Adoption and Implications of Central Bank Digital Currencies (CBDCs) and Cryptocurrencies

Abstract

Central Bank Digital Currency (CBDC) represents a digitized form of central bank funds that aims to enhance financial services and revolutionize the economy. It is important to note that CBDCs differ from cryptocurrencies as they are centrally regulated by sovereign authorities. When compared to cryptocurrencies. CBDCs prioritize privacy by limiting transaction details disclosure. The value creation approaches also vary - CBDCs adhere more closely to traditional models while cryptocurrencies are considered disruptive innovations. CBDCs provide various benefits including social control mechanisms, innovation stimulation and reduced dependence on banks as intermediaries. However, it is improbable for cryptocurrencies to entirely replace traditional money systems. Instead, CBDCs serve as alternatives to both physical cash and digital currencies by offering a digital medium of exchange coupled with regulatory oversight and respect for user privacy considerations.