Digital Currency can transform the way society thinks about money. The rise of cryptocurrencies such as Bitcoin, Ethereum, and thousands of other cryptocurrencies have woken up the central banks, who finds their existence threatened by these new players who are hell-bent on upsetting the present financial regimens?
As a result, today, most central banks are racing to launch their very own CBDC as per Squawk Box.
Sonnenshein @Sonnenshein CEO @Grayscale was asked if the birth of the Digital Currency can spell a death knell for PayPal and other such platforms Sonnenshein said, that companies like PayPal already include decentralized finance in their portfolios.
He also added that the birth of Digital Dollars will not push out the existing cryptocurrencies but augment their utility. It is the birth of the DeFi regimen, and the more it spreads, the more inclusive it will be, providing banking benefits to a wider population.
“The emergence of a digital dollar or a federal backed digital asset we actually believe creates a tailwind for investors,” says @sonnenshein. “Companies like $PYPL and others are already including decentralized protocols like #bitcoin and others in their business model.” pic.twitter.com/jZmPUd0GXu
— Squawk Box (@SquawkCNBC) February 2, 2022
Digital Currency: How does it exist?
Digital currency can be described as Currency available exclusively in electronic form. There are many electronic versions of the Currency. For example, the physical U.S. currency in circulation is only about one-tenth of the overall money supply; the remainder is held in various bank deposits in electronic form.
However, what separates digital Currency from electronic Currency currently in most Americans’ bank accounts is that it never takes physical form? Digital Currency, however, never takes physical form. Instead, it always remains on a computer network and is exchanged digitally.
So a U.S. citizen, instead of using physical dollar bills, will make purchases by transferring digital currency to retailers using his mobile device.
The success of decentralized cryptocurrencies like Bitcoin and Ethereum, which store value but are not managed by central authorities, has forced central banks to create their digital currencies, commonly known as central bank digital currencies.