Deloitte, a global leader in auditing, consulting, and financial advisory services, has released research highlighting Bitcoin’s potential as a foundation for developing a cheaper, faster, and more secure environment for electronic fiat or central bank digital currencies (CBDCs).
In their report “State-Sponsored Cryptocurrency,” Deloitte said that the current fiat ecosystem must be rethought from the ground up in order to address the looming problems of being “slow, error-prone, and expensive relative to the performance in other high-tech industries.”
The paper, on the other hand, pointed out five ways in which Bitcoin could be a big help to traditional money: speed, security, efficiency, international payments, and cooperation between payment participants.
In describing how CBDCs differ from BTC, Deloitte’s report reaffirms one of the primary inflationary qualities of fiat currency by noting that there is no limit to the money supply recorded in the ledger and that central governments can set the value of CBDCs at will.
The analysis shows that the first countries to implement a nationwide CBDC will have an advantage in promoting the use of their domestic currency in global markets and trade.
According to Deloitte, cryptocurrency exchanges will continue to play the role they do today in a CBDC ecosystem, converting “users’ cryptocurrency to paper currency when trading across different currencies and charging an exchange fee in return.” In this model, banks would be in charge of the distributed ledger. They would process transactions and compete with other miners for the fees and rewards that came with them.
The report says that CBDCs won’t be a direct replacement for Bitcoin and other cryptocurrencies. However, as their use grows, consumers will have more options for choosing the payment method that works best for them.
Even while many jurisdictions are racing to introduce their own CBDCs, universal adoption remains a crucial aspect of the program’s ultimate success.
In particular, Andrew Holness, the prime minister of Jamaica, has promised to give $16 to the first 100,000 Jamaicans who use Jam-Dex, the country’s CBDC.