The world seems to be gradually preparing for the dawn of an era where cryptocurrencies will become the benchmark as a means of payment. To avoid this revolution, state central banks are currently busy launching their CBDCs. Research on the development of these digital currencies inevitably leads to a comparison with cryptocurrencies. A recent study by researchers at the New York Federal Reserve estimates that CBDCs would be more respectful of consumer privacy and less expensive than cryptos.
CBDC to end misuse of personal data by large companies
Associate with Professor of Economics at the University of California Rod Garratt, Michael lee – New York Federal Reserve researcher – recently published a blog post on CBDC contributions. They attacked big tech companies using private data collected from their customer through digital transaction settlement. “Transactions using digital payments allow businesses to capture consumers’ personal data, which cash does not. Data is not shared between companies. By gaining exclusive access to their own customers’ data, businesses can use that information to gain a competitive advantage. “Says the article.
For the authors, there is no doubt that the CBDC is the best personal data protection asset available to the public in this age of digital regulations. While the blog post highlights the CBDC as a replacement for the trust, it also acknowledges that cryptocurrencies offered the same guarantee. However, the authors believe that the CBDC would be cheaper and more environmentally friendly. ” Privacy-preserving digital payment alternatives, such as cryptocurrency, involve high transaction costs and can be costly to the environment. Private initiatives proposed by “BigTech” companies are likely to further reduce the protection of privacy »They conclude.
The Chinese case as a counterexample
While it is true that a CBDC will protect consumers from the exploitation of their data by companies, there are doubts about the good faith of the governments which promote it. This is particularly the case with China, whose digital yuan remains the most advanced CBDC project. While other banking and financial institutions are interested in establishing an adequate legal framework for digital currencies, the country seems not to make it a priority. This leads some observers to assert that the lack of transparency around the digital yuan’s privacy features is said to be due to the fact that it will serve as a monitoring tool for the Chinese government.
Cryptoassets are highly volatile unregulated investment products. No EU investor protection. Your capital is at risk.
If the battle between central banks for the launch of CBDCs was clearly on, we are now discovering the one that pits them against cryptocurrencies. Each of the parties is indeed seeking to prove its reliability at a time when the trust seems gradually to be neglected. To defend them, cryptocurrencies can count on Mark Binns for whom the CBDCs have already lost the battle.