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26 July 2021

The Coming Rise And Fall Of Central Bank Digital Currencies

The Coming Rise And Fall Of Central Bank Digital Currencies


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Bitcoin’s popularity has unleashed a race for digital money dominance, which is likely to intensify with the emergence of Central Bank Digital Currencies (CBDCs).

Readers will find that CBDCs will play an important role in the normalization of money as a digital concept.

To better understand the evolution of money, it is important to understand the three different types of money: commodity money, representative money and fiat money.

The two main types of money are commodity money and fiat money, while representative money is more of a hybrid state.

This completed an evolution from commodity money to representative money to fiat money.

We are now experiencing a trend in the opposite direction, by migrating from fiat money to digital representative money.

The representative money of the 20th century were banknotes pegged to gold, and the representative money of the 21st century are digital currencies pegged to fiat money.

The lasting impact of CBDCs will be to normalize the concept of money as a digital native product, and their design limitations will create the demand for a permissionless, inflation-proof digital store of value.

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