Paolo Ardoino, the Chief Technical Officer (CTO) of the world’s largest stablecoin, Tether, has shared his thoughts on the much talked about Central Bank Digital Currencies (CBDC), noting amongst many other things that these new form of money will replace SWIFT and other monetary transfer infrastructures.
1/
Few thoughts on CBDCs
– FIAT is mostly digital already
– but it relies on an outdated tech infra built 30y ago and kept together with rubber and bands
– and it requires ton of maintenance with enormous costs
– and is not standardised at capillary level— Paolo Ardoino (@paoloardoino) March 10, 2022
CBDCs are a digital form of a country’s existing fiat currency, however, leveraging the distributed ledger technology system. With the growth in private cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH), many governments have seen firsthand the clear advantages the technologies powering cryptocurrencies are, and would like to gain control of it.
According to Ardoino, the existing traditional payment system is already highly digitized, however “it relies on an outdated tech infra built 30y ago and kept together with rubber and bands,” making it highly outdated, requiring a high level of maintenance, and not “standardised at capillary level.”
The Tether CTO was proud to note that the clamor for CBDCs, as many central banks including China are conducting advanced trials on, is an idea that Tether had and brought to life about 8 years ago when it created the very first stablecoin ‘USDT’.
According to the Tether veteran, CBDCs will have no issue to be well engrafted into the existing payment system as banks will accept these new forms of money for any wire while the new legal tender “will settle most of credit/debit card flow, especially over the weekend,” just the way private cryptocurrencies operate.
Ardoino predicted that CBDCs will make use of “private blockchain as modern and cost-controlled tech infrastructure,” however, he pointed out that they will not make use of the same blockchain technology that is being utilized by mainstream digital assets.
This is an important difference as private cryptocurrencies are not controlled by any entity, however, the inherent control of CBDCs will be ceded to a centralized authority.
While the need to design a CBDC according to Ardoino is to tag along with the evolution in the financial ecosystem, he noted that nothing is going to change from what the world is already accustomed to, rather, only Bitcoin will give the needed edge that everyone looking for freedom clamors for.
