CBDCs could make stablecoins obsolete, predicts Jake Yocom-Piatt
What impact will the introduction of CBDCs have on the crypto world? We talked about it with the co-founder of Decred During the 2020s, many countries around the world have been hard at Bitcoin Pro platform work developing digital versions of their currencies, known as Central Bank Digital Currencies (CBDCs). According to Jake Yocom-Piatt, co-founder of crypto project Decred, even if most countries around the world launched a CBDC, the crypto industry would still remain ahead in many ways.
„I expect that many states will create their own CBDCs in the not-too-distant future, but there is one key element that differentiates CBDCs and cryptocurrencies. Cryptocurrencies, for example Bitcoin and Decred, are fundamentally fairer systems than fiat currencies. So even if CBDCs adopted many features of cryptos, they would still be inferior in fairness.“
CBDCs are likely to be digital versions of individual countries
In the 2020s, China was one of the most progressive countries in terms of developing its own CBDC, while the US took a more wait-and-see approach. Recent events, however, highlight that there is a growing perception of the importance of developing a digital dollar in the US. CBDCs are likely to be digital versions of individual countries‘ currencies, although many details remain to be clarified.
As mentioned by Yocom-Piatt, crypto assets refer to completely different ecosystems, depending on the asset and its composition. Bitcoin (BTC), for example, is untethered from currencies and national borders, being managed by computer codes and miners:
„Considering that cryptocurrencies are evidently more equitable, with deterministic issuance schedules and self-custodial assets, I would expect that they would not be affected as much by CBDCs, which are just digital fiat.“
On the other hand, according to this logic stablecoins might be more affected by a global spread of CBDCs, as their main purpose is to represent fiat money in digital form, on the blockchain, anchored to a specific value. The future of crypto stablecoins could however depend on the technical characteristics of CBDCs:
„Depending on what actions you will be able to perform with your CBDCs, they could make stablecoins mostly obsolete. If there were too many restrictions on CBDCs, then stablecoins could compete from a flexibility point of view.“