Digital Dollar – The Future Of Money Is Coming

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Digital currency or CBDC (Central Bank Digital Currency) is nothing new. China, Australia, the Bahamas, and many other countries already have the e-currency, or it’s in the process of creating. 

Recently, we’ve received news about the digital dollar, a pilot project by the Federal Reserve Bank of New York, and several banking giants. Can CBDC change the monetary system we know?

Let’s start with the basics. What is CBDC, and how it differs from the actual money?

Unlike physical cash, CBDC is an electronic form of funds. While many compare it to cryptocurrencies, there’s one crucial difference. Just like cash, this currency is issued by the central bank and pegged to the value of fiat currency. Simply said, the bank will start issuing virtual money instead of physical money.

While the main idea comes from the cryptocurrency world, this type of money is government-backed, and transactions are strictly controlled. One of the main advantages of having such a system is using digital money that’s not subject to constant market volatility and provides an increased level of safety.

Since the currency is centralized and controlled by the central authorities, it may not be anonymous. The main perk of such currency is the ability to process transactions quicker and remove the middleman. This should reduce the waiting time and lower the fees even for transfers abroad.

CBDCs come as a wholesale and retail digital currency. The first one is similar to holding reserves in the central bank and is meant to be used by financial institutions. On the other hand, retail digital currency should be used by consumers and businesses, just like fiat currency.

When it comes to retail CBDC, we have token-based and account-based CBDCs. The first type is accessible with a private/public key and allows users to make anonymous transactions, quite like crypto. 

Aucontraire, an account-based CBDC requires digital identification to access the account and make any transactions.

The digital dollar has been in the making for quite a while. Since the recent crypto crash after the bankruptcy of one of the largest crypto exchanges, FTX, the process seems to be sped up. US president Joe Biden announced that he finds it necessary to rush the procedure and issue US CBDC as soon as possible. According to him, it’s in the best national interest.

On that note, a group of banking institutions, including Citigroup, Mastercard, and Wells Fargo, together with the New York Innovation Center, has announced the launch of the 12-week pilot project, testing proof-of-concept digital platform – Regulated Liability Network (RLN).

Unlike some e-currencies we know, this one will be launched on the blockchain. It’s expected that many financial institutions, including central and commercial banks and other regulated non-banking entities, will join the project.

RLN is expected to run for 12 weeks and use USD as a base currency. It will simulate real-life transactions, customer deposits, and transfer settlements. The project will include all the elements included in the actual banking transaction process, such as KYC and AML requirements. 

Once the 12-week deadline expires, the group will draw conclusions about the results and decide how to proceed with digital dollar creation.

Ever since the Central Bank of China launched the digital yuan, there have been numerous scam campaigns, such as YuanPay. In Australia, we’ve seen its counterpart, AussiePay. Both of these campaigns aim to convince investors to put their deposits towards creating a new government-backed digital currency. Once the currency was widely used, investors were promised their share in the coin value.

Since we already elaborated on the fact that digital currencies are pegged to fiat money, meaning the ratio is 1:1, there’s no place to earn any money. It’s just a fraudulent marketing campaign used by scam brokers.

Since we’ve already seen it, we want to warn all the people out there. If you see any adverts promising to earn from the digital dollar, whether through share stake or any other way, reject the offer. The government is issuing digital money and is not offering any benefits from it. 

The post Digital Dollar – The Future Of Money Is Coming appeared first on Global Fraud Protection.


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