Here we go again.
The fever over central bank digital currencies (CBDC) is reaching an elevated level. Each day we see articles on crypto media touting how ABC country or central bank is about to bring out a CBDC. Of course, this is all nonsense since the major central banks are not even close to bringing these out.
For example, by its own account, the Bank of Japan is not even going to make a decision under 2026. That is 3 years from now.
We can now add the Bank of England to the watch list. This prospect of Britcoin is upon us.
It appears the BOE is going on a hiring spree.
According to Crypto.news, the Bank is going to hire experts to design the digital version of the pound.
This sounds like some pretty scary stuff. Naturally, like most things on the Internet, this is over-the-top.
We have to be careful of hype. When it comes to technology, the fact is the hype is rarely met in reality. This causes is popping in the hype cycle.
To me, it appears that CBDCs are in their own hype cycle.
Notice how the headline talks about design. This is not something that is right around the corner. In fact, the target is the next decade.
News of this development is a few weeks after the BoE said they planned to begin designing the CBDC with expectations that it will go out in circulation by 2030. Like the physical pound, the digital pound will be issued by the central bank. It can be spent like any other fiat currency. They stated that the CBDC wouldn’t be a crypto asset. Instead, every digital sterling in circulation will be backed by the government.
The expectation is to go into circulation by 2030. There is obviously a lot of testing, planning, development, and discussion to take place.
Meanwhile, Bitcoin is still operating in the wild. So is Hive. And we keep developing.
We have to say these central banks are on the right path. The challenge they have is they are trying to play catch up.
It is an arms race between the private cryptocurrency industry and the central banks along with the government counterparts.
Even with a project like Leofinance, we see the number of directions that is heading. This is one small project on an unknown blockchain. Yet, we can count a number of applications that are intertwined with each other. Over time, we all hope it will all grow larger.
There are already a couple wrapped tokens tied to the Hive Backed Dollar (HBD). This is key in the ultimate development of a currency.
Here is one of the areas that CBDCs are going to run into a problem. They are working on the basics meaning they are missing some key areas that ultimately drive adoption:
We have:
Naturally, replacing out banknotes can provide some of these, depending upon which currency we are focusing upon. For the BoE, it is highly regional meaning the distribution will be rather tight (basically the UK) along with liquidity that mirrors the banknote production (at least to start).
To me, the efforts of the cryptocurrency industry will net out greater results than all these CBDCs. In the end, they are basically trying to recreate the existing system.
With what we are doing, we can go far beyond it.
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