What is central bank digital currency?

Similar to fiat currencies, digital currencies can be used to buy physical goods and services. As far as the Central Bank Digital Currency is concerned, the CBDC management can be either centralized through the central node similar to Bitcoin or decentralized where currency control and supply are managed through various sources.

Is there a competition between Bitcoin and CDBC (central bank digital currency)?

There is also a competition ready to erupt between Bitcoin, the “elected” digital currency of its network of users, and “appointed” digital currency, known as CDBC (Central Bank Digital Currency), which will likely be quite consequential for investors.

What is the difference between CBDCs and cryptocurrencies?

Importantly, CBDCs should not be confused with cryptocurrencies, such as Bitcoin, which are digital tokens created by a distributed network or blockchain using cryptographic tools. While cryptocurrencies are decentralized, CBDCs are centralized; while cryptocurrencies offer anonymity, CBDCs would allow central banks to know exactly who holds what.

What is CBDC (Digital fiat currency)?

This digital fiat currency is issued by central banks in token form or with an electronic record associated with the currency and pegged to the domestic currency of the issuing country or region. Since this digital currency is issued by central banks, the central banks maintain full authority and regulation over the CBDC.