Central Bank Digital Currencies (CBDCs) vs. Cryptocurrencies: Pros and Cons

[wang hxhx]

Central Bank Digital Currencies (CBDCs) vs. Cryptocurrencies: Pros and Cons

[Yiqi Gong]

One of the biggest differences between CBDCs and Cryptocurrencies is the privacy concern. Privacy concerns are a significant aspect to consider when discussing Central Bank Digital Currencies (CBDCs). Depending on the design of the CBDC system, central banks may have access to detailed transaction data, including information about the parties involved, transaction amounts, and timestamps. This level of transparency raises concerns regarding individual privacy, as it allows central banks to monitor and potentially track individuals’ financial activities.

CBDCs require individuals to interact with digital wallets or accounts, which may involve the collection and storage of personal data. If not properly protected, these databases could become targets for data breaches or unauthorized access, compromising individuals’ sensitive information.

Cash transactions provide a certain level of anonymity, allowing individuals to conduct transactions without revealing their identities. However, with CBDCs, as digital transactions become the norm, the potential loss of transactional privacy could raise concerns for those who value anonymity in their financial interactions.

All these limitations will push people to choose cryptocurrency over CBDC. and even people who don’t have a requirement for privacy will probably choose epayment which is simpler to operate.