- Central Bank Digital Currencies (CBDCs) are fast becoming essential to the global payments landscape.
- CBDCs' advantages have spurred governments worldwide to move forward with their own pilot projects.
CBDCs are digital versions of traditional currency issued and backed by national central banks. They are based on blockchain technology, an immutable ledger that records all transactions in a distributed database.
According to an analysis by BanklessTimes.com, the total value of transactions carried out with Central Bank Digital Currencies (CBDCs) is expected to reach over $200 billion by 2030. This marks a staggering increase of over 260,000% from 2023, whose market is valued at just $100 million.
BanklessTimes CEO commented on the data saying,
BanklessTimes CEOCBDCs have the potential to revolutionize how people and businesses transact. The growth of CBDCs is a direct response to changing consumer preferences and increasing demand for digital payments. As more people across the world become comfortable using digital payment systems, CBDCs are likely to become more popular. We anticipate that their use will snowball over the coming years, driven by factors such as improved efficiency and cost savings.
Why Would a Government Get into Digital Currencies?
CBDCs are expected to become increasingly prominent in the coming years as more countries explore the possibility of issuing a digital version of their national currency. Governments often have multiple motivations for doing so, including strengthening financial inclusion and creating more efficient payment systems. In addition, CBDCs may also allow central banks to issue a new form of currency that is not subject to inflation or other traditional monetary policy interventions. Several countries, including China, India, and Hong Kong, have already launched pilot programs for their own CBDCs.
Why Are Digital Currencies Gaining Traction?
One of the primary reasons behind the surge in CBDC transactions is the interest of businesses in blockchain-based payment solutions. CBDCs can offer faster payment processing, with transactions occurring in real-time rather than waiting for several business days. This makes CBDCs an attractive option for businesses of all sizes, from small sole proprietors to large multinational corporations.
Another factor driving the rise of CBDCs is consumers’ increasing interest in digital currencies. This has led to the rise of new payment methods, such as digital wallets and online payment systems powered by blockchain technology. This, in turn, has created an attractive environment for CBDCs, as people become increasingly comfortable using digital payment systems.
