in the global trade market. While the Economic Exchange platforms will own some liquidity within the CBDC or ECash pool, their crypto ERC20 tokens trading services will continue making millions of crypto transactions.

In such an outcome, both the forms of Virtual Digital assets may become accessible or scam-proof after assigning specific value differences & differences between them.

4. Replacing Fiat Money

Since the CBDC or ECash Act emphasizes replacing the fiat currency with centralized digital currency, it can bid well for the CBDC Crypto tokens. However, crypto tokens may not receive a significant market share when such currencies are released and slowly grow in adoption.

Yet, cryptocurrencies like ETH and BTC could stand to up their market capitalization over time depending on how CEX or DEX function per the central regulations levied by the respective governments.

Final Words

To unquestionably declare that the CBDC vs Crypto market polarization would occur with contrasting outcomes would be a wrong conjecture. Hence, between where the crypto market would tilt in a Digital Currency vs Crypto release scenario, presently, it’s only safe to assume that both shall serve to add value to each other.

In the meantime, be sure to find all the latest crypto updates and how-to crypto content(s) on our page.

FAQs

Q. Can CDBC Overtake Crypto?

The CBDC Crypto digital currency launch cannot realistically overtake the existing top cryptocurrencies. Still, its truth is only limited to the value of the currency instruments and not the market cap because it might as well fly above cryptos within a couple of years.

Q. Will CBDC Hurt Crypto Market?

The release of Central Digital Currencies may not overwhelm the crypto market to the brink of cryptos losing value. However, the CBDC vs Crypto sentiments may drive the prices slightly more volatile for a short period after centralized virtual digital currencies launch.

Q. Which offers better gains between Digital Currency vs Crypto?

Investing in any virtual digital assets, including Digital Currencies and Cryptos, come with its own risks. Thus, you are advised to invest cautiously and never invest using your savings.

Presently, no Digital Currencies nor their ecosystem exists that the central government regulates singularly. So, investment whitepapers, including similar projects offering such currencies, should not be trusted.

Q. Can you Stake Central Digital Currencies?

No central digital currencies presently exist on the market, whose closest alternative is stablecoins. Many platforms allow staking crypto stablecoins like USDT, whose values are tied to various respective fiat currencies.

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