Cryptocurrencies will only become more robust and credible over time but this may change once central bank digital currencies (CBDC) are rolled out, Markets Insider reported.
- Cryptocurrencies and CBDCs differ in terms of centralization, regulation, oversight, encryption, and transparency according to a Deutsche Bank International Private Bank report.
- Deutsche Bank said that as cryptocurrencies age, they gain stability in terms of price fluctuations and this could possibly increase their use for transactions.
- Cryptocurrencies will have time to establish themselves as central banks develop their respective CBDCs, which could take a while to do.
- The Deutsche report notes that advantages of crypto assets versus traditional financial assets would fade as CBDCs are introduced and cryptocurrencies are regulated.
- Investors may prefer to go with CBDCs for general use at the expense of cryptocurrencies. The more successful digital coins are likely to differ more in terms of business models and utility.
- China and Sweden have started trials of their respective CBDCs, while the United States Federal Reserve and the European Central Bank have yet to decide on the matter.