Considering Crypto Vs CBDC Competition As A Substitute For Fiat, Which One Will Win?

CBDC and cryptocurrency. (Photo; Doc. Analytics Insight)

JAKARTA Cryptocurrency, which was first developed by the private sector by utilizing blockchain technology, seems to have attracted public attention. Crypto assets are also predicted to be a means of future transactions and shift the position of fiat money. On the other hand, the government and central banks in various countries do not want to be left behind by developing digital money called CBDC.

Crypto is decentralized because no entity regulates it, while CBDC is centralized or centralized because it is regulated by a central bank entity. Highlighting this, Charles Hoskinson, founder of Cardano (ADA), stated an important shift in the world of digital assets. According to him, the main battle now is between cryptocurrencies and central bank digital currencies (CBDC).

In an interview with the Coin Bureau, Hoskinson, who is also the chief executive of Global Output Input, warned about the potential harm to CBDC. He also praised the main principles of decentralized crypto.

Hoskinson explained that competition is not only between various cryptocurrencies such as Ethereum, Cardano, Algorand, or Solana. The risk now is crypto against CBDC. He provides an example of China that has launched a CBDC along with a social credit system that monitors behavior and allows authorities to limit access to services such as transportation based on individual behavior.

Furthermore, Hoskinson noted that many support ESG (environmental, social and corporate governance) and have proposed the use of CBDC to provide incentives for environmentally friendly behavior by controlling money transactions. According to him, this can lead to transaction discrimination based on individual actions and identities.

Hoskinson reminded that this structure can isolate political minorities and society will lose its freedom. He argues that the only way to fight this is to return to the principles of money and financial systems based on principles. Crypto that adheres to these principles is the counterposition of CBDC and contributes to fighting systems that limit individual freedom.

In ending the interview, Hoskinson confirmed that all legitimate cryptocurrency projects have a common goal of countering the CBDC system. He acknowledged that it is difficult to predict which protocols would be dominant as the crypto world is full of uncertainty, but it is important to maintain principles that support individual freedom.