Financial services giant Deloitte has conducted a new study that underscores the potential of Bitcoin as a powerful tool to create a cheaper, more secure, and faster ecosystem for digital fiat currency or more precisely, central bank digital currency or CBDC.
Deloitte’s report, State-Sponsored Cryptocurrency, emphasized the need for a total revamp of the existing fiat ecosystem to address upcoming issues such as being slow, error-prone, and expensive in comparison to efficiency in other high-tech industries.
However, the analysis identified five major areas in which Bitcoin may significantly improve traditional fiat currency — speed, efficiency, security, cross-border payments, and interaction with other payment participants. It states:
“With the potential to […] do it without the day-to-day operational need for a centralized organization, whether commercial or federal, the result could truly be transformational.”
CBDC has an inflationary trait
The analysis points out several differences between Bitcoin and government-issued CBDCs and reiterates the major inflationary trait of fiat as a CBDC does not have a money supply cap contained on the ledger and its value can be defined by a centralized authority.
As per the study, the authorities that roll out their CBDCs first, would have an early-bird advantage which could potentially influence the use of their local currency in the international market.
While CBDCs will not be a one-to-one substitute for BTC and other cryptos, the growing acceptance of CBDCs will provide users with other options for identifying the most suitable mode of payment, according to the report which concludes:
“Bitcoin could ultimately spawn a series of new opportunities that would transform the current payments system into one that is faster, more secure, and less expensive to run.”
While many governments have joined the race to implement in-house CBDCs, widespread adoption is one of the most important conditions for their success.
While China, which recently launched its pilot version for digital yuan, still leads the CBDC game, many other countries are actively developing their own digital currencies to become the early bird.
As TheCoinRise reported, India recently hinted at the launch of its CBDC in 2022-23. Countries like Tanzania and Australia are also working on their CBDCs.