Introduction to central bank digital currencies (CBDCs)
A central bank digital currency (CBDC) is a digital version of fiat currency that is usually issued on blockchain or other distributed ledger technology by the central bank of a country or territory.
A CBCD is a digital version of fiat currency that is usually issued on blockchain or other distributed ledger technology by the central bank of a country or territory.
CBDCs are mostly at an early stage of development and have yet to be deployed on a large scale which means not a lot is known about them yet.
However, unlike cryptocurrencies, a CBDC will be regulated by the monetary authority of the issuing country or territory and will have legal tender status. CBDCs are also expected to be more stable than most cryptocurrencies as they will be backed by monetary reserves of the country or territory.
CBDCs are increasingly popular globally, with various governments and central banks exploring CBDCs. While implementations of CBDCs may vary, they are essentially digital representations of fiat currencies regulated by a monetary authority, as opposed to regular cryptocurrencies.