CBDCs have some benefits but also many drawbacks, which has sparked debate about whether adopting them is a good idea.
Central bank digital currencies (CBDC) have received quite a bit of attention in recent years, sparking a fierce debate about the benefits and possible drawbacks of the technology.
A digital form of a country’s fiat currency, CBDCs are centralized and backed by a nation’s central bank. In contrast, cryptocurrencies like Bitcoin (BTC) are decentralized and not controlled by any major authority.
Advocates of CBDCs say they could potentially improve payment efficiency and expand financial inclusion for populations with limited access to the financial system. At the same time, critics argue they have the potential to infringe on privacy and open up new avenues of government corruption, among other concerns.