Central Bank Digital Currencies (CBDCs) are poised to become technologies with the largest market capitalizations in history. The figures vary. Some say trillions of dollars, some say greater. The true value of these technologies can hardly be overstated as they approach the value of money itself. However, at this transitional moment in history, we might ask what are the first and clearest value cases for CBDCs, and how will they earn their place in a world upheld by legacy systems?
Here are four quick, concrete benefits of CBDCs that have countries across the world experimenting with the new technologies. For these platforms to gain adoption, we believe these are among the most critical:
Decentralized, Secure, and Scalable Technology Framework
Today’s systems are slower, more expensive, and less safe than potential CBDCs. It’s that simple. CBDCs can double the number of transactions that Visa or Mastercard process (not to mention other, slower methods), and they can do so instantly and for lower fees. We have also seen centralized processing for economic and other sensitive information repeatedly exposed and exploited and insecure. CBDCs, run on the Cypherium network, are resistant to centralized attacks, of course, as well as Sybil attacks, 51% attacks, and more — while maintaining full decentralization.
For new systems to augment and ultimately replace legacy systems, there will have to be both horizontal and vertical integrations that incentivize current enterprises and governments to take on CBDCs. Cypherium’s Java Smart Contracts offers easy API integrations of existing mobile and web apps, as Java is the largest device pool in the world. No additional code migration needed, and our multi-level governance structure ensures the independence of applications from the protocol layer. This incentivizes both platform hosts and new entrepreneurs who seek to create on top of our network.
New opportunities for currently adopted models
Public blockchains are maintained by open communities. This is cheaper, faster, and more secure than traditional intermediary services, as we have discussed. CBDCs will be able to leverage this by connecting with the world of decentralized finance. This will garner trust, security, and a culture of inclusivity that will benefit economies. This will allow pre existing blockchains like Bitcoin and Ethereum to flourish, and further, it will enable new modes of enterprise across many industries.
Such coordination is made possible through our interoperability framework. Cypheriun is able to serve as a gateway for coordinated, cross-industry participation by linking different chains to one another to facilitate meaningful cooperation and joint action. Through tools like CypherLink (a notary mechanism based on the InterLedger protocol), Cypherium Connect (a third-party plug-in module for banking systems), and Cypherium Validator (a verification machine), our network can link any two banking systems; Cypherium can support cross-chain transactions among any two CBDCs or other digital currencies.