Financial services giant Deloitte has conducted a new study that shows how powerful a tool Bitcoin can be to create a cheaper, more secure, and faster ecosystem for digital fiat currency or more specifically, Central Bank Digital Currency or CBDC. Deloitte's report emphasises the need for a total revamp of the existing fiat ecosystem to address upcoming issues such as being slow, error-prone, and expensive in comparison to efficiency in other high-tech industries. Governments across nations have been exploring the possibility of issuing their CBDCs to deal with these issues, to improve efficiency and reduce costs but Bitcoin is already well-positioned to assist governments in this effort, according to Deloitte.
The report, titled "State-Sponsored Cryptocurrency", points out several differences between Bitcoin and government-issued CBDCs and reiterates a major inflationary trait of fiat as a CBDC, which is that CBDCs have no limit on the amount of currency a government is allowed to issue as well as defining the value of CBDCs.
Meanwhile, Deloitte also highlights some of the shortcomings of Bitcoin. "Wide-spread adoption will require Bitcoin to address governmental requirements around anti-money laundering and illicit trade, as well as other key concerns such as volatility of value, ease of use challenges, and a general lack of endorsement by “trusted” bodies," notes the study.
The study also states that the authorities that roll out their CBDCs first would have an early-bird advantage, which could potentially influence the use of their local currency in the international market.
While many governments have joined the race to implement in-house CBDCs, widespread adoption is one of the most important conditions for their success.
The report also goes on to state that while CBDCs will not be a one-to-one substitute for Bitcoin and other cryptos, the growing acceptance of CBDCs will provide users with other options for identifying the most suitable mode of payment, according to the report, which concludes by saying, "Bitcoin could ultimately spawn a series of new opportunities that would transform the current payments system into one that is faster, more secure, and less expensive to run."
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