The post Why Central Bank Digital Currencies Can’t Compete with Bitcoin appeared on BitcoinEthereumNews.com.

The emergence of Central Bank Digital Currencies (CBDCs) has ignited widespread interest, sparking enthusiasm among central bankers, generating curiosity within financial media, and fueling spirited debates in the Bitcoin community. Among cryptocurrency enthusiasts, opinions on CBDCs vary widely, ranging from viewing them as powerful tools for government surveillance and control to seeing them as desperate attempts by traditional fiat systems to maintain relevance. In this essay, we will explore the assertion that CBDCs are unlikely to attain widespread adoption, while bitcoin is poised to emerge as the dominant digital currency. Three pivotal factors support this argument: Bitcoin’s open and permissionless nature, its first-mover advantage, and its user-centric monetary policy. Open and Permissionless Architecture Bitcoin operates on an open and permissionless framework, allowing anyone to participate in the network and contribute to its development. This openness fosters a vibrant community of developers, miners, and users, propelling innovation at a rapid pace. In stark contrast, CBDCs are closed systems under governmental control. Lacking the open-source nature that fosters community-driven development, CBDCs resemble government intranets, such as those used by entities like the U.S. Department of Veterans Affairs or the UK’s NHS, designed for specific user groups and purposes. The restricted and centralized nature of CBDC intranet hampers their ability to innovate at the speed of an open system like Bitcoin. First-Mover Advantage Bitcoin not only pioneered the concept of digital currency but has also seen substantial real-world adoption and growth. From a financialization perspective, Bitcoin has achieved significant milestones, including its recent adoption as legal tender in El Salvador. It boasts a thriving organic economy, deep and highly liquid trading markets, and the development of mature derivative markets worldwide. On a technical level, Bitcoin maintains tens of thousands of distributed nodes that uphold the ledger, supported by a globally dispersed network of…

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Filed under: News - @ October 10, 2023 6:28 pm