CBDCs claim a much more widespread place than other cryptocurrencies. Stablecoins, on the other hand, are seen as a true bridge between crypto and fiat currencies. Still, their use in crypto adoption would be far from beneficial.
Do not use recommended?
While most governments are wary of cryptocurrencies, two digital assets are being singled out as a solution that could boost adoption. CBDCs and stablecoins, which combine the best of crypto and fiat currencies, could indeed be the assets favored by the general public.
However, Jorge Sebastião, co-founder of EcoX, Vít Jedlička, president of Liberland, Adam Greenberg, co-founder of Nova Finance and Joseph Beverley, founder of Neobills Consulting, would do well to think about their real benefits. At a conference at the Blockchain Summit in Paris on July 8, the four experts discovered several drawbacks.
For example, CBDCs can be used in the same way as fiat currency, but are under the influence of the authorities. Banks and governments can give themselves the right to seize them. However, its usefulness is no longer in question. As for stablecoins, their case is a bit more complex. Algorithmic coins, for example, are still too young to use. Stablecoins pegged to a pre-existing currency have also proved unstable during times of economic crisis. These are therefore not without risk.
Diversification would be the secret of adoption
Crypto and digital currencies in general have their pros and cons. It is therefore impossible to focus on one asset without taking risks. For Jorge Sebastião, it is essential to diversify both investments and uses.
To avoid getting stuck with unstable, seized or plummeting assets, we need to diversify the mix. We must therefore avoid favoring only Bitcoin, CBDCs, stablecoins, real estate or even gold. Among them, gold, real estate and crypto are the most reliable. We have seen that Bitcoin is much more reliable than stablecoins or CBDCs because it is crisis resistant.
Excerpt from Jorge Sebastião’s Speech at the Blockchain Summit in Paris
In addition, gold or fiat money are not the most sustainable long-term assets for the four experts. Cash flow problems or shortfalls can quickly become problematic with widespread adoption. Cryptocurrencies, on the other hand, are not subject to scarcity and can be easily generated. The impact of such an act on the global economy and on possible inflation was not discussed.
There remains mistrust for crypto adoption
If Bitcoin finally appears to be the preferred currency for mass adoption, its volatility continues to fail. Likewise, in the event of a crisis, user behavior remains unpredictable. Last month we witnessed the wave of panic that caused investors to sell their coins. The phenomenon had largely contributed to the fall of cryptocurrencies. Unfortunately, the pattern can always repeat itself after mass adoption and lead to a much bigger crisis.
Whatever the case may be, for the four experts, confidence remains the nerve of war. If crypto is adopted, it should provide reliable and solid assets. Freedom and service must take precedence over profit, as the greats of the industry want. If the latter succeeds, it can return power to the world’s population and enjoy great success.
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