Does this era-defining economic environment allow for the coexistence of cryptocurrencies and CBDCs?

Even if we enjoy digital payments like NEFTs, UPI transactions, and more, the idea is inevitably dependent on the established banking system. Even though the invoices are typically paid out right away, the involved banks must still communicate back and forth in order for the transaction to be effective. And a few server problems only make matters worse.

CBDC (Central Bank Digital Currency) and claims about its widespread acceptance are now here!

Mark Tencaten explains that CBDC intends to unify the entire payment system under a single roof, as opposed to our current payment system, which requires ongoing monitoring and insight sharing for every two- or multi-party transaction and requires banks to maintain client information in dedicated databases.

CBDC in the crypto world

For those who are familiar with how traditional currencies and the current digital payment system operate, Mark Tenacten demonstrates that CBDC will undoubtedly bring in a new and more effective world of transactions. And CBDC will be based on blockchain technology, making real-time fund settlements possible.

However, that isn't the main reason why CBDCs are praised. Central Bank Digital Currencies will make it simpler, quicker, and less expensive for the government to implement complicated monetary policies and allocate stimulus programs without having to take into consideration the burdensome logistics, all owing to the intrinsic blockchain architecture.

It makes sense that CBDCs will rely on blockchain technology's permissioned side. This implies that a central authority will be able to change transactions on the blockchain as needed.

In what ways does this affect cryptocurrencies?

As per Mark Tencaten, CBDCs won't have any adverse effects on the acceptance and standing of cryptocurrencies.

Despite initially appearing to be anti-crypto, CBDCs continue to leverage the same technology platforms to influence the world's transactional infrastructure. It will still be feasible to use smart contracts to program money and achieve basic operational irreversibility levels, faster payments, and other things.

It's also vital to remember that the majority of international CBDCs are considering using the Ethereum blockchain to launch a new and effective type of digital payment.

Coexistence of CBDC and cryptocurrency

According to Mark Tencaten, CBDCs will indirectly contribute to the crypto frenzy by introducing the general public to the digital world. And it wouldn't take long for individuals to venture out and hunt for something decentralized and private once they begin investigating the numerous advantages of a blockchain-driven payment system.

When it comes to streamlining and accelerating payments, CBDCs will assume a prominent role in their genuine form. The traditional, decentralized crypto players will carry on operating and thriving as a part of the cryptocurrency asset class with their on-chain currencies.

To further simplify, CBDCs will expedite transactions and regular payments, and cryptocurrency will continue to gain traction due to its many applications and valuable advantages.

What are the benefits for cryptocurrency investors?

According to Mark Tencaten, this new coexistence arrangement offers quite a lot for cryptocurrency investors. Major CBDC proponents view Ethereum as the preferred blockchain at scale, bringing Ethereum-powered blockchains and their associated tokens closer to cryptocurrency investors. Additionally, a sizable portion of them is swarming various exchanges. The BAT (Basic Attention Token) and SNT (Status), two of the most well-known cryptocurrencies that have increased significantly over the past few weeks, are some of the prominent factors in this respect.

Conclusion

CBDCs are very optimistic, at least for the ones whose adoption is driven by blockchain technology. However, the wider picture suggests that cryptocurrencies and CBDCs will coexist peacefully in an era where financial inclusion and asset class diversification are the primary consumer requirements. And as soon as people begin to understand the advantages of blockchain-driven economic reforms, it's possible that chain-relevant cryptocurrencies may experience another bull run, with different crypto exchanges facilitating wave riding for early adopters.

Since more and more nations have access to cross-border money transfers, quicker remittances, and a more compassionate space that doesn't need to rely on traditional banking systems, the new era that suggests the development of an increasingly integrated digital payment infrastructure appears to be up to the task. And for this reason, we are optimistic about the CBDC-Crypto convergence's progress on this.