To begin with, the CBDCs are not as simple and defined to make any predictions about them right now. Currently, many central banks have launched some pilot programs and projects that are only in a demo status. So, the researches are aimed to rule out any possible errors and to explore the relevance of the CBDC system. At first sight, this kind of currency might seem perfect, and I suppose there is some truth in that. Firstly, Central Bank Digital Currency presents better functionality in comparison to cash money. The central bank is able to transform digital currency into the form of token that can be easily stored in a personal bank account for executing transactions and maintaining the value. The storage alternatives that are presented by the digital currency is also much safer, by the way. Secondly, exploitation of the CBDCs seriously low the transaction costs. As long as the currency provides owners with rapid money transfers with reduced taxes, therefore there literally no profit in using other variants of money. Additionally, CBDCs can also support improved control over the money supple. The point is that it can direct monetary policy tool in order to bear interests. 

   The aforementioned aspects may literally put down any doubts about the CBDCs cons. However, Central Bank Digital Currency is not as positive as it seems to be. CBDCs will be available only in a country that issues them. That is why it cannot be used abroad. For instance, one will not have lower transactions cost in case of international money transfers. Moreover, commercial banks will probably lose their income because of their decreased validity and effect. It can result in a transition to wholesale funding from the government budget.

   By and large, I am certain that the invention of Central Bank Digital Currency is a suitable decision. It will meet the positive expectations and become a significant part of a country’s economic life. Central bank should keep an eye on cryptocurrency market and implement useful innovations to prevent people from possible negative consequences of this currency. One day all countries will use this technology, it is just a matter of time.


References:

https://www.bis.org/about/bisih/topics/cbdc.htm

https://www.paconsulting.com/insights/are-central-bank-digital-currencies-the-future-of-money/ 

https://www.bankofengland.co.uk/research/digital-currencies

https://101blockchains.com/central-bank-digital-currency-pros-and-cons/

Firstly i will speak about advantages of digital currency. Almost everyone in the world knows something about crypto. But in a few years i consider that it will be hard to find a person with zero knowledge about the crypt. So the first advantage is that nowadays we live in the digital ages and over the years progress will not stop so thats why crypto will become more and more popular in the future. Secondly lets speak about some real facts. Crypto provides the most comfortable way of p2p trading. Thats because you do not need any banks, taxes, fees,and other staff, just you and your partner. You can make a transaction wherever you are and also at any time. 

Now about cons. No doubts that digital currency is a very perspective direction and in the future it will realize its potential. But what about nowadays. Now is not the time of the crypto. Thats because of many factors, such as not every service, shop provider accepts crypto, also there is no option to pay with crypto offline, even more you need to have a good internet availability. Last but not least is that crypto transactions are immutable, meaninig that once the money leaves your wallet, there is no to get them back. 

By and large, I reckon that digital currency is a very ambitious and perspective project. So I would say that for me the main question is not “Will the digital currency replays money?”, is “When it will happen?”. My answer – in the near future. 

 

 

https://www.theglobaltreasurer.com/2015/05/27/digital-currency-pros-and-cons/ 

https://cryptonews.com/guides/bitcoin-pros-and-cons.htm 

https://101blockchains.com/central-bank-digital-currency-pros-and-cons/ 

Talking about pros, there’re some advantages. Operating with digital money is much faster, safer and cheaper, compared to the traditional way. Another thing is that CBDC could promote diversity in payment options, making it more comfortable for both big corporations and usual people.

However, there’s a significant downside of CBDC. It’s a strong control by central banks. They might increase their insight on how people spend money, potentially depriving users of their privacy. 

Taking everything into consideration, CDBC could be a great alternative for cash, especially during pandemic.

 

-https://www.finextra.com/blogposting/20074/advantages-and-downsides-of-central-bank-digital-currencies

-https://www.bis.org/about/bisih/topics/cbdc.htm

 

Modern world is rapidly developing. Every aspect of our life changes and becomes more convenient than it used to be. So does money. A couple of years ago no one would consider digital currency as a method of payment. But currently more and more companies in the field of services and goods let people pay with BTC, Ethereum, Litecoin, etc. However, central banks haven’t made their decision on cryptocurrency. Are they going to use it or not?

 

As for the high points of cryptocurrency, I think that there are 2 of them. Firstly, transactions of digital currency are more convenient than the ones made with plastic cards. They offer its users low or even no fee for a transaction, which is obviously better than making a transaction from one bank account to another, especially when a bank account is connected to a foreign bank. Moreover, cryptocurrency can be transferred to people worldwide with tiny fees or even without them, as a crypto coin represents its own eco system. Secondly, crypto wallets have better security then usual bank accounts. Some companies sell special device which needs your fingerprint, a password and other types of proving that this is your account. With their help you can reduce chances of your account being hacked almost to zero. Also, you are the owner yourself of a digital wallet and it can be closed by anyone’s decision, except yours.

 

However, crypto coins have their weak points. For example, crypto coins have very unstable price. It can skyrocket or significantly decrease by, for example, one’s twit (Hello, Doge coin). Therefore, people are scared to lose their money because of this reason. Also, it isn’t supported by anything real, so it means that (in theory) there may be an infinite number of every digital coin, and it means that none of them cost anything more than 0$. For example, the number of Bitcoins is limited to some value N, but it can be enlarged at any time.

 

In my opinion, central banks will reject the idea of using cryptocurrency. It’s a well-known fact that central banks are controlled by government. Some digital coins offer its users anonymity. It means that people can receive and spend money without letting know who they are. Anonymity isn’t the concept that government likes, because it develops black market, consequently it lets illegality spreads, and partly deprives the country of taxes. As for non-anonymous coins, their transactions can be tracked, but this process still brings in inconvenience for government, which is obviously not willing to do anything that complicates their work.

 

     To begin with the biggest advantage of using crypto-coins is privacy, decentralisation and anonymity . Usually people think that crypto-transaction cannot be tracked or cancelled by governments, companies or other people.  In addition it has a very convenient payment system. It has a possibility to change all spheres of life. Every transaction will be made easier and simpler. There are also a lot of benefits for governments. Collecting taxes, monetary policy, distribution of money won’t be problems anymore. 

     Nevertheless, some economists are not sure about CBDC. Firstly, they suppose that technologies are not developed enough and paying systems all over the world are not ready for them. Secondly, digital currencies are not that anonymous as people suppose. There are several ways to track transaction. In addition digital currencies do not have stability. Consequently, 80% of mankind will not put their savings in CBDC systems. 

     To sum up, I would like to say that in my opinion CBDC is not ready today because of several factors: technologies are not effective enough, people’s minds are not ready for that and most of the governments will make everything to cancel this project.

The information was taken from:

1) CBDCs simplify implementation of monetary policy by making it easier to propagate money through the economy. The current system relies on intermediaries, such as commercial banks, to distribute money between themselves and throughout an economy. A CBDC eliminates third-party risk. It automates the process and establish a direct connection between consumers and central banks.    

2) CBDC system has the potential to simplify the transfer of money across borders.

3) CBDCs can simplify government functions, such as distribution of benefits or calculation and collection of taxes.

4) CBDCs make it easy for a central bank to track money, thereby preventing illicit activity and illegal transactions using CBDCs.

1) CBDCs do not solve the problem of centralization. A central authority is a bank. Therefore, it still controls data and transactions between citizens and banks that to some extent can erode the privacy of citizens. Information could be hacked or misused by criminals, or central banks could misuse their power and disallow transactions between citizens.

2) A strong CBDC issued by foreign country could substitute the local currency of a weaker country. For example, a digital U.S. dollar could substitute the local currency of a smaller country.

To some up, I suppose that it could take years before digital money becomes a regular part of the monetary system. Experiments in CBDCs are ongoing and we still cannot predict the role of such currencies in an economy and who will regulate them. However, given heightened interest in the area, the future may be closer than we think.

    To begin with, it will be much more convenient to use digital money. Transactions can be done through a user’s smartphone at any time. What is more, CBDC makes money allocating more efficient. Payment’s fees will be lower. Digital currencies also provide transparency. Any transaction will be tracked by central bank. It is going to be harder to hide an illicit activity from the government.

    However, there are some disadvantages. Firstly, commercial banks will lose popularity because consumers are going to move money into CBDC. Secondly, even though digital currencies may seem to be well-protected, it is still can be vulnerable to attacks. As technologies improve, hackers are developing their skills. There have already been many cases of digital thefts. 

    To conclude, it is impossible to ignore the influence of CBDC. This technology has already started to appear in our lives. Government must protect consumers from the cons of digital money and make the best out of it. 


https://www.theglobaltreasurer.com/2015/05/27/digital-currency-pros-and-cons/
https://www.ledgerinsights.com/imf-pros-cons-central-bank-digital-currency-cbdc/
https://www.800loanmart.com/additional-topics/pros-and-cons-of-using-digital-currency/

If we talk about advantages of cryptocurrency, firstly it is easy to make transaction with such assets. Also you can faster and cheaper make payments, easier to produce cross-border transfers.  Secondly, cryptoassets, such as bitcoin, are decentralised, so it does not controlled by company or government. In addition, crypto currency is not underinfluenced by inflation, which is very substantial advantage over real money.  

But there are also many disadvantages of cryptocurrency. The value of cryptoassets is extremely volatile. For example, bitcoin reached a peak of 65000$ in April and fall to less than a half that value in two month. Another frightening aspect is the fact that you can anonymously transfer cryptocurrency. So you can easily be a sponsor of some terroristic organization and it will be very hard to identify and find you. In addition, it will be difficult to catch a cryptocurrency thief. Also the fee for withdrawing money from cryptocurrency is quite big. 

Taking into consideration all mentioned above I would like to emphasize that of course cryptocurrency is really useful thing, but it also has dozen minuses that should be fixed, and may be after it, cryptoassets will become national currency.  


https://blogs.imf.org/2021/07/26/cryptoassets-as-national-currency-a-step-too-far/

https://amlbot.com/wp-content/uploads/2020/05/IPOL_STU2020648779_EN.pdf

In many countries around the globe, the demand for paper currency has been diminishing rapidly as consumers have turned increasingly to using credit and debit cards as well as cellphones and online payment methods. For example, Swedish households used cash for about 15 percent of their retail transactions last year—only half the usage rate observed four years earlier. 29 Indeed, a prominent global payments firm recently launched a campaign aimed at incentivizing small businesses to stop accepting cash at all.

There are lots of advantages of digital currencies. Firstly, CBDC can serve as a practically costless medium of exchange. Secondly, digital currencies secure store of value, and stable unit of account.

However, there are disadvantages too. One of them is possibility of losing monetary control. In addition, the economy may be subject to indeterminacy and that there may not be any equilibrium that exhibits stable prices.

In conclusion, more and more people nowadays are aware of the phenomenon of digital currencies. In the nearest future they will start to use CBDC more, which will mean the end of cash.