Over the course of 2020, numerous countries around the world will snap to their own digital versions of their currencies, known as central bank digital currencies (CBDCs). However, according to Jake Yocom-Piatt, co-founder of the Decred crypto project, the crypto industry still has its selling points even though most countries have adopted CBDCs.
“I assume that many nation-states will create their own CBDCs in the not too distant future, but there is a critical difference between CBDCs and cryptocurrencies,” Yocom-Piatt told Cointelegraph. “Cryptocurrencies, such as Bitcoin and Decred, are generally fairer systems than fiat currencies. CBDCs take on many cryptocurrency functions, but they cannot compete with fairness.”
Last year, China led the way in terms of CBDC development pace, while the US took a slower approach. Recent developments suggest that CBDC development will become increasingly important in the US. CBDCs are likely to be digital versions of countries’ dollars, although many details are still in flux for now.
As mentioned by Yocom-Piatt, crypto assets represent different core frameworks depending on the asset and structure. Bitcoin (BTC), for example, remains tied to national currencies and borders operated by computer code and miners.
“Because cryptocurrencies have been shown to be fairer with deterministic issuance plans and self-managed assets, I expect them to be relatively unaffected by CBDCs that are just digital fiat,” said Yocom-Piatt.
On the flip side, stable coins could logically feel a greater impact from a world run by CBDC, as their main purpose is to represent fiat in digital form on the blockchain, tied to a certain value. However, the future of crypto-native stablecoins may still depend on the upcoming specifications of CBDCs.
“Depending on what actions you can take on your CBDC assets, stable coins can be mostly out of date,” noted the Decred co-founder. “When there are too many restrictions on CBDC assets, stablecoins can compete for flexibility.”
Stable coins like USDT and USDC work on the blockchain and enable a variety of transactions and storage accommodations. USDC in particular saw notable usage within the decentralized financial sector or the DeFi crypto sector in 2020.
