With the crypto market expanding daily and more people taking an interest in it, central banks are taking note. So much so that the idea of digital versions of fiat currency, popularly known as CBDC’s, is gaining traction.
However, even as this possibility grows, analysts do not see CBDC’s presenting any serious competition to decentralized currencies. That’s because the whole idea of decentralization has taken root, and centralized cryptos may not be that attractive in the long term.
According to Morgan Stanley Chief Economist Chetan Ahya, decentralization is already deeply engraved in the minds of investors, and this is not likely to change. Ahya added that decentralized cryptocurrencies also have multiple uses besides payment, with some of them acting as a good store of value.
The Morgan Stanley top executive further states that, in the end, it is the innovation that will carry the day, and decentralized cryptocurrencies are doing a pretty good job at it.
That said, CBDC’s have their advantages in the market. One of them is that they will make transactions faster and make creating counterfeit money harder. They could also make the detection of errors and their correction much faster.
This asset class also has their disadvantages too, and one of them is the level of control that they confer on central banks. With CBDC’s, it is easy for a central bank to monitor the money flow of any person they want in real-time. This is a huge affront on privacy and could push people further into decentralized cryptocurrencies. It’s a huge validation of the future of decentralized crypto.