Cryptocurrency also provides much greater privacy than CBDCs. Transactions are sent and received through wallet addresses, and it's possible to retain some degree of anonymity. Certain types of cryptocurrency are even thought to be untraceable. With a CBDC, the central bank will have a record of users and their transactions.
Examples of central bank digital currencies (CBDCs)
Most CBDCs are in the research or development stage, but there are a few that have launched. Here are some examples of CBDCs that are either available or being tested in different countries:
- The Bahamas has launched the Sand Dollar, a digital version of the Bahamian dollar. It's issued by the Central Bank of the Bahamas through authorized financial institutions.
- China is testing a digital yuan, also known as the digital renminbi or digital RMB. Among countries with the largest economies, China has gotten the furthest in developing its CBDC.
- Nigeria is rolling out the eNaira, which records transactions on a centralized blockchain ledger. It's the first African nation to launch a CBDC.
The U.S. is researching the costs and benefits of launching a CBDC, but, of the nations with the largest banks, it's the furthest behind, according to the Atlantic Council.
We're still in the early phases of CBDCs, but it's clearly an idea that's catching on. The countries that are exploring them represent more than 90% of the world's total gross domestic product (GDP). While CBDCs may not entirely replace cash, we'll likely see most countries at least implement their own digital currencies in some way.
