The Future of Central Bank Digital Currency (CBDC) and Cryptocurrency

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Digital currency and cryptocurrency have changed the way the world interacts with money. The use of digital money has expanded globally and the rise of cryptocurrency has changed the way financial transactions can be conducted. Now, the Federal Reserve is working on a new type of digital currency called Central Bank Digital Currency (CBDC). In this article, we will take a look at the various aspects of digital currency and cryptocurrency, the Federal Reserve’s plans for a CBDC and what the future may hold for digital currency and cryptocurrency.

Overview of Central Bank Digital Currency and Cryptocurrency

Central Bank Digital Currency (CBDC) is a type of digital currency backed and issued by a central bank. It may represent a liability of the central bank, and may be used as a store of value and medium of exchange in the same way paper currency is used. CBDCs can also be used to facilitate payments between financial institutions and businesses, allowing funds to be sent and received with speed and efficiency.

Cryptocurrencies, on the other hand, are digital assets created and stored on a distributed ledger technology platform (often referred to as a “blockchain”), and outside of the control of any central bank or government. Cryptocurrencies are typically used as a medium of exchange between individuals, businesses, and other organizations.

The Federal Reserve’s Plan for 2023

In October 2020, the Federal Reserve announced it would be exploring the possibility of a Federal Reserve Digital Currency (FRDC) for use within the United States by 2023. The FRDC would operate similarly to other digital currencies, allowing for secure and anonymous transfers of funds, and would be capable of being used for a variety of financial applications.

The primary goal of the FRDC is to provide a digital alternative to cash that is backed by the full faith and credit of the US government. The Federal Reserve plans to work with other central banks around the world to ensure the security and stability of the FRDC. Additionally, the FRDC would in no way attempt to replace existing cryptocurrency. The Federal Reserve has indicated that it does not view cryptocurrencies as a threat to the US Dollar or other physical currencies.

The Future of Cryptocurrency

Cryptocurrency has been growing in popularity over the years and is becoming an accepted form of payment for goods and services around the world. With the rise of CBDCs, it’s likely that governments and central banks will begin to recognize the importance of cryptocurrency and attempt to regulate and integrate it more into global monetary systems.

Currently, cryptocurrency purists insist that cryptocurrencies should remain decentralized and independent of government and central bank influence. However, this could change as the use and acceptance of cryptocurrency grows, prompting more governments to take an interest in it.


The future of digital currency and cryptocurrency is unclear, but it is likely that governments and central banks will continue to embrace the idea. The Federal Reserve’s plans for creating a digital currency by 2023 is a testament to this. It is likely that digital currency and cryptocurrency will play a major role in the future of world commerce.

Ultimately, only time will tell what the future holds for digital currency and cryptocurrency. It is however, clear that central banks and governments around the world are beginning to embrace this new way of doing business, and will only continue to do so in the years to come.


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