Certain elements of Bitcoin technology can be used in the development of CBDCs.
According to an analysis by Deloitte, one of the largest financial services firms, the technology behind Bitcoin can be applied to the development of CBDCs. The analysis cites a number of characteristics that CBDCs could borrow from the cryptocurrency. These include the speed of money transfers, security and convenience of cross-border transactions.
CBDCs with Bitcoin features would help solve the problems of today’s financial system, among which are:
- low transaction speeds;
- vulnerability to hackers and fraudsters;
- high transfer fees.
The analysis suggests that the issuance of CBDCs, as well as the distribution of digital currency among banks for circulation, can be carried out by the central bank. Intermediary banks would act as servers to store data and confirm payments, like nodes in the Bitcoin network. Banks would be able to make money on transaction fees.
In addition to the benefits of this operating option for CBDCs, there are a number of risks as follows:
- the possibility of inflation;
- money laundering;
- increased levels of cybercrime.
The Deloitte analysis suggests that the countries that introduced CBDCs first will have advantages, as their currencies will be the primary ones used for trade and in international markets.
